Plastic exports from China continue downward trend

By Steve Toloken
Staff Reporter / Asia Bureau Chief

Published: February 12, 2013 1:52 pm ET
Updated: February 12, 2013 1:55 pm ET

Related to this story

Topics China

GUANGZHOU, CHINA -- While China's manufacturing sector showed modest signs of improvement in January, recent indicators from export-oriented plastics processors are pointing in the opposite direction, to continued struggles with weak world demand and rising costs.

Chinese injection molder Des­well Industries Inc. was leading the way among firms reporting troubles, with its sales down 15 percent and losses doubling in the nine months ended Dec. 31.

But that was offset by reports of continued recovery in the broader manufacturing sector. The HSBC Purchasing Managers Index for Chinese manufacturers rose to 52.3 in January, up from 51.5 in December. It marked a two-year high, with HSBC calling it the third month of "modest" improvement for Chinese factories.

"A higher reading of January final manufacturing PMI implies that China's manufacturing activity is gaining further steam on the back of improving domestic conditions," said Hongbin Qu, chief economist for China at HSBC. "We see increasing signals of a sustained growth recovery in the coming months."

The Feb. 5 HSBC report said new export orders also increased in January. Among some export-oriented plastics processing firms reporting earnings, however, the results were not so positive.

Deswell said weakening export markets pushed sales down 15 percent to US$44.6 million. Macau-based Deswell said operating losses more than doubled to $1 million, compared with the same period in 2011.

"Weakening demand in our export markets impacted sales and margins," said CEO Franki Tse in a Feb. 5 statement. "We also continue to see increasing Chinese manufacturing costs and a shortage of available labor.

"In spite of these headwinds, we are focused on closely partnering with our customers, suggesting new product concepts and providing sophisticated design and development services," he said. Its factories are in China.

Deswell was not alone. Hong Kong-listed Eva Precision Industrial Holdings Ltd. warned that its 2012 financial results would show a significant decrease in profit, and Beijing film extruder Fuwei (Films) Holdings Co. Ltd. warned of difficulties ahead in exports and from overcapacity in China.

Eva, which has plastic and metals operations that manufacture office equipment for Japanese brands, said its profit for 2012 would suffer as those brands shift to lower-end products to boost sales into emerging markets.

It also said it would be hurt by costs associated with building a new factory in Wuhan, to expand into the auto parts industry, and by general increases in labor and other manufacturing costs in China. It previously warned of similar problems in its financial report for the first half 2012.

"The board wishes to inform shareholders and potential investors of the company that the factors causing such profit reduction continued to exist in the second half of 2012 and therefore … it is expected that the group continued to record a significant decrease in net profit for the year ended [Dec. 31]," the company told the Hong Kong Stock Exchange in early January.

Biaxially oriented PET film maker Fuwei said sales were down 36 percent to US$43.3 million in the nine months ended Sept. 30, and it blamed poor export markets, antidumping duties on Chinese-made BOPET films imposed by several countries, and overcapacity as film makers added production, particularly in China.

It said it expected that situation to continue.

"We believe that in the fourth quarter of 2012, there will be growing capacity of BOPET films in China and stronger competition in the market," it said. "In addition, the prices of raw materials remain high and our ability to pass on all increases in cost of raw materials to our customers on a timely basis is limited."


Comments

Plastic exports from China continue downward trend

By Steve Toloken
Staff Reporter / Asia Bureau Chief

Published: February 12, 2013 1:52 pm ET
Updated: February 12, 2013 1:55 pm ET

Post Your Comments


Back to story


More stories

Image

Molder Carclo expands in China, chasing medical growth

November 19, 2014 3:44 pm ET

U.K.-based injection molder Carclo plc is “significantly” expanding its Chinese medical manufacturing capacity with a new factory, as the ...    More

Green Fence boon for China, group says

November 14, 2014 1:04 pm ET

China's Green Fence rules and regulations regarding the import of scrap materials will prove to be a “long-term” boon for the recycling...    More

Image

Borch shakes up executive suite, eyes possible U.S. factory

November 13, 2014 5:31 pm ET

Chinese injection press manufacturer Borch Machinery Co. Ltd. has shaken up its top management team, naming a new chairman and a new CEO in a move it ...    More

Some Chinese firms see slowdown

November 13, 2014 3:55 pm ET

So far, 2014 has not been a great year for all, according to exhibitors at the 9th Flame-retarding Fiber Materials, Engineering and Modified Plastics ...    More

Image

Plastech in legal battle over Chinese electric car contract

November 12, 2014 10:28 am ET

Julie Brown, the embattled former CEO of Plastech Engineered Products Inc., is back in court six years after her company was liquidated under bankrupt...    More

Market Reports

Plastics in Brazil - State of the Industry Report

This in-depth report examines the Brazilian plastics industry from a historical and geographical context. Our analysts provide insight on economic trends and forecasts, growing manufacturing sectors that utilize plastics, private investment opportunities, market environment challenges, and innovations in R&D.

Data tables and charts on producer prices, trade, plastics production and end market indicators is also included.

Learn more

Plastics Recycling Trends in North America

This report is a review and analysis of the North American Plastics Recycling Industry, including key trends and statistics based on 2013 performance. We examine market environment factors, regulatory issues, industry challenges, key drivers and emerging trends in post-consumer and post-industrial recycling.

Learn more

Injection Molders Market Report & Ranking 2014

This special package contains our 132-page 2014 Market Report on the Injection Molding segment and our exclusive 2014 RANKINGS database of 500+ Injection Molders for a discounted package price.

Learn more

Upcoming Plastics News Events

January 14, 2015 - January 14, 2015Plastics in Automotive

February 4, 2015 - February 6, 2015Plastics News Executive Forum 2015

June 2, 2015 - June 3, 2015Plastics Financial Summit - Chicago 2015

September 16, 2015 - September 18, 2015Plastics Caps & Closures - September 2015

October 27, 2015 - October 29, 2015Plastics Financial Summit - New York - 2015

More Events