Chinese plastic pipe production grows 10 percent

By Steve Toloken
News Editor / International

Published: April 14, 2014 1:21 pm ET
Updated: April 14, 2014 1:24 pm ET

Related to this story

Topics China Construction Extrusion Pipe/Profile/Tubing
Companies & Associations

KUNMING, CHINA — China’s plastic pipe production grew 10 percent last year, to 12.1 million metric tons, fueled by increasing urbanization, expansion of rural drinking water systems and government spending on infrastructure, according to statistics from a Chinese pipe industry group.

Production growth this year is likely to slow to between 5-10 percent, reflecting a general softening in the rapid growth rate of China’s economy, but the industry continues to have sizable long-term opportunities, said Wang Zhan Jie, secretary general of the Beijing-based China Plastics Piping Association.

“During the past years, the plastic pipe industry developed very fast,” Wang said in an interview at the CPPA’s annual conference, held April 1-3 in Kunming, Yunnan province. “Now not only plastic pipe but other industries slow down and they pay attention to quality.”

But Wang and others at the event said the huge migration of Chinese residents to cities — estimated at 80 million people by 2020, or roughly the population of Germany — will continue to drive demand.

Industry officials also noted demand coming from the country’s focus on developing its western regions, like the site of the conference, Yunnan province.

“All of this gives us very good opportunities to develop the plastic pipe industry,” Wang said, although he noted that there are questions about whether the government will have the money to implement all the infrastructure projects it has announced.

Speeches and executives interviewed at the conference, which drew 430 people, noted challenges, including severe overcapacity.

Plastic pipe production last year in China was only about 50 percent of installed capacity, according to CPPA figures. The trade association said in a report at the conference that that has led to fierce competition, with larger companies developing more quickly and smaller firms facing more trouble and bankruptcies.

Jiang Jia Cheng, chief executive of Wealpro Pipeline Industry Group Co. Ltd. in Yingkou, Liaoning province, said the market dynamics are encouraging consolidation.

He said the industry’s 10 percent growth in production last year was average, but he said other firms, like his, have grown faster. For example, China’s largest pipe maker, publicly traded Lesso Group Holdings Ltd., reported that its production grew 17 percent last year, and revenue rose 20 percent.

A company’s success increasingly depends on its management, innovation, and quality and cost control, rather than simply tapping into growth, Jiang said.

“The market is good but it depends on the company itself,” he said, in an interview on the sidelines of the CPPA conference.

Wealpro has three pipe manufacturing plants and uses mostly foreign-made materials, including from Germany and South Korea, to better control quality, he said.

CPPA figures say that while China’s pipe industry has between 6,000 and 10,000 plastic pipe manufacturing companies, the 400 members of its association account for about 70 percent of the country’s production.

Qian Guijing, president of the China Plastics Processing Industry Association, said the industry should pay more attention to developing its own technology, instead of relying on foreign technology. He also said advocated focusing on innovation, rather than strictly growth, as the country’s economic growth rate slows.

“We shouldn’t draw on past successful experience because now the conditions are different,” he said.

He pointed to oil and gas industry pipelines as a sector where the domestic pipe sector should focus its research, because the high performance requirements of that pipe can make it more profitable, if a company is able to produce the quality needed.

Wang Quan Long, general manager of pipe maker Dongxin Plastic in Liaocheng city, Shandong province, said he believes there are opportunities in northern China to create larger pipe firms, mirroring what has happened in the southern part of the country, where pipe makers tend to be larger.

He said his company plans an initial public offering in 2016 to help raise money for expansion.


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Chinese plastic pipe production grows 10 percent

By Steve Toloken
News Editor / International

Published: April 14, 2014 1:21 pm ET
Updated: April 14, 2014 1:24 pm ET

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