Dalian Commodities Exchange, which has been trading linear low density polyethylene futures since July 2007, is preparing to launch PVC future contracts soon.

The exchange has been fine-tuning the contract and conducted a successful 60-minute test drive February 27, according to various media reports. Industry insiders have hinted that trading will begin by the end of this month.

Being the world's largest producer and consumer of PVC resin, China managed to grow its PVC capacity by 9.2 percent in 2008. However, actual output dropped almost a million metric tons from the previous year, to 8.8 million metric tons. Meantime, apparent consumption of PVC exhibited a sharper annual decline of 11.2 percent to 9.2 million metric tons.

As Plastics News has reported, Indian and Chinese officials and businesses exchanged friendly words on bilateral trade and cooperation at the recent PlastIndia event. However, the day after the trade fair, Indian authorities announced the initial findings of their anti-dumping probe into Chinese plastics equipment, including lofty punitive duty rates.

According to the February 10 notification posted by the Indian government, a 223 percent duty rate will be imposed to "plastic processing or injection molding machines" in the range of 40-1,000 metric tons that originate in or are exported from China.

A total of 10 Chinese machinery suppliers tried to rebut the anti-dumping presumption and responded to investigation questionnaires, which focused on cost structures and market-economy examination. These companies have received duty rates from 76 percent to 223 percent. They are:

• Guanzhou Borch Machinery Co. Ltd. (76 percent)


• Ningbo Liguang Machinery Co. Ltd. (95 percent)


• Ningbo Haitian Huayuan Machinery Co. Ltd. (100 percent)


• Ningbo Haitian Plastic Machinery Group (100 percent)


• Ningbo Haixing Plastics Machinery Mfg. Co. Ltd. (123 percent)


• Hangzhou Tederic Machinery Co. Ltd. (126 percent)


• Haitian Heavywork Machinery Co. Ltd. (128 percent)


• Zhejiang Golden Eagle Plastics Machinery Co. Ltd. (147 percent)


• Zhejiang Sound Machinery Manufacture Co. Ltd. (163 percent)


• Smargon Plastic Machinery Co. Ltd. (223 percent)

The case is still open, as the Indian government said it would conduct further verification and hold hearings before announcing final findings. Feedback to the initial findings is due 40 days from the notification. No other timetable has been given.

Five weeks after the Indian government announced its ban on Chinese toy imports, New Delhi has decided to relax the ban as of March 2. India's trade ministry said Chinese toys can be imported, but they need to be certified as safe by recognized international standards, such as the International Organization for Standardization (ISO) or the American Society for Testing and Materials (ASTM).

The ban of Chinese-made toys intended to bar imports for six months for "public health and safety" reasons. Beijing's warning that the move could seriously jeopardize bilateral trade ties seems to have worked, industry insiders said.

China's Minister of Commerce Chen Deming told the press that Beijing dispatched a vice minister of commerce to India to discuss the toy ban.

Meantime, Indian newspapers reported that toy prices in India soared 30-100 percent under the ban as local supply failed to meet market demand.

The trade tension between the two emerging economic powers has escalated in recent months as India raised a series of trade barriers and investigations. It is difficult to predict whether the toy ban's cancellation bodes well for the ongoing anti-dumping case of Chinese injection molding machines.

Shanghai Chlor-Alkali Chemical Co. Ltd. is seeking a buyer for its 10 percent stake in Bayer Polymers (Shanghai) Co Ltd., a polycarbonate manufacturing unit of Bayer AG's wholly owned Bayer (China) Ltd. subsidiary.

Bayer Polymers (Shanghai) was established as a 90-10 joint venture in September 2001 with registered capital of US$188.1 million. The company has been producing polycarbonate, PC/ABS blends, etc. with an annual capacity of 100,000 metric tons since September 2006.

The local manufacturing facility, however, hasn't been profitable. It has taken sizable losses in the past few years: 365.3 million yuan (US$53.4 million) in the red in 2007 and 424.2 million yuan (US$62 million) in 2008. Shanghai Chlor-Alkali cites radical market fluctuation, China's export rebate policy change and rising production cost, among other reasons, for the joint venture's failing business.

Challenged by continuous losses, Bayer Polymers (Shanghai) will be restructured by majority owner Bayer (China), a move that can severely dilute Shanghai Chlor-Alkali's stake in the underperforming joint venture. Therefore, Shanghai Chlor-Alkali hopes to sell its share before changes occur.

Shanghai Chlor-Alkali is a 51.6-percent-owned subsidiary of state-owned Shanghai Huayi Group Corp. The company's board of directors approved the sale in late January, according to an announcement. The Shanghai United Assets and Equity Exchange Web site shows that Bayer Polymers (Shanghai) -- classified as a state-invested enterprise -- is listed from February 26 through March 26.

In an effort to further boost its domestic market, China is expanding its rural purchase incentive programs for appliances and electronics to include automotive vehicles as well. Farmers will receive reimbursements of up to 5,000 yuan (about $730) per vehicle on purchases of light trucks or minivans and up to 650 yuan ($95) per unit for motorcycles, according to the Finance
Ministry.

Beijing continues to subsidize both domestic and foreign brands in its rural purchase incentive programs. General Motors Corp.'s mini vehicle joint venture, SAIC-GM-Wuling, is believed to be one of the biggest beneficiaries of the plan. The joint venture claims it supplies half of the Chinese market for light vehicles.

The "cars to the countryside" plan will cost the government 5 billion yuan ($730 million) and is expected to boost vehicle sales by more than 1 million units this year, which will help to push China's total auto sales above 10 million units for the first time.

Auto supplies such as Lingyun Industrial Corp. also will benefit from the plan, Chinese media said.

I'm writing in response to our managing editor Don Loepp's blog posting "When will the recovery start?" While Ben Bernanke spoke of a possible bottoming out of the U.S. economy by the end of this year, U.S. industrial output in February fell to its lowest level in almost seven years, and industrial capacity utilization hit a record low.

U.S. manufacturing is still deteriorating, but the pace of decline slowed from 2.7 percent in January to 0.7 percent in February, due to an increase in the production of motor vehicles and parts after extended plant shutdowns in January.

Another important sign of hope, in my eyes, is President Obama's decision to finally help small businesses. He announced Monday that $730 million from the stimulus plan will be used to reduce lending fees while increasing government guarantees on a portion of up to 90 percent of Small Business Administration loans. The program also seeks to increase bank liquidity by injecting $15 billion into banks in order to boost lending to small businesses.

There are about 25.8 million businesses in the United States, and more than 99 percent of all employers are small businesses, according to the U.S. Small Business Administration. In the plastics industry, molders and machinery makers with no more than 500 employees are considered small businesses, so are plastics material and resin manufacturers with no more than 750 employees.

China's largest domestic resin compounder Kingfa Sci & Tech Co. Ltd. has recently launched a long-term thermal-aging lab approved by Underwriters Laboratories. The facility is the first UL-approved LTTA lab established by a materials manufacturer in the Greater China region.

In an LTTA test, engineers accelerate the thermal aging process of polymeric materials such as engineering plastics for around 5,000-10,000 hours and project the highest possible service temperature with a 100,000-hour half-life for a specific material, i.e. the relative thermal index (RTI). RTI is an indication of a material's ability to retain a particular property (physical, electrical, etc.) when exposed to elevated temperatures for an extended period of time.

"During the one-year-plus of the certification process, we made tremendous progress in terms of our understanding of the testing standards, lab operations, control of the testing environment, etc.," Kingfa General Manager Xia Shiyong said at the opening ceremony.

Plastics materials' thermal endurance and flame resistance have been put in the spotlight in China, thanks to a series of high-profile blazes, particularly the CCTV tower fire in February. Chinese authorities have since strengthened the enforcement and inspection of a ban on polyurethane and all other plastic materials that emit toxic fumes when burned out of public places.

An economic downturn usually is a time to go back to school. But you don't need to attend an expensive MBA program to gain new knowledge and skills. Plastics News China Blog is introducing its brand new series of Chinese business and culture advice. And it's free!

Since most how-to-do-business-in-China books are written by Westerners with an outsider's perspective, I'm going to take a new approach. I plan to review the existing literature and add my own take from an insider's point of view.

I am going to start with a recently released DVD set "On the frontlines: Doing Business in China," presented by The Atlantic. China veteran James Fallows played the editorial supervisor and co-host, while New York Times business columnist Joe Nocera provided commentary at the end of each program.

I chose this DVD set because it's up-to-date and the video and audio really brings out the cultural nuances vividly, compared to print.

Do you know why Dominos failed in China but Pizza Hut scored huge success? Have you ever wondered exactly how China evolved over the past century and what that says about your Chinese business partner? I can't wait to share the answers with you.

Vicky Parwani, treasurer of the Association of Furniture Manufacturers & Traders (India), shared with me a letter sent by the association to India's Directorate General of Anti-dumping & Allied Duties under the Ministry of Commerce & Industry.

In the letter, the association opposed Indian government's preliminary anti-dumping charges on Chinese injection molding machines. "The association strongly condemns such as move that will destabilize the plastic furniture industry," the letter said.

Parwani is also a partner of Mumbai-based molder Exclusiff Seating Systems.

The sole applicant for India's anti-dumping investigation on Chinese plastics injection molding machinery may have inflated its market-share data in order to qualify for filing the complaint, according to an Indian machinery executive. He pointed out that the Indian government requires the applicant for an anti-dumping probe to have at least 25 percent of domestic market share.

K. Bhattacharya, partner of Kolkata, India-based plastic machinery manufacturer Protech Engineering, told Plastics News that L&T Demag makes 400 machines annually, while stats compiled by Indian plastic resins giant Reliance Industries Ltd. show that more than 3,000 injection presses were sold in India in the 2007-08 fiscal year.

Bhattacharya provided us with machinery sales statistics for 2005-06, 2006-07, and 2007-08 (click year to open in new window). The stats include both locally made machines and imports, and Bhattacharya said his team is working on collecting more specific information about India's indigenous machine building capacity.

"All three leading machine manufacturers -- namely, L&T Demag, Windsor Machinery & Milacron India -- put together make only 1,100 machines," which is barely a third of the total market share. "India's plastic processing industry will get affected badly in case machines from China get blocked this way," Bhattacharya asserts. "Can China afford to lose this big business?" he added.

In an effort to ease the pressure on its export sector, China is again increasing the export tax rebate for a wide range of products, including some plastic resins as well as finished products.

According to an announcement jointly issued by China's Ministry of Finance and State Administration of Taxation, starting April 1, 2009, the export value-added tax rebate will rise to 11 percent or higher for "a selection of plastic materials and processed products."

In fact, the rebate rate will reach 13 percent for some plastic resins, including certain grades of unplasticized PVC, polyolefins, nylon, PET, etc.

A detailed tax chart (in Chinese) is available at http://cws.mofcom.gov.cn/accessory/200903/1238153268800.xls

China's export rebate for processed plastic products was cut from 13 percent to 11 percent in September 2006, and further down to 5 percent in July 2007. Due to the impact of the global recession, Chinese exporters have seen sharp declines in demand from particularly the U.S. and Europe.

Beijing beefed up the tax rebate for certain plastic products to 9 percent on November 1, 2008. However, exports of plastic products still continued to drop at a double-digit pace in January and February.