PN China Blog - English: Materials Archives

Dangerous plane part

I was running out of patience at the Ottawa airport yesterday afternoon, after the plane was taxiing for half an hour to the runway. Finally, the Embraer Emb 145 Jet geared up and started accelerating. Peng! With a strange sound, the gentleman sitting right in front of me grabbed his head by both hands. I couldn't believe my eyes, but the small panel above his seat apparently just fell down and struck the poor man's head, only still hanging to the plane through a couple tubes. Ouch! Fortunately, the gentleman said his head was fine after immediately using an ice pack except for a little headache.

I heard someone in the half-empty 50-seat plane say, "is that panel made of plastics? That's probably why it doesn't hurt as much [as metal]."

Good point! Maybe it'll even be safer with a layer of overmolded thermoplastic elastomer.

Posted by Nina Ying Sun on September 20, 2007 12:00 PM | Permalink | Comments (0) | TrackBacks (0)

India's Reliance marching west

India's largest private enterprise and a major commodity resin producer Reliance Industries Ltd. has lined up $10 billion to invest in Egypt, the company's largest overseas investment so far.

The package will include $1billion for an oil refinery and $7 billion for petrochemicals, according to India's English newspaper The Economic Times:

Reliance Industries proposes to take advantage of the heavy crude available in North Africa to process a range of oil products such as gasoline.
Heavy crude is usually difficult to process and requires a highly complex refinery. But it is cheaper than normal or sweet crude by about $5-5.5 per barrel. Reliance Industries uses a lot of heavy crude in its Jamnagar refinery.

Another newspaper, The Times of India, analyzed Reliance's overseas investment deployment and strategies, highlighting the target on the European and U.S. markets:

The Egyptian government estimates Indian investments in Egypt are worth $320 million. Reliance Petroleum Ltd, a subsidiary of Reliance group, has been importing and marketing Egyptian crude oil since 2001. Over the last few years Reliance is trying to expand its global footprint in the oil and gas business. It already has hydrocarbon assets in Oman, Yemen and East Timor. While it has oil assets in Yemen, in east Timor and Oman the company is dealing in gas.
Egypt too is becoming a big source of gas and this could have prompted Reliance to explore the option. Besides, it is strategically located with Europe and the entire African continent being a large potential market.
Reliance had earlier made investment announcements in Saudi Arabia and Yemen along with other Indian oil majors but the plans did not fructify. At home it is dealing with uncertainty on pricing for its gas finds in K-G basin and has had to alter its petroleum retailing plans due to large under-recoveries.
But the problems at home have not deterred it from trying to also find a way into the American continent. Company executives have talked of their intent to buy old refineries in the United States as well to get a toehold.

China is a significant export market for Reliance, accounting for about 65 percent of Reliance's business in polypropylene exports.

Reliance doesn't have production facilities in China right now.

Posted by Nina Ying Sun on August 10, 2007 12:24 PM | Permalink | Comments (0) | TrackBacks (0)

Beijing unveils bubble-wrap aquatic center

China has officially opened its National Aquatics Center, nicknamed the "Water Cube" for its unique design.

The official Web site of the Beijing 2008 Olympic Games said it took over four years to complete the construction. According to the press release:

The NAC's Games-time construction area is close to 80,000 square meters, containing 17,000 standard seats, including 6,000 permanent seats and 11,000 temporary ones. During the 2008 Olympic Games, it will produce 42 gold medals in swimming, diving and synchronized swimming.
...
On January 31, the NAC will host its first Good Luck Beijing sport event -- the 2008 Swimming China Open.

The iconic Olympics venue features a clear surface made out of ethylene tetrafluoroethylene (ETFE) plastic films. Officials said it's the first of its kind in China and the largest and most complicated membrane system in any single project in the world.

The Water Cube is also the only Olympic venue funded by $110 million in donations from ethnic Chinese living outside mainland China.

Plastics News has reported on the innovative use of plastic material in the Water Cube in a previous story Water Cube structure features ETFE foil membranes.

Photos courtesy of the Beijing Olympic Games official Web site.

Posted by Nina Ying Sun on January 28, 2008 6:01 PM | Permalink | Comments (1) | TrackBacks (0)

Plastic going to space

Now that aircraft makers are bringing in more-than-ever amount of plastic content into airplanes, consumers realize plastic is not just the material shopping bags are made out of.

Plastics is also making its way into spacecrafts, scientists said, and not just limited to interior parts. It can be used to arm spacecraft bodies and shield them from radiation, a job that can't be done by metals.

Experiments on the International Space Station have shown that plastics such as polyethylene provide good shielding. Plastics contain lots of hydrogen, which is good at absorbing cosmic rays.
Even if the whole spacecraft is not built from plastic, it could be used to shield key areas such as living quarters.

That's according to a recent BBC report. The article explained why metals wouldn't work:

"With this kind of radiation, you cannot simply shield the craft with heavy metal. It can actually make it worse, because when the cosmic rays hit the metal atoms, they can produce secondary particles."

But the best protecting material appears to be water, the article said.

Posted by Nina Ying Sun on October 8, 2007 4:36 PM | Permalink | Comments (0) | TrackBacks (0)

Morgan Stanley and China's resin maker

According to China's financial newspaper 21st Century Economic Report, Morgan Stanley has finished a low profile transaction with Sichuan Huaton Industry Commerce Development Shareholding Co., which is said to be China's largest maker of polyphenylene sulfide resin (PPS).

The story said Morgan Stanley has helped Huaton finance US$200 million by issuing bonds to Morgan Stanley's equity management subsidiary. In addition, Morgan Stanley inked an agreement to buy less than 20 percent of Huaton's stake with US$80 million.

The China Engineering Plastic Industry Association confirmed that Huaton has larger capacity than the other two PPS manufacturers in China, both also located in Sichuan province.

Huaton's capacity will reach 35,400 metric tons by the time it finishes the ongoing expansion. China's demand for PPS, on the other hand, will top 70,000 metric tons by 2010, the report said.

Huaton also is considering going public outside of China. That certainly is something Morgan Stanley is looking forward to.

Posted by Nina Ying Sun on March 31, 2008 1:43 PM | Permalink | Comments (0) | TrackBacks (0)

Latest on China's PVC anti-dumping

Despite its abundant domestic PVC capacity, China still imports 150,000 to 160,000 metric tons of PVC paste resin (total value US$160 million to 170 million) annually.

China's State Council recently amended the tariff regulations so that PVC paste resin no longer shares the same tariff coding with general PVC powder. China Trade News commented that the change will "help with the healthy growth of domestic manufacturers of PVC paste resin."

China has been imposing anti-dumping charges on imported PVC powder since 2003. "But because general PVC powder was not distinguished from PVC paste resin, it was difficult for authorities and organizations to effectively monitor the pricing and trading of imported PVC powder; therefore, the industry couldn't accurately assess the effectiveness of the anti-dumping measures," the report said.

The tariff coding for general PVC power is 39041000 and the coding for PVC paste resin is 39041010.

Posted by Nina Ying Sun on March 7, 2008 10:39 AM | Permalink | Comments (0) | TrackBacks (0)

Gasoline first, plastic later

Refiner and petrochemical giant China Petroleum & Chemical Corp. (Sinopec) has made gasoline production a priority over plastic resins in response to the long lines at gas stations across China.

The company told Dow Jones Newswire that it plans to cut production of naphtha and petrochemical products in July and at the same time increase diesel production.

Sinopec will continue to reduce ethylene production in July, by at least 12 percent.

On the flip side, two Sinopec ethylene lines in Maoming, Guangdong province, with combined capacity of 1 million metric tons, have resumed production, after a temporary closedown caused by a lightning strike June 3.

Posted by Nina Ying Sun on July 9, 2008 11:17 AM | Permalink | Comments (0) | TrackBacks (0)

Finally! PN introduces China resin pricing

Plastics News and its partner CBI (Shanghai) Co. Ltd. are bringing global readers the latest resin pricing intelligence in the Chinese market from on the ground.

The China Price Monitor is supplied by CBI with up-to-date China market prices of polyolefin resins. It monitors supply/demand trends, imports and exports, plant closures and production outages. Readers will find the report rotate on a weekly basis between 1) high density polyethylene, 2) low density and linear low density polyethylene, and 3) polypropylene.

CBI has a professional team dedicated to the report, making about 200 calls to buyers and sellers in China each week for each issue. The CBI China Price Monitor, with brief commentary in both Chinese and English, offers open access to all readers.

Posted by Nina Ying Sun on July 2, 2008 4:48 PM | Permalink | Comments (0) | TrackBacks (0)

Blame US$ for resin prices

My colleague Frank Esposito's column Plastics demand Rx for resin headaches highlighted a few important facts: 1) resin price spikes, 2) weaker dollar, and 3) increased exports to Asia. He rightly attributed the growing exports to the weaker dollar. And I'm here drawing an additional line between the resin price hikes and the weaker dollar.

Yes, if you are looking for something to blame for the resin prices, don't forget the greenback.

Fundamentally, the depreciating dollar has fueled oil and natural gas prices, which impacts the production cost of derivative plastic materials. As former Federal Reserve economist David T. King pointed out in a Wall Street Journal article: "The collapse of the dollar exchange rate, alone, explains at least half of the increase in the pump price of gas over the past five years." Of course, the other half would be the supply/demand relationship. Detailed economic analysis is available is King's column.

From another perspective, based on the principles of nominal prices and relative prices, internationally traded commodities like plastic resin must reflect the value of the currency that stipulates the prices. When the dollar falls, prices -- including benchmark gold and commodities -- go up.

Posted by Nina Ying Sun on June 18, 2008 7:38 AM | Permalink | Comments (3) | TrackBacks (0)

iPhone's plastic casing

Perhaps it's too early to draw a conclusion, but the popular Apple iPhone 3G may not be doing much to help change the "low-quality" image of plastic.

Owners are reporting tiny cracks on the plastic shell of the iPhone. In a discussion thread on the official Apple discussion forum, various users have reported such issues, especially with white units.

Another Mac-user online community is having a similar discussion, with a few user-generated photos just on the first page.

Although the iPhone 3G is not yet officially available in mainland China, fans are closely watching feedback from users in other regions. A popular Chinese information technology site published a collection of photos and commented that the quality of the plastic casing is cheaper than the metal casing used on first-generation iPhones.

One reader left a message, asking: "Is this a production problem in Apple's Chinese factories or Apple's unwise selection of materials?"

Some markets in Shanghai are selling smuggled iPhones with price tags of 8,800 yuan (US$1,289) for the 8G model and 9,700 yuan (US$1,421) for the 16G model, according to local newspaper Oriental Morning. Vendors claim that the pricing is reasonable, because the handsets are unlocked and without a contract. However, the 16-G model without a contract will cost just US$699 in the U.S.

Posted by Nina Ying Sun on August 5, 2008 10:33 AM | Permalink | Comments (1) | TrackBacks (0)

Asus laptops smell nice, thanks to nano resin

Taiwanese computer manufacturer Asus is making headlines these days. In addition to its popular EeePC-branded ultraportable laptops and the "world's slimmest" 22-inch monitor it's rolling out, the company debuted its first series of fragrant laptops last week in Beijing.

The F6V series offers four different scents, including an "ocean-inspired water scent" and a "Chinese herbal ointment scent."

The company's design director Fu Huixin explained the technology to portal Web site 163.com: "We use nanotechnology to form resin and soak the resin in perfume compound, which becomes fragrant resin in about 24 hours. We then coat the material on the surface [of the casing]."

The company said the development process took about a year, but it wasn't able to comment on how long the scent will last. "We'll have the answer after some more testing," Fu said.

It's unclear whether these fragrant computers will be available for the U.S. consumers. But if they plan to do so, I'm not sure how the "Chinese herbal ointment" will work out in America. Perhaps replace it with a rich chocolate scent?

Posted by Nina Ying Sun on July 30, 2008 11:45 AM | Permalink | Comments (1) | TrackBacks (0)

Mitsui Chemicals adds compounding capacity worldwide

Tokyo-based Mitsui Chemicals Inc. told the Nikken Business Daily that the company is expanding the compounding capacity of its subsidiary in Zhongshan, Guangdong province, in China.

The company plans to invest 1 billion yen on compounding equipment and raise the capacity of polypropylene compounds in Zhongshan by 25 percent, bringing the site capacity to 50,000 metric tons annually.

The compounds are mainly used for automotive bumpers and interior trim.

The expansion will be completed by summer 2009. Mitsui Chemicals announced in April its plans to increase the compounding capacity in Zhongshan to 42,000 metric tons by the end of 2009. It seems like the plan has been revised, with a larger investment and an earlier deadline set for China.

In the same announcement, the company mentioned a series of PP compounding capacity increases around the globe. By the end of 2009, it will add:

6,000 metric tons of capacity in Sydney, Ohio;

17,000 metric tons in Nashville, Tennessee;

5,000 metric tons in Aguascalientes, Mexico;

27,000 metric tons in Bangkok, Thailand;

and 15,000 metric tons in New Delhi, India.

The Nikken report also said that Mitsui is investigating the possibility of adding a plant in Europe. The company currently has manufacturing sites in Stirlingshire, Scotland, and Bad Sobernheim, Germany.

Posted by Nina Ying Sun on August 20, 2008 4:39 PM | Permalink | Comments (0) | TrackBacks (0)

China extends antidumping charges on U.S. PVC

China's Ministry of Commerce and the China Customs just announced separately that China will continue to impose anti-dumping charges on PVC powder imported from the United States, South Korea, Russia, Japan and Taiwan. A five-year term will take effect on September 29, 2008, when the previous five-year term will end.

The duty rates will remain the same, which means, with the exception of Formosa Plastics Co. USA (11 percent), all other U.S. exporters will be subject to 83 percent anti-dumping duties.

For further details, email me and get a copy of the Ministry of Commerce's official document in Chinese.

Posted by Nina Ying Sun on September 26, 2008 4:39 PM | Permalink | Comments (0) | TrackBacks (0)

China to set world resin pricing, in yuan

A consultant from Platts said China soon will become the largest buyer of polyolefins and will have more say on resin pricing. Mr. Wen Longchuan told the audience at the recent International Synthetic Resin Conference 2008 in Yuyao, Zhejiang province, that China will consume 20 percent of world's polyolefins by 2012. Wen projected that China will import 3 million metric tons of polyethylene and 4.5 million metric tons of polypropylene in 2012.

Being the biggest resin buyer, China will have enough bargaining power to set the pricing for global markets. The Chinese currency Renminbi or yuan will also become an important denomination for resin prices.

A complete script of Wen's speech in Chinese is available here.

Posted by Nina Ying Sun on October 22, 2008 9:33 PM | Permalink | Comments (0) | TrackBacks (0)

China's No.1 compounder debuts acquisition

Leading Chinese compounder Guangzhou Kingfa Sci & Tech Co. Ltd. has officially acquired a special engineering resin maker Mianyang Dongfang Special Engineering Plastics Co.

The deal was priced at less than 300 million yuan. No further details are available.

Kingfa has achieved rapid organic growth in the past three years, increasing sales by more than 30 percent annually. The October 1 acquisition marks the company's new expansion strategies as well as its determination of entering the market of specialized engineering resin.

Dongfang was founded in August 2003 with a registered capital of 60 million yuan. The company is currently the largest producer of anti-corrosion high density polyethylene that is used in buried steel pipelines and claims annual capacity of 32,000 metric tons, according to Kingfa's announcement.

Dongfang's major customers include refiner giants like Petro China, China Petroleum & Chemical Corp (Sinopec) and China National Offshore Oil Corp (CNOOC).

As of the end of August, the Mianyang, Sichuan province-based company realized sales and net profit of 315 million yuan and 20.6 million yuan respectively.

Guangzhou-based Kingfa said it plans to acquire several more companies "with technologies or products that supplement Kingfa's business" in the next few years.

Posted by Nina Ying Sun on October 7, 2008 12:40 PM | Permalink | Comments (0) | TrackBacks (0)

Latest about Kingfa's acquisition

China's largest plastics compounder, Kingfa Sci & Tech Co. Ltd. of Guangzhou, Guangdong province, has disclosed more details about its acquisition of speciality engineering resin maker Dongfang Special Engineering Plastics Co. of Mianyang, Sichuan province.

The deal was first announced to the public last month, as mentioned in my blog on Oct. 7.

This week, the price tag has been revealed: 180 million yuan, about 27 percent more than Dongfang's net asset estimate.

Kingfa said it will better align its existing manufacturing bases in Guangzhou, Shanghai and Mianyang after the acquisition is complete, increase efficiency, and reduce Dongfang's reliance on its current partners' toll compounding services.

Kingfa also mentioned a plan to establish a joint venture to manufacture inorganic non-metal materials, including rare earth, and related equipment. Kingfa will invest 7 million yuan for 70 percent of the JV's share.

Posted by Nina Ying Sun on November 26, 2008 3:25 PM | Permalink | Comments (0) | TrackBacks (0)

China's fear of foreign resin

A Chinese trade group official recently accused foreign resin makers of dumping plastic resin in China and "severely disturbing the market."

A recent report from the Chinese-language financial newspaper 21CBN quoted unidentified "industry insiders" as saying that Chinese resin makers are preparing to request anti-dumping investigations.

The report pointed a finger at South Korean resin producers, especially LG Chem, SK Chem and Samsung. In September, South Korean-made resin accounted for 33 percent of China's total monthly PP import, 20 percent of its total polyethylene import, and 64 percent of polystyrene import. The South Korean prices were significantly lower than Chinese domestic market prices: about 700-3,500 yuan per metric ton (US$0.05-0.23 per pound).

In October, LLDPE imports averaged 8,511 yuan per metric ton ($0.56/pound), 8 percent lower than Chinese domestic market prices. PP imports averaged 7,234 yuan per metric ton ($0.50/pound), 16 percent lower than Chinese prices.

Price gaps are even wider for feedstocks such as propylene.

As a result, China's domestic resin companies are cutting back production. In October, PVC output dropped 33 percent and 49 of the 97 PVC resin producers in the nation ceased production.

China's major resin producers, Sinopec and PetroChina, both primarily state-owned, said their petrochemical derivatives businesses took a huge loss in October.

South Korea, itself, is also trimming resin production, but Chinese companies complain that South Korea is taking advantage of its depreciating currency to dump products overseas.

Posted by Nina Ying Sun on December 22, 2008 8:04 PM | Permalink | Comments (0) | TrackBacks (0)

Kingfa predicts first profit decline

In my December 8 column "China now victim of own success", I made it clear that compounder Kingfa was bound to take a hit financially, for reasons including massive investment in real estate.

The moment of truth has arrived. Kingfa, China's largest domestic plastic resin compounder, issued a performance forecast on January 23, predicting a 30-70 percent drop of profits in fiscal 2008. Kingfa's net profit hit 396.5 million yuan (US$60 million) in 2007.

The Guangzhou-based company had been on a clean, upward growth trend since it went public in 2004.

Kingfa blamed the domestic and global economic downturn and the sharp fall of resin prices in the fourth quarter of 2008. It admitted that the company's real estate business has lead to a "comparatively large loss," as the price of its land reserve took a dive. Slow demand from the consumer market in the fourth quarter also affected the company's "main resin business."

Kingfa's compounding business is mainly serving the appliance and automotive markets, both of which are in a slump.

Analysts said the company predicted such a wide range (the 30-70 percent mentioned above) because of difficulty appraising the company's land reserve.

In the worst-case scenario -- if the company's upcoming annual report confirms a 70 percent decline -- Kingfa's 2008 net profit would end up at 119 million yuan (US$17 million).

Posted by Nina Ying Sun on January 29, 2009 1:12 PM | Permalink | Comments (0) | TrackBacks (0)

German firms to expand in China

Despite the major slowdown of China's gross domestic product growth rate, which dropped to 6.8 percent in the fourth quarter of 2008, foreign investors continues to expand in the world's third largest economy, including German conglomerates Evonik Degussa GmbH and Siemens AG.

Chemicals giant Evonik Degussa was reported by Chinese state media to have reached an agreement with officials of Hangzhou, capital city of the Zhejiang province, on issues regarding investment policies, investment scale, environmental protection requirements, etc.

During a business visit to Hangzhou in January, Evonik Degussa (China) Investment Co. Ltd. Vice President Tuo Jianliang told the press that he was very optimistic about the industrial policies in Hangzhou and planned to invest 24 million euros. The investment will aim to supply a number of sectors including construction, automotive, food and agriculture. The company said it will add 100 million euros of investment per year in the next four years.

Evonik Degussa currently has established legal entities in 13 cities on mainland China, including Beijing, Shanghai, Guangzhou, Changchun, Dalian, Liaoyang, Yingkou, Qingdao, Rizhao, Anqiu, Nanping, Nanning and Chongqing.

Siemens AG is in talks with the local government in Foshan, Guangdong province, regarding potential further investment. According to a report from Zhujiang Business, Siemens China's Executive Vice President He Weike told city officials that the company is confident about increasing its investment in Foshan and hopes for strong support from the government. Among other industries, He said Siemens hopes to help upgrade the plastics machinery industry in Foshan, where Siemens currently runs a sales office.

It appears that the Siemens expansion deal is still in a very early stage.

Posted by Nina Ying Sun on February 2, 2009 9:30 PM | Permalink | Comments (0) | TrackBacks (0)

Chi Mei completes China's largest ABS facility

Taiwanese resin maker Chi Mei Corp. has finished the construction and equipment installation of its 100,000-metric-ton ABS production facility in Zhenjiang, Jiangsu province. The project started in August 2007 with a total investment of US$40 million.

According to the Economic and Trade Commission of Jiangsu, Chi Mei was hit hard in the global financial crisis and held off on the launch of the new project. Thanks to China's appliance purchase rebate program, the company has seen strong growth in demand for January. Production has since started.

Chi Mei acquired Grand Pacific Petrochemical Corp.'s 250,000-metric-ton ABS plant in Zhenjiang in early 2008.

Posted by Nina Ying Sun on February 18, 2009 9:54 PM | Permalink | Comments (0) | TrackBacks (0)

GDPE raises commodity-based financing

China's Guangdong Plastics Exchange (GDPE) announced Monday that it has sealed a cooperation agreement with Shanghai-based SPD Bank that will provide its trading companies with up to 1 billion yuan (US$146 million) in physical commodity-based financing.

In an interview with Guangzhou Daily, GDPE Vice President Liang Hongbing said the move is intended to alleviate cash flow pressure among trading companies. Small and midsize plastics firms in China have been facing a shortage of cash flow since last year, he said. Combing Chinese and foreign markets, there are nearly 10,000 different grades of plastic resins. Under the pressure of soft export demand and limited capital, a good number of plastic resin makers, processors and trading companies are faced with operational difficulties.

GDPE will continue to provide financing for its members. The amount of physical commodity-based financing credit is expected to reach 10 billion yuan (US$1.5 billion) in the next three years and benefit thousands of small and midsize enterprises, Liang said.

Posted by Nina Ying Sun on February 24, 2009 11:52 AM | Permalink | Comments (0) | TrackBacks (0)

Dalian plans to add PVC futures

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.

Posted by Nina Ying Sun on March 2, 2009 5:45 PM | Permalink | Comments (0) | TrackBacks (0)

Bayer Polymers' China partner to opt out

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.

Posted by Nina Ying Sun on March 9, 2009 11:56 AM | Permalink | Comments (0) | TrackBacks (0)

Kingfa opens 1st UL-approved LTTA lab

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.

Posted by Nina Ying Sun on March 19, 2009 9:41 AM | Permalink | Comments (0) | TrackBacks (0)

China raises export subsidies for plastics, again

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.

Posted by Nina Ying Sun on March 31, 2009 3:03 PM | Permalink | Comments (7) | TrackBacks (0)

Investigators probe Kingfa executives

The China Securities Regulatory Commission on April 2 notified Kingfa Sci & Tech Co. Ltd., the nation's largest plastic compounder, that three current and former company executives are under investigation for questionable stock purchases. Guangzhou-based Kingfa disclosed the news in an announcement.

The three executives include board members Xia Shiyong and Li Jianjun, as well as a former senior manager, Huang Xianbo, who was a deputy director of the corporate technical center.

Kingfa launched its stock options program in 2006. By June 30, 2007, Xia owned 31.58 million shares of Kingfa stock, Li 8.74 million shares, and Huang 3.28 million shares. Huang left the company in September 2007.

Public records show that nearly a dozen of Kingfa executives have been selling stock since December 2008. Li, alone, sold 2.3 million shares in late December.

Chinese media quoted anonymous sources as saying illegal stock selling by executives is not uncommon in China. The usual consequence of such case is the companies seize the earnings from the executives. That Kingfa's executives are being investigated by the CSRC perhaps indicates the severity of the case, a few media reports said.

Posted by Nina Ying Sun on April 3, 2009 10:03 PM | Permalink | Comments (0) | TrackBacks (0)

Kingfa posts profit slump

Following a Jan. 23 report forecasting a 30-70 percent yearly profit decline, Chinese compounder Kingfa Sci & Tech Co. Ltd. confirmed in its April 7 annual report that its 2008 net profit dipped 42.7 percent. Operating profit contracted further, marking a 67.4 percent decline from the previous fiscal year.

Kingfa listed a number of contributing factors to its thinning margins:

• During the first three quarters of 2008, plastics processors encountered difficulties in maintaining profitability and healthy cash flow, thanks to Beijing's macroeconomic and currency polices. Consequently, Kingfa's ability to raise prices and collect payments was impaired.

• Due to major resin price hikes in the first half of 2008 and sharp falls in the fourth quarter, the company suffered inventory depreciation loss as well as market reluctance to buy. Kingfa's overall product gross margin was 13.6 percent, just a half percentage point lower than the previous year.

• Kingfa's majority-owned real estate business unit took a 126.5 million yuan ($18.5 million) depreciation loss, as the Chinese housing market cools down.

• Wholly-owned subsidiary Mianyang Changxin New Material Development Co. Ltd. and its subsidiary were affected by the Sichuan earthquake. In addition to damage to factory buildings and machines, the companies' customers in the earthquake region either delayed payment or suspended materials purchasing.

• The snow storms in southern China during the beginning of the year led to transportation cost hikes. High oil prices and new customers located far away from shipping points also increased sales expenditures.

• Interest payments increased due to growing bank loans and rising interest rates in the first three quarters.

• Changes in accounting and tax policies.

Despite the profit decline, Kingfa's annual report stressed its goal of securing more than 10 percent of the domestic market by 2010.

Thanks to strong demand from the appliances and automotive end markets, Kingfa's capacity utilization rate exceeded 80 percent in March, according to analysts at Guotai Junan Securities Co. Ltd.

However, it is hard to tell if the growth in 2009's first quarter represented a real recovery or temporary uptick caused by inventory replenishment. "April and May will be critical times to show the real demand from downstream," a Guotai Junan's report said.

Posted by Nina Ying Sun on April 10, 2009 5:47 PM | Permalink | Comments (0) | TrackBacks (0)

China's large PLA project buys Japanese equipment

Medical equipment and supplies manufacturer Henan Piaoan Group Co. Ltd. has sealed an agreement to purchase patented polylactic acid production technology, engineering and equipment from Japan's Hitachi Plant Technologies Ltd.

The project in Changyuan, Henan province, is expected to go on stream in March 2011, with an initial annual capacity of 10,000 metric tons (22 million pounds), according to a press release issued by Hitachi. Piaoan plans to expand the capacity to 150,000 metric tons (331 million pounds) "in the future," with a total investment of 1.83 billion yuan (US$267 million).

Piaoan plans to make medical supplies out of PLA biopolymer and become the first "high-quality, industrialized PLA production base in China," the release said.

Hitachi Plant Technologies developed PLA manufacturing technology in 2004. The company claims its patented technology produces pure, colorless and easy-to-process PLA materials.

Privately-owned Piaoan reported 1.2 billion yuan (US$176 million) in 2007 annual sales. The company didn't comment on the new project. Its corporate Web site, however, said the company invested 300 million yuan (US$44 million) to build 10,000 metric tons of PLA capacity with equipment imported from Switzerland.

Posted by Nina Ying Sun on April 13, 2009 2:13 PM | Permalink | Comments (0) | TrackBacks (0)

Dalian PVC futures approved

The China Securities Regulatory Commission has approved the Dalian Commodities Exchange to begin trading PVC futures. In the April 15 announcement, the agency said it will soon approve DCE's PVC futures contract.

Being the world's largest producer and consumer of PVC resin, China is in urgent need of futures trading to balance the dramatic pricing fluctuations and reduce market risk, CSRC said. The agency said it values DCE's experience of trading linear low density polyethylene futures since July 2007.

DCE said it has established a trading, transaction, and delivery system, and selected recommended delivery manufacturers and grades. The exchange published for public review the PVC futures draft contract, which specifies trading content as class-1 and premium PVC resin of the SG5 grade.

The Chinese standards categorize PVC resin into 10 grades, from SG0 to SG9. Among them, SG5, which is PVC powder produced through suspension polymerization, makes up more than 70 percent of the PVC consumption in China.

Posted by Nina Ying Sun on April 15, 2009 6:18 PM | Permalink | Comments (0) | TrackBacks (0)

China's stimulus plan shows benefits

Thanks to globalization, one nation's fiscal spending to stimulate economic growth is bound to "leak out" to the entire global supply chain. For example, China's move to subsidize big-ticket item purchases - such as appliances, cars and electronics - in rural areas is bolstering sales for Japanese and Taiwanese suppliers, among others.

Chinese financial media CBN cited a report from Nihon Keizai Shimbun saying that Japanese material suppliers, including Mitsubishi Chemical Corp., have raised their ethylene capacity utilization rates to 75-90 percent. The report attributed the change to China's growing demand as well as the ending of the industry's inventory adjustment.

Taiwan Union Plastic Machinery Co. Ltd. also reported 10-15 percent sales growth in the first quarter, when the company said it sold more than a dozen large injection molding machines (with clamping forces of more than 1,600 metric tons). The company's 2008 sales contracted 5-10 percent, according to a news story from Xinhua News Agency. "We didn't expect to see the effects [of the stimulus package] so soon," a company official said, "We believe the growth rate will reach 20 percent for 2009 fiscal year."

Posted by Nina Ying Sun on April 16, 2009 11:45 AM | Permalink | Comments (2) | TrackBacks (0)

China's overcapacity grows despite global recession

An industry leader in Beijing recently cautioned that the recession failed to curb overheated investment in China's petrochemical industry in the first half of 2009. New structural problems emerged.

In an interview with China Securities News, China Petro & Chemical Industry Association's deputy secretary in general, Feng Shiliang, made a couple interesting points:

First, investment in the chemical industry (including polymers) leaped 30 percent in the first half compared to a year ago. Second, capacity utilization remains low. By the end of June, the capacity utilization rate is 82 percent for ethylene crackers and 51 percent for PVC facilities.

I can quickly name some resin projects under construction or planning.

In Shanxi province, privately owned coal mining company Xiang Coal Group is finalizing its 200,000-metric-ton (441-million-pound) PVC joint venture project with a scheduled start-up in October. With partner Henan Hengtong Chemicals Co. Ltd., Xiang Coal decided to invest 2.5 billion yuan (US$ 366 million) to build 600,000 metric tons (1.3 billion pounds) of coal-based PVC capacity back in 2007.

Coal-based PVC production model has been losing advantages, as China's industrial-use electricity prices surged and crude oil prices fell. But the projects keep moving forward.
Another example is publicly traded Xinjiang Zhongtai Chemical Co. Ltd., which today announced plans to build 1.6 million metric tons (3.5 billion pounds) of coal-based PVC capacity in the next five years.
Both projects are located in the central and western parts of China, which led China's GDP growth in the first half, compared to the more developed east coast.

Posted by Nina Ying Sun on August 13, 2009 5:42 PM | Permalink | Comments (1) | TrackBacks (0)

Sinopec claims to be largest SBC producer

Beijing-based China Petroleum & Chemical Corp. (Sinopec) has overtaken Houston-based Kraton Polymers LLC as the world's largest producer of styrenic block copolymer (SBC), according to Chinese state media.

Sinopec's SBC annual capacity reached 410,000 metric tons by mid-August, exceeding Kraton's capacity of 405,000 metric tons. The news also said Sinopec's market share in China's SBC market reached 61 percent in the first seven months.

Sinopec's SBC capacity consists of 220,000 metric tons at its Baling branch in Yuyang, Hunan province, 100,000 metric tons at its Beijing Yanshan branch, and 90,000 metric tons at its Maoming branch in Maoming, Guangdong province.

China has about 10 SBC manufacturers with combined annual capacity of 710,000 metric tons, the reports say.

Posted by Nina Ying Sun on September 9, 2009 1:52 PM | Permalink | Comments (0) | TrackBacks (0)

A new player in China's ethylene industry

What do the top three Chinese ethylene producers - China Petroleum & Chemical Corp. (Sinopec), China National Petroleum Corp. (CNPC) and China National Offshore Oil Corp. (CNOOC) - have in common? Two things: state ownership/control and integrated business of oil drilling, refining and petrochemical production. Now, they are going to be joined by a new player with similar background: China North Industries Group Corp. (CNGG).

CNGG's subsidiary Liaoning Huajin Tongda Chemicals Co. Ltd. (Liaotong) is going to test its new 450,000-metric-ton ethylene project at the end of this month, which, depending on the test results, will be followed by an official launch.

While the project is smaller than the big three's facilities (up to 1-million-metric-ton each), it signifies CNGG's entry into the ethylene market and the completion of the oil drilling, refinery and resin production line. CNGG's subsidiary Zhenhua Oil Co. Ltd. will supply crude oil through a 140-kilometer pipe from the Yingkou port to Liaotong's base.

China's domestic ethylene industry touts a total production capacity of 10 million metric tons by 2008, 64 percent of which belongs to market leader Sinopec. CNPC claims another third of the total capacity, and CNOOC is ranked the third with its joint venture with Shell Petrochemical Co.

Unlike the big three, CNGG's main business is supplying to the Chinese military, but the company is gradually transitioning to high-tech civilian machinery and chemical products. With 99 subsidiary companies, it's also the fourth largest Chinese firm that's permitted to own overseas oil operations.

Publicly traded Liaotong expects the ethylene project to turn in up to 7.7 billion yuan (US$1.1 billion) of annual sales and 975 million yuan (US$143 million) of after-tax profit.
China still relies on export for more than 40 percent of its ethylene consumption.

Posted by Nina Ying Sun on September 21, 2009 3:51 PM | Permalink | Comments (0) | TrackBacks (0)

Kumho adds ABS compounding plant

Korea Kumho Petrochemical Co. Ltd. plans to build an ABS compounding plant in Foshan, Guangdong province. The Foshan factory, slated for completion by 2010, will be Kumho's seventh plant in China and serve the automotive and electronics industries.

Media reports say the plant's initial capacity will be 10,000 tons of ABS compounds in 2010, with plans to reach 50,000 tons by 2015 and 100,000 tons by 2018.

Posted by Nina Ying Sun on October 6, 2009 1:39 PM | Permalink | Comments (0) | TrackBacks (0)

Coal-based PVC project back in full production

The tough economic times are over for Inner Mongolia Elion Chemical Industry Co. Ltd. The company said its coal-based PVC project - the world's largest of its kind - has been running full scale production for five months and will achieve annual output of 300,000 tons of PVC.

Elion had to halt production due to the global downturn last year, according to media reports. With help from the local government, the company managed to resume production in February and gradually raise capacity utilization. The company said it broke even in May and became profitable in June.

Elion is a joint venture between Elion Resources Group Co., Shanghai Huayi Group and Shenhua Shendong Power Co. Ltd.

Posted by Nina Ying Sun on October 6, 2009 1:40 PM | Permalink | Comments (0) | TrackBacks (0)

Sichuan embraces more profile capacity

After last year's 7.9-magnitude earthquake in Sichuan province, building materials manufacturers have found the Southwest Chinese market promising and started to establish a foothold there. Wuhu, Anhui province-based Conch Profile & Science Co. Ltd. is following the trend and making a move.

The publicly traded company recently announced that it will jointly invest 500 million yuan with its subsidiary Yingde Conch Profiles Co. Ltd. on the 80,000-ton Chengdu production base. Conch will hold 90 percent of the new plant's stake.

The company expects to finish the 40,000-ton first phase and start production by the end of 2010. The investment capital includes Conch's own fund as well as bank loans.

In the announcement, Conch said the new plant will take advantage of the ample PVC resin resources in that region and help increase market share. The company recognizes the growing local competition, but asserts confidence in the new operation.

Posted by Nina Ying Sun on October 6, 2009 1:41 PM | Permalink | Comments (0) | TrackBacks (0)

Chinese resin maker launches WAP site

How many American companies in the plastics industry have WAP (Wireless Application Protocol) applications that enable easy access to company information from a mobile phone or PDA? A small Chinese company, Anhui Xinli Composites Co. Ltd., has included WAP service as part of its marketing campaign.

Xinli doesn't have its own WAP site per se. Instead, it joined a resin industry WAP site "Anhui Resin Web" that's hosted on China's 12114.org, a mobile messaging domain name directory service platform owned by the Ministry of Industry and Information Technology. Any cell phone user can access "Anhui Resin Web" simply by sending a text message.

Four-year-old Xinli claims annual capacity of 40,000 metric tons of unsaturated polyester resin and 50 million yuan (US$7.3 million) in fixed assets.

Posted by Nina Ying Sun on October 15, 2009 3:37 PM | Permalink | Comments (0) | TrackBacks (0)