Leading Chinese PVC pipe and profile extruder Dalian Shide Plastic Industry Co. Ltd., which launched a massive expansion project three years ago, has agreed to huge new deals with several European machinery suppliers, including the purchase of several hundred extrusion lines.
Dalian Shide, based in industrial Dalian in the country's northeast, already processes more than 1 billion pounds of PVC annually.
Its latest expansion, aimed chiefly at meeting soaring demand in China for more energy-efficient plastic windows, involves building and equipping a string of 11 new plants across China, which will add capacity of more than 1.6 billion pounds, according to suppliers.
Privately owned Dalian Shide signed supply contracts with extruder manufacturers Cincinnati Extrusion Technology Austria GmbH and Krauss-Maffei Kunststofftechnik GmbH at a two-day ceremony in Linz, Austria, in early May.
Other suppliers involved include tooling provider Greiner Extrusiontechnik of Wartberg, Germany, and Reimelt GmbH of R"dermark, Germany, which is due to raw material supply systems.
For each of the suppliers, the Dalian Shide orders represent the biggest contracts they have ever had to satisfy.
Dalian Shide has a history of making big purchasing announcements - and of following through on the deals. At NPE 2000 in Chicago, a consortium of suppliers including Cincinnati Extrusion, Greiner and Reimelt formed to give the rapidly expanding Chinese processor technical support. At the time, they signed a $59 million deal for 120 extruders and related equipment to manufacture vinyl window profiles.
Also at NPE 2000, Dalian Shide's colorful young owner, Xu Ming, revealed plans to build at least six $25 million PVC pipe plants across China by 2005, each capable of processing 175 million pounds of PVC.
The latest deal is even bigger. For Linz-based Krauss-Maffei, for example, the order includes 60 twin-screw machines for making profiles and 60 single-screw extruders for making pipe, plus a preliminary agreement for another 66 twin-screw machines, said Krauss-Maffei marketing manager Guido Radig.
The first 30 twin-screws and 30 single-screws will be delivered within five months, and the second set within a year. The machines will go to six locations, Radig said.
``This is a good reference to deliver in China,'' Radig added. Krauss-Maffei already has delivered 60 extrusion machines to the group - 20 in 2000 and 40 last year, he said.
Vienna, Austria-based Cincinnati Extrusion, part of SMS Plastics Technology, so far has sold Dalian Shide 160 extruders, 60 of them supplied last year, according to marketing director Hans Berlisg. He was unwilling to discuss the size and details of the latest deal until his company receives a down payment.
Berlisg said profile quality in China has not been high, since a large number of processors operate machinery copied from the West. Bigger producers like Dalian Shide now are importing original Western equipment. He sees an opportunity for substantial consolidation in the market.
In what is the largest order in its 120-year history, Reimelt will supply raw-material storage and weighing systems for window profile production in 11 plants. The contract is worth 30 million euros ($28 million), according to the firm.
The equipment for six plants will be shipped this year, with the remainder in the next three years, said Reimelt.
Dalian Shide plans two more profile extrusion plants in Dalian, four on a site in Shanghai, one plant in Chengdu and four more in Zhuhai, according to Reimelt Managing Director Ralf Geschka.
In a rare press interview given in September 2002, Ming said Dalian Shide was looking for overseas acquisitions. At the time, he said the company wanted to buy two large profile plants in the United States and one in Germany, plus a tooling factory in Austria.
Ming also is chairman and owner of Dalian Shide Football Club Co., one of China's top-ranked soccer teams.