China's plastics industry is expected to keep growing in 2006 with improved raw material supplies and a continuously bullish national economy.
The country's 11,412 large and midsize plastic processors - out of the 60,000-plus total - collectively registered 430.6 billion yuan ($53.4 billion) in sales and 17.6 billion yuan ($2.18 billion) in profits during the first 11 months of 2005, according to statistics from Beijing-based All China Marketing Research Co. Ltd., under the National Bureau of Statistics. The entire industry has produced 43.4 billion pounds of plastic products during the same period, up 12.2 percent from a year ago.
As the world's second-largest plastics processor, China's capabilities exceeded 44 billion pounds in 2004. In the same year, gross exports came to a historical high of 23.8 billion pounds, up 22.8 percent from the previous year.
Meanwhile, China's consumption of resins has risen from 50.8 billion pounds in 2000 to 83.8 billion pounds in 2004, for an average annual growth rate of 13.5 percent. Beijing-based China Association of Plastic Processing Industry President Liao Zhengpin recently estimated the figure to top 88 billion pounds by the end of 2005.
Liao said the industry has been growing at double-digit rates annually since 1996.
The past two years have witnessed accelerated growth of more than 20 percent. In 2004, for instance, the industry's production value increased 25 percent and reached 380.3 billion yuan ($45.9 billion).
After successfully coping with resin price hikes, China's plastics industry ``will continue growing rapidly, with the continuous growth of the national macroeconomy,'' Liao said Dec. 7 in Shanghai, according to the official Xinhua News Agency.
China's gross domestic product for the first three quarters of 2005, according to the National Bureau of Statistics, was 10.6 trillion yuan ($1.31 trillion), up 9.4 percent from the year-before period.
China's economy, still the fastest growing in the world, is predicted by both Chinese and Western economists to slow its pace in 2006.
New York investment banking firm Morgan Stanley & Co. Inc.'s chief economist Stephen Roach puts it at 6.7 percent, while the Chinese version is milder. China's State Information Center, the Development Research Center of State Council and the Chinese Academy of Social Sciences, among others, estimated the 2006 economy to grow between 8.7 and 9.2 percent.
When it comes to raw materials, tariffs on imported resins will be further lowered, from 10.3 to 9.1 percent for low and high density polyethylene and from 9.7 to 8.6 percent for polypropylene, PVC, polystyrene and ABS. Many anticipate declines of crude oil prices. A stronger yuan is also likely to help reduce the material costs of processors.
In addition, domestic resin production capabilities keep expanding with new petrochemical projects going on stream, such as the 1.76 billion-pound ethylene project between Royal Dutch Shell plc and China National Offshore Oil Corp. in Huizhou, Guangdong.