While Beijing's strong stimulus policies bolster demand for materials used in the automotive, appliance and electronic sectors, the global downtown also is creating opportunities for local suppliers in China and changing the market dynamics.
That's according to leading compounder Kingfa Science & Technology Co. Ltd., a Guangzhou-based firm that says it is preparing for a market comeback.
At the recent Chinaplas trade fair in Guangzhou, Kingfa's president of global sales and marketing, Robert Lu, said the publicly traded firm is showing healthy first-quarter growth. On a month-to-month basis, sales increased by 10 percent in January and 15 percent in February, he noted.
Chairman Yuan Zhimin had told investors at an April 28 annual meeting that, after a bleak fourth quarter, orders received in the first quarter rebounded to about the same level as a year ago.
Having a wide range of products from engineering resin compounds to polylactic acid compounds helps with the overall stability, Lu said. But the automotive market is leading the uptick, with a 30 percent jump in the first quarter, and it may expand faster during the rest of the year, Lu said.
This year, we expect to supply more than 10,000 metric tons [22 million pounds] of materials to just the Japanese auto brands, Yuan told shareholders.
Multinational manufacturers are trying to maintain reasonable cash flow by cutting back prices, which has prompted a new outreach to Chinese local suppliers for lower-cost materials.
Fortune 500 companies, for instance, have come to value local suppliers more than they ever did, as they try to manage cost and explore the Chinese domestic market in the same time. The global crisis has changed the competition balance, Lu said.
The firm may invest in more new materials this year, Lu said, including carbon-fiber-reinforced resin and degradable plastics. Its PLA products are still in the early stage of commercialization, mainly focused on exports.