While the global recession has dented China's masterbatch industry, the sector continues to grow at around 8 percent a year in volume as more buyers seek quality plastic colorants and additives, according to a new report.
That growth rate is down from double-digit increases seen previously, but the rising demand for quality in China's local market is expected to push growth and make that masterbatch market one of the fastest growing in the world, according to Bristol, U.K.-based consulting firm Applied Market Information Ltd.
The Feb. 3 report from AMI said there are about 500 masterbatch makers in China, including foreign firms, but the largest 50 firms accounted for about 50 percent of industry production in 2008, making the sector much more concentrated than plastics processing.
Difficulties with logistics and differences in local regulations mean production plants tend to serve local markets, and a single homogeneous market for the products has yet to develop in China.
The report, titled Corporate Performance and Ownership among Masterbatch Producers in China, also said many Chinese firms continue to use the much cheaper method of directly mixing dry blends and pigments, rather than relying on masterbatch technology, especially in products for the local market.
The switch to masterbatch is often hard to achieve in the face of the cost-effectiveness and simplicity of these traditional coloring practices, AMI said. Increasingly, though, as standards, quality and color-matching requirements improve, so companies are expected to make greater use of masterbatch.
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