European debt crisis forced resin suppliers to slow export growth of engineering plastics

After experiencing the darkness of 2009, engineering plastics all rebounded in different degrees in 2010. Therefore, for the majority of plastic manufacturers in the first half of 2010, it is bound to be a year in which output and demand continued to grow. Despite the frequent callbacks, it has basically bid farewell to the plunge in the second half of last year and the bottom is gradually rising. This trend of higher volatility also reflects, to some extent, the warming of the economy and the recovery of confidence in the entire commodity market. While manufacturers of industrial plastics and consumer plastic packaging products are working overtime, the suppliers of consumer electronics and engineering resins are not so good in the second half of the year.

Taking two film and packaging companies in Malaysia as an example, Malaysian TGP (a film manufacturer with 30 years of production experience) and SLP ResourcesBerhad (mainly producing packaging materials) expect Japan, ASEAN, and Asia Pacific to become the main drivers of their strong growth.

The suppliers of engineering plastic resins, such as Cepco Mold Co., Ltd. and Prestige Dynamics, a high-precision mold specialist, caused sales to decline in the second half of the year as a result of the European debt crisis.

Datuk Ang Poon Chuan, General Manager of TGP, expects the production of stretch film, garbage bags and industrial bags to be 10% higher than last year. Last year, its sales reached RMB 81.8 million. The company's films are mainly used for industrial product packaging.

DatukAngPoonChua said: "As the increase in industrial output in Australia, Japan, ASEAN, the Middle East, India and East Asia caused our order volume in the second half of the year to continue to grow. At present, we are mainly concerned about whether the European debt crisis will affect the consumer confidence of Japanese customers because Japan At present, it accounts for 30% of our group's sales, and our current work is to develop a new stretch film product and hope to put it on the market as soon as possible.We will rely on this technology and equipment to expand production capacity to maintain market competitiveness Although this technology will cost us $250,000 per production line, this new technology not only increases the production speed of stretched film but also optimizes the effective saving of raw materials, so we think it is worth it."

At the same time Ang also said: "As the emerging petrochemical plants in the Middle East, China and South Asia continue to emerge, so the resin prices will gradually decline."

Compared to the $1,500/tonne in the first quarter, the price of polyethylene resin has now dropped to around $1200/tonne.

The company’s sales for the first quarter were approximately RMB1.3 million, which was nearly three times that of last year’s RMB46 million.

Kelvin Khaw, marketing director of packaging company SLP based in Kulim, Kadah State, Malaysia, said: “Compared to 2009, our group's plastic packaging material sales volume is expected to reach 30,000 tons this year, compared with 23,800 tons last year. It mainly includes clothing. Bags, garbage bags, etc. 46% of the company is exported to foreign countries, while the rest is sold to the domestic market, and the Japanese and Asian markets are its major markets.

From January to May 2010, our total output has reached 12,000 tons, which is an increase of 2,300 tons from 9,700 tons in the same period last year. Our exports to Japan in the first quarter were 1,508 tons, compared with 1,219 tons last year. Although the European debt crisis affected our European market, we also reached a level of 300 tons compared with 290 tons last year. ”

At the same time, Jansen Lim, a director of the Cepco Group, said: "According to feedback from its multinational MNCs (which is mainly engaged in the sales of electronics and automotive products), the growth rate in the second half of the decade significantly slowed."

Cepco is a supplier of engineering plastic resins. Its multinational corporations, MNCs, account for about 80% of the Group's revenue, while the rest of its revenue comes mainly from its plastic sheet production division.

"We expect this year's sales to exceed RMB 8 million, which is almost the same as last year. As for its plastic sheet division, it is expected to stay above 270 tons per month, which will increase production by about 10% in the second half of the year compared to the same period last year."

Lim said that the amount of plastic sheets exported to Asia and ASEAN is much better than Europe.

Reduced demand has caused the resin price to fall from $2,050/tonne six weeks ago to $1,940/tonne. Cepco is a small and medium-sized engineering resin company that produces thermoplastic sheets.

At the same time, an engineering plastic resin trader said that in the second half of the year, engineering plastics suppliers may face a 15% to 20% drop in sales compared to the first half.

WillyTa, general manager of PrestigeDynamics, said that at the beginning of the year, a 20% drop in the euro has slowed the sales of plastic parts for consumer electronics.

“We want to expand our business, but we have to be relatively cautious. So we need to determine the status of the European market before expansion.”