Email Us

China's Plastics Industry Struggles, But Some See Signs Of Turnaround

HONG KONG — China's plastics industry continues to face difficulties, judging by financial reports this week from some of the larger companies, amid signs of modest improvement in the overall manufacturing environment.


Illustrating the challenges, Cosmos Machinery Enterprises Ltd., saw sales in its plastics machinery unit drop 23 percent in 2012, to HK$843.9 million (US$108.7 million), while its plastics processing division reported a 29 percent drop in sales, to HK$322.3 million ($41.5 million), as the company said various headwinds hurt operations and cut profits.


"Most Chinese manufacturers have been running below capacity," Cosmos said in a March 27 filing to the Hong Kong Stock Exchange. "Customers from various industries had to suspend their development of new products or defer their investment plans, which significantly and negatively impacted the Group's overall businesses."


It was not entirely bad news. Eva Precision Industrial Holdings Ltd., a maker of plastic and metal components and molds in the office equipment and automotive industries, said sales rose to a record HK$2.36 billion (US$304 million), although profit tumbled 66 percent on higher costs and as its customers switched to lower-margin products.


Still, the company said its precise molding business saw a sharp pickup in the second half of 2012, which it took to be a leading indicator that customers are launching new projects and expect growth in the near future.


Mold making sales rose 16 percent for the year, even after dropping 22 percent in the first half of 2012, it said.


"The robust resurgence of mould development in the second half of 2012 is an evident reflection of [a] revival of confidence in economic outlook among our customers," the company said in a late March report to the Hong Kong exchange.


One of China's more prominent indices of economic activity, the HSBC China Flash Manufacturing Purchasing Managers Index, reported moderately better results for March, with manufacturing activity at 51.7, up from February's 50.4 reading. A reading above 50 indicates expansion.


"This implies that the Chinese economy is still on track for gradual growth recovery," said Qu Hongbin, chief economist, China, for HSBC, in a March 21 statement. "Inflation remains well behaved, leaving room for Beijing to keep policy relatively accommodative in a bid to sustain growth recovery."


Companies with ties to China's "new materials" industries or environmental cleanup fared well.


Polyphenyline sulfide maker China Lumena New Materials Corp. said its plastics business increased 16 percent to $2.93 billion Chinese yuan ($471 million), as demand remained strong for PPS in "green" projects like filters to reduce emissions from power plants.


It said China's National Development and Reform Commission recognized PPS as a key emerging material in an early March report.


But others in China's more traditional manufacturing sectors reported trouble.


Injection molder VS International Group Ltd. said weak global demand among its consumer electronics customers and rising manufacturing costs in China pushed revenues down 20 percent in the half-year ending Jan. 31, to HK$683.2 million (US$88 million).


"The operations environment of the Group will continue to be challenging," it told the Hong Kong Stock Exchange. "The [electronic manufacturing services] industry is extremely competitive and pricing pressure from customers and rising manufacturing cost has put a squeeze on its profit margin."


Hong Kong-based Cosmos offered perhaps the most broad-based look at the industry's position in its financial report.


It said its mainland Chinese plastics processing factories, for example, posted a loss of HK$20.2 million (US$2.6 million), including charges for closing a plastic products factory in Wuxi and relocating other processing operations.


The company also said the Chinese government's program of subsidizing rural home appliance purchases, which started several years ago to boost domestic consumption, actually hurt business at its molding plant in Hefei, Anhui province, in the first part of the year.


"The subsidy policy for home appliances products in rural areas… turned out to be negative to the business as the market prematurely exhausted its purchasing power," Cosmos said. Still, it said the Hefei plant climbed back to break-even by the end of the year.


The company said it will continue to focus on developing new products, such as upgraded versions of energy-saving molding machines, provide precision mold services, and it said it believed it would return to profitability this year.


"It is anticipated that 2013 should be the year to turnaround and bring profits for the group," it said.


Hot Precision Plastic Injection Molding Products
Precision Plastic Injection Molding News
  • Benefits of Using Wire Cutting Parts in ManufacturingBenefits of Using Wire Cutting Parts in ManufacturingMarch 25, 2024Wire EDM has become an indispensable process in modern manufacturing. By using fine wires or laser beams, for example, as cutting tools, wire EDM is able to precisely cut materials into the desired sh...view
  • Singapore Molds AdvantagesSingapore Molds AdvantagesSeptember 16, 2022Singapore is a small country with a population of only 3 million, during the 80-90 's, Government attaches importance to and supports the development of precision molds, introduced a number of pol...view
  • Factors to Consider When Purchasing Mould Spare PartsFactors to Consider When Purchasing Mould Spare PartsMarch 25, 2024In the manufacturing industry, moulds are key production tools and mould components are integral to their efficient operation.When sourcing mould components, several factors must be carefully consider...view
  • The Way Of Mold Surface TreatmentThe Way Of Mold Surface TreatmentSeptember 16, 2022Die at work in addition to require sufficiently high strength and toughness, and its surface properties are essential to performance and service life of the mould. These surface properties: abrasion r...view
  • Mold Monitor Application In Injection MoldingMold Monitor Application In Injection MoldingSeptember 16, 2022In the Production, due to thimble, and sliding block no in place or products no full release and led to of pressure die situation award-winning ban more than, let engaged in scene of technicians heada...view
  • Injection Molding In The Spotlight At PlastimagenInjection Molding In The Spotlight At PlastimagenAugust 1, 2022Latin America's largest plastics show, Plastimagen, wrapped up on March 15 from Mexico City, with injection molding strongly represented, including a particular emphasis on thin-wall packaging sys...view