FocusChina ban threatens bag makers’ future

21 January 2008 08:50  [Source: ICIS news]

By Longston Li

 

SHANGHAI (ICIS news)--China’s ban on shops selling plastic bags and on the production of ultra-thin carriers will have a big impact on producers and polyethylene demand when it comes into force on 1 June, with consumption estimated to drop by two-thirds, market sources said on Monday.

 

“The policy says we will not be allowed to produce and sell plastic bags thinner than 0.025mm, which would have a great impact on our business,” an official from a big PE shopping bag maker said.

 

“Almost all plastic bags in the supermarkets were between 0.015-0.020mm and 90% of our business is estimated to be affected by the policy,” he added.

 

A big drop in demand would intensify the already strong competition in the shopping bag sector and many small factories were likely to go bankrupt.

 

“Our long-term orders are gradually decreasing after the announcement. A more obvious impact on all sorts of orders is expected in March and April,” a salesman of the producer said in Mandarin.

 

“Plastic bag consumption will decrease by two-thirds after the new rule takes effect and the recycling rate of one-off plastic bags will rise evidently,” Dong Jinshi, vice president of the waste plastics recycling committee of the China Plastics Processing Industry Association said.

 

A second middle-scale PE plastic shopping bag producer agreed there would be a reduction in consumption by up to two-thirds.

 

In fact the producer was heard to be negotiating with its downstream users to offer thicker or degradable bags once the ban comes into effect.

 

“Our orders are still stable now but will be decreasing... because shops make their orders three to five months in advance,” a source from the producer said in Mandarin.

 

PE is the main material in shopping bags and Chinese shopping bag makers consume about 1.2m tonnes of PE a year.

 

The demand for domestic PE from the shopping bag sector might fall by up to half, or 600,000 tonnes/year, which was 5% of the country’s total consumption, a supplier said.

By: Longston Li
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