Ban strains China plastic bag makers’ finances

11 June 2008 08:19  [Source: ICIS news]

SHANGHAI (ICIS news)--China’s plastic bag ban has forced producers in Fuzhou city in the eastern Fujian province to cut production drastically, pushing many small producers into bankruptcy, said a source from the local plastic sector on Wednesday.

"We can’t switch to produce nonwoven bags with the credit crunch we are facing," said a manager of one small enterprise.

Producers would have to invest more than yuan (CNY)100,000 ($14,451) on new equipment if they wanted to switch to producing substitutes like nonwoven bags, he added.

 "With the thinner bags we were producing, our cost was CNY9,000/tonne and we had 2% margin. Now the cost goes up to CNY10,000/tonne if we produce thicker bags," said a plastic producer in Fuzhou.

Even bigger enterprises that were capable of switching to nonwoven bags were grappling with rising feedstock costs, which could eat into their profits, they said.

"Nonwovens are facing an increasing feedstock pressure as all upstream material prices continue to increase, such as polypropylene (PP) that accounts for 63% of feedstock," they added.

China had banned the production and sale of plastic bags thinner than 0.025mm from 1 June to prevent pollution and encourage recycling.

($1 = CNY6.92)

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By: Dolly Wu
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