FocusAsian EPS makers cut output on shrinking demand

09 July 2009 07:10  [Source: ICIS news]

By Clive Ong

SINGAPORE (ICIS news)--Expandable polystyrene (EPS) makers in Taiwan and China have slashed operating rates due to shrinking demand from the recession-hit US and Europe and bleak prospects for next month, industry sources said on Thursday.

Manufacturing and re-export activities in Hong Kong and southern China had taken a hit this year as orders for finished goods from Europe and the US had fallen amid the economic downturn.

“Orders from the US and Europe have shrunk and were distributed mostly to larger factories. Smaller outfits basically had limited orders,” a trader in Hong Kong said.

Consequently, demand for EPS resins, which is made into styro-foam for packaging, was weaker than previous years.

Several EPS sellers believed the weak demand could last into August, given that there was no significant pick up in orders among the factories.

“Typically, most orders would have arrived by now, so based on the current limited amount of orders, demand for EPS would likely remain lacklustre in the third quarter," said a Taiwanese producer.

Major EPS plants in China have cut operating rates to around 50-60% as producers tried to keep inventories at a manageable level.

Major producer the Loyal Group, which has a total ouotput of more than 800,000 tonnes/year in Asia, had been alternating production at its four facilities in China, namely Ningbo, Jiangyin, Tianjin in eastern China and Dongguan in southern China, market sources said.

Chinese major Wuxi Xingda Foam Plastics has also been operating below 60%, according to market sources. Its plants in Wuxi, Jiangsu and Changzhou have a total output of more than 600,000 tonnes/year.

Its new plant in Huizhou, with an initial capacity of 180,000 tonnes/year has been completed and is scheduled to start up in the third quarter.

Taiwanese plants were also operating at below optimum. The Ming Dih Group and Taita Chemicals kept their Taiwanese plants at around 70%, as weak Chinese and export demand had resulted in poor sales.

Demand for expandable polystyrene (EPS) resins in Asia has remained weak despite July being the start of the traditional manufacturing and exports season in China, producers said.

The Chinese construction sector, which uses block flame retardant EPS, was also lacklustre. Consumption had fallen short of previous years levels despite the central government’s efforts to stimulate the local economy.

“Buying momentum is weaker than previous years and we have to operate at lower levels to avoid stockpiling,” said a Taiwanese producer.

Other Chinese EPS producers include The Hao Hua Group, Garson Chemicals, Yangzi BASF and Nijiaxiang Chemicals.

Separately, styrene monomer (SM) producer Leasty Chemical has recently announced its intention to build a 240,000 tonne/year EPS plant in eastern China.

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By: Clive Ong
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