Chinese EPS rates to decline below 30% during Lunar holidays

10 February 2010 07:56  [Source: ICIS news]

SINGAPORE (ICISnews)--Average operating rate of the key Chinese expandable polystyrene (EPS) sector could fall below 30% during the Lunar New Year holidays starting this weekend, producers said on Wednesday.

Major manufacturers in China plan to idle their facilities - a usual practice each year - for around seven to 10 days, producers said.

Operating rates of EPS in China on the whole averaged 50-55% in January, they added.

Loyal Group and Wuxi Xingda Foam Plastics, two of China’s largest producers having a capacity over 800,000 tonnes/year each, would shut most of their facilities across the mainland towards the end of this week, producers said.

Smaller EPS plants like Nanrong Chemicals’ 100,000 tonne/year unit in southern China would also be shut for around 7 days, the company said.

Workers across China typically make their way to home provinces each year during the Lunar New Year celebrations.

Sellers said the packaging EPS market was expected to remain weak in the first quarter. However, they anticipated a rebound in demand in the second quarter.

A Taiwanese producer said: "Typically the Chinese export sector would pick up in the second quarter which will then spur consumption of packaging EPS resins."

Producers said demand for block flame retardant EPS was moderate since the end of 2009. Consumption of the resin, which is used to manufacture insulation panels for roads and houses, was feeble as the construction sector in northern, eastern and western China was in a lull, they added.

Another producer in Taiwan said: "The Chinese construction sector usually enters a peak during the summer months, so demand for block flame retardant EPS would likely pick up only towards mid year."

Other major producers in China include the Hao Hua Group and Taita Chemical.

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By: Clive Ong
+65 6780 4359

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