FocusLabour shortages in China to curb demand for styrenic resins

02 March 2010 09:35  [Source: ICIS news]

By Clive Ong

SINGAPORE (ICIS news)--A shortage of workers in the consumer goods making factories across southern and eastern China may derail demand for styrenic resins in the second quarter, producers and traders said on Tuesday.

Demand for polystyrene (PS) and acrylonitrile-butadiene-styrene (ABS) in China was expected to rebound in the second quarter, as the exports sector typically would improve during the time, traders said.

However, a shortage of workers could dampen the demand for resins as factories making consumer goods including toys and plastics for exports, would be unable to ramp up production, they added.

"There is a shortage of an estimated 3m workers in southern China factories, which is problematic for moulders," a trader in Hong Kong said.

Some moulders shifted their factories inland in a bid to secure workers as raising salaries did little to improve the situation.

Market players said that government incentives for workers to try other fields had also reduced the number of people willing to work in factories.

"The incentives for workers to work in the construction and infrastructure sector in areas like Sichuan had curbed the number of factory workers in eastern and southern China," a trader in southern China said.

Also, the income of farmers had increased as the government tried to bridge the rich-poor gap and maintain the country’s agricultural output, resulting in more farmers staying on their farms, traders said.

"Many of the incentives like discounts on automotive and appliances purchases over the past two years were aimed at people in the rural areas," a resin producer said.

As such, most workers, who were farmers, were content to stay in the rural areas, further exacerbating the labour shortages in the coastal cities, producers said.

With factories now potentially facing an acute labour shortage, overall production would inevitably slow if the situation did not improve, they said.

Therefore, even if orders for plastic goods stream in during the second quarter, demand for resins like PS and ABS might not increase in tandem due to restrained output at factories, they added.

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By: Clive Ong
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