China XD Plastics plans to expand capacity amid rising auto demand

13 October 2010 21:20  [Source: ICIS news]

NEW YORK (ICIS)--China XD Plastics is expanding its production capacity for modified plastics to meet increasing demand, especially in automotive applications within China, the company said on Wednesday.

The company plans to increase its annual modified plastics capacity to approximately 135,000 tonnes in 2011 from 100,000 tonnes in 2010 by purchasing up to nine new production lines, which will be housed at its factory in Harbin, China, it said.

“The automobile market in China is growing rapidly, as is the amount of plastics being used in automobiles. Currently, the majority of our products are used in automotive applications, so we are directly benefitting from these two market drivers,” said Taylor Zhang, chief financial officer of China XD Plastics.

The auto industry in China continues to grow at a rapid rate, with auto sales totaling 11.57m units within the first eight months of 2010 - a 39% increase compared with the same period in 2009.

The total cost of the expansion was projected at roughly Chinese yuan (CNY) 130m ($20m), with CNY100m for the purchase of new equipment and CNY30m for the facility retrofitting. Installation and testing of the new production equipment will likely be completed by the end of 2010, and full operational capacity is expected in January, the company said.

“Our expanded capacity, when fully online, will allow us to increase our output and benefit further from the favorable growth dynamics in our industry,” said Zhang.

The new capacity will address production needs for high-end engineering plastics, such as modified nylon, acrylonitrile-butadiene-styrene (ABS) and alloy plastics, according to Zhang.

“While we already have a strong share of the market for modified plastics in China, we have made the strategic decision to increasingly focus our efforts and resources on the development and manufacturing of higher-end, and higher-margin, modified plastics. The new capacity expansion is a clear step in that direction,” he said.

 ($1 = €0.72)

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By: Feliza Mirasol
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