PRA June-July 2013-Country Focus-China

Country Focus

China renews its draw factor Chinaplas 2013, held from 20-23 May in Guangzhou, saw a total visitorship of 114,103, up by 4% from the 2012 show in Shanghai, with 27% of visitors coming from overseas, compared to 25% in 2012. With 22% more space this year, the show continues to grow.

Foreign companies still view China as a bright spot in a gloomy world economy, even as the country grapples with a slower economic growth (with the International Monetary Fund recently saying that it could miss its 7.5% growth target this year), rising labour costs and regulatory barriers.

Plant set-ups and expansions Germany-based speciality chemicals firm Lanxess’s Inorganic Pigments business unit is building a 25,000-tonne/year facility for red iron oxide pigments in Ningbo, China. Construction work on the EUR55 million plant is expected to start in the second quarter and production is scheduled by 2015.

Speaking at a preview, Wolfgang Oehlert, Vice President for the inorganic pigments business unit Wolfgang Oehlert, for Asia Pacific, said that the new plant will add on Vice President for the to the company’s current capacity of 40,000 tonnes inorganic pigments at its Shanghai facility. “We export around 50-60% business unit for Asia of our output from our Shanghai facility that makes Pacific, Lanxess yellow and black pigments but the Ningbo plant will cater solely to the domestic market.” He said that the Chinese market is growing, especially with urbanisation and the mobility mega trends that wil require high quality pigments.

He also said that the new plant will focus on “sustainable production using an improved Penniman Red process.” According to Oehlert, “The new plant will be a blueprint for future iron oxide pigment plants worldwide. We are allocating 30% of our investment on the latest environmental standards, including water and waste gas treatment, energy consumption and solid waste recovery.” To be marketed under the Bayferrox and Colortherm brands, the yellowish red pigments will be targeted at the paints, coatings, construction and plastics industries.

Lanxess also operates pigment plants in Germany and Brazil and together with the Shanghai facility has a total capacity of 350,000 tonnes/year currently.

Singapore-based Borouge, a joint venture between Austrian chemicals firm Borealis and UAE-based ADNOC, is on an expansion drive. “Borouge is on an exponential growth journey as we reinforce our business momentum in Asia,” said Wim Roels, CEO of Borouge’s Marketing & Sales. With the expansion of its Abu Dhabi-based plant’s annual capacity of PE and PP to 4.5 million tonnes/year by 2014 and continuous investments in infrastructure and people, Borouge is expanding its operations since the demand for polyolefins in Asia is expected to grow to 100 million tonnes by 2020, while the Chinese polyolefins market is expected to surge from 32 million to 59 million tonnes/ year this decade.

Roels said that the firm is planning on opening five new offices in Bangkok, Delhi, Ho Chi Minh City, Jakarta and Tokyo this year. “Borouge is well positioned to meet the market demand for innovative solutions for pipe systems, wires and cables, automotive components and advanced packaging applications,” he added.

Furthermore, the company has set up an enlarged Asia North region covering not only Greater China but also Japan and Korea.

According to Vincent Ong, Senior Vice President of Asia North, the firm will relocate its Shanghai office to Pudong by next year. The regional office will house an R&D centre.

Wim Roels, CEO of Borouge's Marketing & Sales, says the firm is well positioned to meet the market demand for innovative solutions

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Country Focus

Also on the cards is the expansion of the logistics network to include warehouses in Tianjin and Ningbo by the end of 2013, adding on to the existing Shanghai and Guangzhou logistics hub network.

Meanwhile, German extrusion machinery maker Windmöller & Hölscher (W&H) is setting up an office in Shanghai to build up its presence in China, said Philip Elder, W&H Sales Manager for China. He said that the office will cater to sales, service and maintenance, adding that the firm is committed to the Chinese market and to Asia. “We will cater to the growing market for flexible packaging in China,” he said. The firm was promoting its Filmex cast film line and had sold an 11-layer line for barrier film last year. He also feels that the market and customers are becoming more mature and therefore has great confidence in the Chinese market. “Because private consumption will continue to grow at a rapid pace, W&H equipment will be needed to satisfy this demand in a way that meets the investors' increasing requirements for better products, less waste, faster change over times, higher productivity and less energy consumption,” he said.

Kabra and Plastiblends make premiere showcase Indian extrusion machine maker Kabra Extrusiontechnik (KET), a part of the Kolsite Group, together with sister company colour and additive masterbatch producer Plastiblends made their premiere showcase at the Chinaplas show. “We are here to create a brand presence,” said Chairman SV Kabra speaking to PRA during the show. “It is the first time that we have participated in Chinaplas and the response has been encouraging.”

When asked if the firm would set up a plant in China, Kabra replied, “It is a possibility. We could collaborate with a local manufacturer.”

The firm already owns a stake in US-based extrusion machine maker Gloucester Engineering (GEC). Kabra and GEC formed a joint venture, Kabra Gloucester, in 2009, and later in 2011, Kabra bought a 15% ownership stake in GEC, to manufacture lower cost blown film lines in India. But the latter has been through difficult times, especially when it had to restructure its business in 2010.

“It was dormant for a few years but it has been doing well since it changed hands (in 2011, GEC was purchased out of receivership by private equity firm Blue Wolf Capital Partners),” said Kabra.

In fact, GEC President Carl Johnson said recently that the firm is coming off two consecutive years where it has doubled its annual sales. “By recapturing customer confidence, the company’s backlog has steadily increased and management is forecasting an additional 35% growth in 2013,” he said in a press release.

SV Kabra expects to see further response from the Chinese market to the company's product offerings

Adds Kabra, “We are offering Kabra Gloucester blown film lines all over the world. These hybrid machines (produced at KET’s plant in Daman) have been developed to beat Chinese pricing.”

Last year, Kabra Gloucester showcased a five-layer barrier film line with an output of 525 kg/hour at the facility in Daman, Gujarat. Other features of the line were the 2,100 mm layflat width and 100-micron thick film.

DSM on an expansion mode in Asia Dutch materials firm DSM Engineering Plastics says that Asia is an important part of its growth. Speaking to journalists at a media briefing, President Michael Koch said the firm moved its headquarters to Singapore recently “because Asia is an important market for engineering plastics.”

The firm is also accelerating its development pace in Asia and China. For instance, Koch said that capacity is being doubled at the firm’s polymerisation and compounding plant in Jiangyin, China, to 400,000 tonnes/ year. This is due to come on stream next year.

Meanwhile, it is also currently doubling capacity at its caprolactam facility in Nanjing. “We are looking at partnering with companies to actively increase the use of caprolactam,” said Koch, adding that there is a strong market in China for the feedstock.

Furthermore, the company opened its first application development centre for engineering plastics in Japan earlier this year. And it recently invested to extend its R&D capabilities in Shanghai with the set-up of an Automotive Development Centre for Asia and a Performance Materials Research Centre to conduct R&D. DSM has developed a new material solution that combines its Arnitel VT thermoplastic copolyester (TPC) and Akulon PA6, to address the challenges faced by sausage producers

“We are committed to focused growth, reflected by our continued presence and expansion in the region,” said Koch, adding that the firm will open a technical centre in Pune, India, next year, alongside its manufacturing plant. “We need to be close to our customers, to develop solutions and expand production in Asia,” added Koch.

Future plans include a technical centre in Nanjing by 2014, according to Koch who says that DSM has allocated an investment of US$1 billion in R&D in China from 20112015.

In terms of its materials, DSM is focusing on the flexible packaging market, which is growing in the region.

“We are working with the industry to reduce food waste while at the same time offer safety and convenience,” said Koch, adding that in Europe 30% of food is wasted due to improper storage.

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Country Focus Kraiburg keeps Asia on its horizons Germany-based TPE maker Kraiburg, which doubled its capacity at its Malaysian plant last year, counts China and India as its two largest markets since the countries take up around 45% and 10% of the output respectively, said Roland Ritter, Director Asia Pacific.

And to meet the competitive nature of the markets, Ritter says the firm has to continuously develop and expand new grades and special materials since “every customer has different needs.” He also explained that Kraiburg is positioned as a high-end TPE supplier, adding that the firm’s main market segments are the automotive, consumer and medical sectors. “We have a leading edge in the automotive sector in China; and in the medical and consumer sectors in India and Thailand,” he said.

When asked if the firm would consider setting up a plant in India, Ritter said that it is still “in the discussion stage.”

Roland Ritter (left) seen here with Bridget Ngang and Lars Goldmann, also from Kraiburg

The three products for Asia Pacific the firm has developed recently are said to have improved flame retardancy, scratch resistance and CO/NY (co-adhesion with nylon).

The halogen-free intumescent FR/AP (flame retardant) series contains additives to give it better resistance to burning, compared to general TPE grades. As for the scratch-resistant TPE (SCR series), it has improved mechanical stress for automotive parts such as sliders on ventilation grilles, control wheels or seat adjusters.

Meanwhile, the CO/NY grade features improved bonding to nylon/PA bonding with a TPE compound as well as adhesion in co-injection and insert moulding. It can be used in handles for hand/power tools, over-moulded housings for the building/construction industry, electrical and electronic components; air inlet piping; door sills and automotive parts.

Demanding quality pipe/profile technology Austrian extrusion technology provider Battenfeld Cincinnati says the Chinese pipe/profile market has matured, after years of development. “Customers have higher quality requirements. With the rising labour costs, land resources become increasingly strained and rising energy prices, our

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Battenfeld Cincinnati displayed various extruders for the pipe/profile market

customers are beginning to pay more attention to product quality,” said Marketing Supervisor Rosemary Tan.

When asked about the Asian market, she said, “Demand is relatively stable. In the Southeast Asian market, Battenfeld Cincinnati provides an efficient and stable international advanced level of equipment to firmly occupy the leading position in the high-end market.”

The firm’s other markets are South America, Middle East and Africa, as well as Europe, which Tan said is in the doldrums, adding, “But we have a strong market leadership in Russia and the CIS.”

This year, the firm expects a 35% increase in turnover, compared to 2012. “Last year, we secured 80% contracts from the high-end market for pipes and window profiles,” Tan added.

At the exhibition, it showcased its seventh generation conical twin-screw extruder conEX series extruder, which has been upgraded with the AC inverter motor, allowing for 20% lower energy usage and without the need to replace carbon brushes thus allowing for a maintenance-free operation.

Another model shown is the single-screw extruder extruder solEX series for producing PE-HD and PP pipes.

PE80 and PE100 materials are used for non-ferrous pipe extrusion, with a production diameter from 20 mm to 2,500 mm for water and gas pipes, explained Tan. “The machine can also be used to produce PP drainage and sewerage pipes and corrugated pipes.”

When asked how Battenfeld Cincinnati distinguishes itself from the competition, Tan replied, “It has always been adhering to industry-leading extrusion technology solutions with the launch of equipment that is energy saving and environmentally friendly, providing greater yield with more energy savings.”

Research a core focus of converting equipment supplier Chinese-Swiss joint venture (with Polytype Converting Group of Switzerland) Shantou Huaying Soft-Packing Equipment Plant supplies specialised printing and coating equipment to China.

Country Focus

At Chinaplas, it showcased its ink tray trolley. “It features an independent trolley structure, with accurate installation, a special independent active roller to reduce ink bubbles and improve the printing performance,” said General Manager Sarah Xu.

The company hinges on R&D with its Guangdong Printing & Coating Engineering Technology R&D Centre (co-founded with Shantou University and Shantou Academe of Light Industrial Equipment).

“Huaying focuses on technical innovation and development. We are also certified in accordance to the ISO9001:2008 quality management system and are CE-certified,” she added.

She went on to say, “China is a huge potential market for the flexible packaging industry that continues to develop, especially with the state, food and drug safety regulations and other packaging-related regulations arising from customer demands.”

Xu also commented that demand for more efficient equipment is growing in the country and the company expects to secure more sales.

Huaying introduced the ink tray trolley unit

“Over the past decade, Southeast Asia has become our most important overseas market but in recent years, countries like Indonesia, which has been subject to government instability, yielded varying degrees of decline. However, this year, India and China have stabilised, and we expect further growth to come from the Indian market,” she said. Huaying continues to firm up business in Indonesia through its distributor PT Panverta Cakrakencana.

As for the European market, Xu also reiterated that initially, Chinese products generally did not comply to the standards.

“But if China continuously improves the technological content of its products, demand in Europe should increase accordingly. This will be our long-term goal,” she said, likewise mentioning the potentials of the Russian and CIS markets.

Expecting more sales in the coming year, the firm is pining for a certain level of growth, yet, mulling that the domestic and global economy could weigh down on this goal.

Opportunities from a cost and quality-conscious market Homegrown maker of extrusion equipment for middle to high-end customers, Useon (Nanjing) Extrusion Machinery, is beginning to notice a changing landscape in the Chinese market. “It is transforming from a price to a qualityconscious (market), and this change provides a good opportunity to those who focus on quality and innovation,” said company spokesperson Cliff Zhang. But he also points out that the change poses a “big challenge to those whose main strategy is focusing on pricing.”

He added, “Generally speaking, Southeast Asia is still a price-conscious market and is attractive for companies who employ price as their strategy.”

But he adds that the European market, one of the firm’s target markets, is a highly-competitive base. “It puts more weight on quality and safety issues than price. To enter this market, a machine supplier will encounter many restrictions in design, safety issues and manufacturing standard,” said Zhang.

The Russian market, on the other hand, is a typically polarised one that has high and low-end and a bit of middle-class market characteristic. Which product to fit the market depends on a company’s own character, said Zhang, adding that this year the company expects 20% increase in sales.

Set up in 2006, Useon makes extruders and at the show it exhibited a new series of high torque twin-screw extruders. It also introduced the direct extrusion technology with a twin-screw extruder and foam extrusion technology.

For the twin-screw extruder, it has raised the specific torque up to 10.6Nm/cm3; with some models able to reach at 14.5Nm/cm3, while the speed has been brought to 800 rpm, which would be a new benchmark for a Chinamade twin-screw compounder, said Zhang.

With the direct extrusion technology, the twin screw extruder is employed into the extrusion process, reducing the energy consumption substantially by up to 35%. In foam extrusion, traditional HCFC has been replaced with supercritical CO2 as foaming agent, which not only cuts down the material cost, but contributes to a green product, said Zhang.

Useon Extrusion displayed a new series of high torque twinscrew extruder JUNE / JULY 2013

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