PVC Firms Increased Sales in 2007   

By Peter Zong   
In 2007 China totally manufactured 9.72 million tons of polyvinyl chloride resin (PVC), an increase of 19.79% compared with 2006; totally imported 1.3 million tons with a drop of 11.9% and exported 0.75 million tons with a growth of 50.6%. The total calculated consumption was 10.26 million tons, up 11.6%. Among the total output, nearly 75% is made from calcium carbide.  
    There are around 160 PVC firms in China by the end of 2007. We can get the public data of 17 publicly listed firms. CCR has recorded seventeen expanded and newly built PVC projects during the period starting March 2006 to November 2007, which may affect the total output in 2007.
    The common complaints for PVC manufacturing firms are high cost of raw materials, high price of power and increased delivery cost, explaining for the 2007 financial result. Petroleum price rocketed sharply, and price of ethylene followed, causing ethylene process PVC firms to suffer a high cost. Therefore new projects favored calcium carbide process, which finally, however, caused a tight supply and high price of calcium carbide. Both Ningxia Yinglite and Xinjiang Zhongtai, which gained a gross profit rate of more than 20%, use calcium carbide process to produce PVC. Except Cangzhou Chemical and Shandong Haihua, other 15 firms publicly listed in the stock markets increased their sales in PVC business. All 17 firms reported a positive EPS.  Two companies - Nanning Chemical and Weifang Yaxing reported a down of net profit. Except Cangzhou Chemical, all other 16 firms grew their total sale.    
     Tianjin Dagu Chemical Industry Co. and Sinopec Qilu Petrochemical Co. still occupied the first two positions according to the PVC production capacity, but they have no duty to release their operation result.
    Shanghai Chlor-Alkali Chemical Company Ltd. (SH: 600618) maintained its third position. In 2007 the company expanded its PVC capacity by 25%, making the calcium carbide process capacity accounting for 78% in its total.  The gross profit rate of PVC business is 1.26% only. The company gained a positive EPS by caustic soda business (In 2006 the company suffered a loss). In 2007 it exported 310 thousand tons of caustic soda (100%).  Construction on the 150 000 t/a caustic soda in Huasheng Branch of the company is going to be completed at the end of 2008. So the company plans to produce 420 000 tons of PVC and 770 000 tons of caustic soda in 2008 and will start to construct the third phase project in Huasheng Branch in order to supply chlorine for the 300 000 t/a MDI project. PVC sale contributed around 44% to the company's total sale.
    Xinjiang Zhongtai Chemical Co., Ltd. (SZ: 002092) became the second largest among the seventeen firms with a PVC output of 304 800 tons, and expect to be the largest one nationwide in 2009. ChemChina is the biggest shareholder of Xinjiang Zhongtai by holding 15.2% equity. PVC sale accounted for 80% in the total.
    Sichuan Jinlu Group Company Ltd. (SZ: 000510), located in Sichuan province produced 271 600 tons PVC in 2007 and also improved the gross profit of PVC business from 10.07% in 2006 to 11.31%. Nearly 80% of its total sales came from PVC business. The company must manage the challenges from the earthquake although its production facilities were safety in the disaster.
    Shen Ma Industry Co. Ltd. (SH: 600810) jumped into the fourth by increasing the sales of PVC by 219%. The chlor-alkali project in its subsidiary came on stream, which helps Shen Ma increase the PVC output to 205 000 tons from 70 400 tons in 2006. The caustic soda output was also doubled. The gross profit rate of the caustic soda business Shen Ma activated in 2007 was as high as 45.5%, only next to Jin Hua Group. Of course the PVC sale was 30% of its total sales. Shen Ma is still the biggest Nylon-66 manufacturer in China. In 2008 the company plans to produce 405 000 tons of PVC and 430 000 tons of caustic soda. The company is constructing a 200 000 t/a PVC project that is scheduled for startup in 2008.
    Shenyang Chemical Industry Company Ltd. (SZ: 000698) is the biggest PVC paste firm in China, so it can reach the highest gross profit rate.
    Tangshan Sanyou Chemical Company Ltd. (SH: 600409), the second largest soda ash producer in China, occupied the sixth position by doubling its PVC output and sales. PVC sales contributed 27% in the total. The company predicted to add the third 100 000 t/a PVC production line in the second half of 2008. It also announces to produce 2 million tons of soda ash, 210 000 tons of caustic soda and 230 000 tons of PVC in 2008.
   Ningxia YingLiTe (SZ: 000635) manufactured 160 000 tons of PVC in 2007. Its PVC capacity has reached 275 000 t/a by October 2007. The company does not announce new plan for 2008.  
    Taiyuan Chemical Industry Company Ltd. (SH: 600281) gained a 63.75% increase of PVC sales by expanding its PVC production capacity from 80 000 t/a to 150 000 t/a. PVC sale holds a proportion of 28% in the total. The company is constructing a 50 000 t/a adipic acid project.
   Hebei Baosuo Company Limited (SH: 600155) had faced with a crisis of bankruptcy in 2007 but was saved by New Hope Chemical Investment Company Limited in May 2008.
   Hubei Yihua Chemical Company Ltd. (SZ: 000422) reported that the total sale surged 68.17% in 2007 on the basis of increased production through acquiring Hunan Jinxin Chemical Industry Co., Ltd. (CCR 2007 No.19) The two subsidiaries - Guizhou Yihua Chemical Company Limited and Hubei Yihua Fertilizer Industry Company put into production. It got the biggest net profit among the 17 firms.
   Nantong Jiangshan Agrochemical & Chemicals Company Ltd. (SH: 600389) is a company majored in pesticide business. The company has not changed more in PVC business in 2007. It was requested to relocate its production units in 2008. Therefore new projects will be constructed such as 100 000 t/a ionic membrane caustic soda.
    Nanning Chemical Industry Company Ltd. (SH: 600301) reported a drop of its net profit in the fiscal 2007 because of the increased cost of raw materials and power. The new PVC unit will help the company in 2008. It has set up a new JV - Nanning Luzhou Chemical Company Limited (51% equity) to mull a 320 000 t/a PVC and 300 000 t/a caustic soda project.
    Yunnan Salt & Chemical Company Ltd. (SZ: 002053) purchased a power generation company in 2007 to reduce cost.
    Weifang Yaxing Chemical Company Ltd. (SH: 600319), a top chlorinated polyethylene producer in China, reported that the net profit growth decreased by 38.77% over 2006 because the hydration hydrazine JV project with LANXESS stopped for a long time, causing a loss of RMB46.92 million.
   Cangzhou Chemical Industry Co, Ltd. (SH: 600722) suffered a huge financial debt crisis in 2007. The company shut down its two PVC production lines (230 000 t/a and 60 000 t/a) in May 2007 due to lack of cash.
   Shandong Haihua Company Limited (SZ: 000822) did not disclosed the separated data for PVC business. It totally got a sale of RMB937 million from PVC business and caustic soda business. It ranked the first by the total sale.  
   Xinjiang Tianye Co. Ltd. (SH: 600075) produced 307 000 tons of PVC and 226 400 tons of caustic soda in 2007. But the company did not disclose the sale split between PVC and caustic soda.
   Jinhua Group Chlor-Alkali Co