China Should Develop High-End PS Products    

By CCR Information Investigation Department   

1. Impacts from the financial crisis are still there

The global non-expandable polystyrene (PS) production units are mainly distributed in Northeast Asia, North America, Western Europe, Southeast Asia and South America. (the expandable polystyrene information is not involved in this report) With impacts from the drastic profit reduction in the PS consuming sectors and the appearance of some low-price substitutes, PS makers suffered some difficulties in operation, even in survival in 2009. Some well-known PS producers in the world regrouped and even spun off the PS business. For example, The Dow Chemical shut down its 120 000 t/a PS unit in Zhangjiagang of Jiangsu province permanently. Mitsui Chemical, Inc. and Sumitomo Chemical Co., Ltd. dissolved their joint venture Japan Polystyrene Inc. (JPS) and quitted the PS business. Mitsubishi Chemical Corporation also withdrew from PS Japan Corp. jointly funded with Asahi Chemical Industry Co., Ltd. and Idemitsu Kosan Co., Ltd. BASF shut down its 80 000 t/a PS unit in Ludwigsburg.
   Owing to the price rise of crude oil and styrene monomer in the international market in 2009, the price of PS in China also went up, the PS makers remained to earn a little margin.

2. Competitiveness of domestic products is weak

China has nearly 40 PS producers today. Those with a relatively high output include Yangzi-BASF Styrenics Co., Ltd., Zhenjiang Chimei Chemical Co., Ltd., Shanghai Secco Petrochemical Co., Ltd., Formosa Industries (Ningbo) Co., Ltd. and Jiangsu Laiden Baofu Plastifying Co., Ltd. PS producers with foreign fund such as Zhenjiang Chimei Chemical Co., Ltd., Chevron Phillips Chemical (China) Co., Ltd. and Yangzi-BASF Styrenics Co., Ltd. used the advanced technologies and the quality of their products is at a relatively high level among the PS makers in mainland China. PS producers in China are mainly concentrated in southern China. Owing to the low production cost and the closeness to consumption markets, they have acquired a considerable scale.

Capacity of Major PS Producers in China in 2009
Producer                               Capacity (thousand t/a)
Zhenjiang Chimei Chemical Co., Ltd.         360
Shanghai Secco Petrochemical Co., Ltd.       300
Formosa Industries (Ningbo) Co., Ltd.       200
Jiangsu Laiden Baofu Plastifying Co., Ltd.    200
Yangzi-BASF Styrenics Co., Ltd.             180
Wuxi Weida Plastic Co., Ltd.                165
SK Polystyrene Resin (Shantou) Co., Ltd.    150
PetroChina Dushanzi Petrochemical Co., Ltd.    130
Chevron Phillips Chemical (China) Co., Ltd.    120
Fujian Fangxing Chemical Co., Ltd.             120
Zhanjiang Xinzhongmei Chemical Co., Ltd.    100
Sinopec Beijing Yanshan Petrochemical Co., Ltd.    100
Total Petrochemicals Foshan Co., Ltd.       100
Guangzhou branch of Sinopec Corp.           50
Panjin Ethylene Industry Co., Ltd.            40
Source: CNCIC


   Due to various reasons, China's domestic PS producers (excluding foreign funded and Sino-foreign joint ventures) have considerable gaps with the world advanced level in the functions and quality of products as well the scale of production units. Their PS products therefore have a slack competitiveness in the market.

(1) The functions and quality of products made by domestic makers can not meet the needs in high-end markets

The quality and functions of PS resins made by domestic makers are commonplace and can not yet meet the needs in the electronics sector. In the electronic and electric appliance sector with the greatest demand for PS, the imported PS holds an absolute advantage share and domestically-made PS is used in small quantities and only in low-grade products. Well-known manufacturers of electronic/electric appliances in China all use imported PS or PS made by foreign-funded and Sino-foreign joint ventures in China. Even foaming PS used in shockproof outer packaging is imported from abroad or purchased from foreign-funded and Sino-foreign joint ventures.

(2) The production units of local makers are far below the economic scale, lacking competitiveness

Most local PS production units have a capacity of less than 30 000 t/a. There are also quite many small units with a capacity of around 10 000 t/a. The PS production units with a capacity of over 10 000 t/a almost all use technologies bought from abroad and have problems of high construction investment, long construction cycle and poor management. The small units can not compare with large advanced units in product quality and production cost, therefore holding inferior position in market competition.

(3) The supply of raw materials is inadequate

Unmatched to the rapid development of the PS production, China has not developed sufficiently in the production of styrene monomer. The source of raw materials for PS production is therefore restricted and most of domestic PS makers depended on the imported styrene monomer. Hence China's PS consumers like the imported PS more.

3. Imported products hold a half of the domestic market share

China is a net exporter of expandable polystyrene (EPS) but a net importer of PS.
   The total import amount of PS in China was 1.1074 million tons in 2009, an increase of 3.86% over 2008. The import amount of PS in 2008 was 12.18% lower than 2007. The import growth made in 2009 was mainly due to two factors. One factor was that the PS unit of Dow in Zhangjiagang shut down in April 2009 and other PS producers were running below the full capacity. Domestic PS supply was therefore reduced. The other factor was that there was not much price difference between domestically-made products and imported products, but the performance of imported products was better than the products made by domestic makers. End users therefore preferred imported products.
   Despite the rapid development of China's PS sector and the rapid growth of the exports, there is a considerable gap in the quality and performance of products compared with similar foreign products. The needs for high-end products still rely on imports heavily. It also shows that China's PS sector still has a quite big development space.