China Plastics Processing Industry Association

Moderate yet stable growth

During 2017, China’s plastic processing industry was actively adjusting its industrial structure and transforming the development pattern to achieve a moderate yet stable growth. The pace of adjustment accelerated notably, and foreign trade in processed plastics continued to improve.
   In 2017, output of China’s plastics industry reached 75.1554 million tons, up 3.44% YoY, and the growth was 0.78 percentage points higher than in the previous year. The main-business income of 15 350 sizable enterprises totaled RMB2 280.836 billion, a YoY growth of 6.74%, 0.63 percentage points higher than in the previous year. The main-business income accounted for 9.41% of the national total of light industry and 1.96% of the national total for all industry. The accumulated profit was RMB135.468 billion, a YoY increase of 4.81%, and the growth was 2.51 percentage points lower than in the previous year, contributing 8.52% of light industry profit and 1.8% of the all industry profit.
   Among all plastic products, films ranked first in output, reaching 14.54 million tons, or 19.35%. Foamed plastics registered the fastest growth, with output at 2.7865 million tons and growth at 7.84% YoY, followed by daily-use plastic products, at 6.6514 million tons and YoY growth of 5.8%. The output growth of plastic artificial leather and synthetic leather was slowest, at only 1.34%. Please refer to Table 1 for details.

    Table 1   Production & growth of plastics industry, 2017

   The geographic pattern of plastics production became more reasonable. In 2017, the output of plastic products in 10 eastern provinces and municipalities was 41.8105 million tons (55.63% of national output), with YoY growth of 2.61%. The plastic products industry in eastern China grew steadily. The output of Shandong Province and Fujian Province increased significantly, with YoY growth rates at 10.02% and 7.36% respectively. Although the growth rate of production in Guangdong Province was -1.22%, both the main-business income and total profit increased significantly there, thriving with high quality. The production of six central provinces was 18.0656 million tons (24.04%), with YoY growth of 5.05%. Among these six provinces, Jiangxi, Anhui and Henan provinces had higher output growth rates, respectively at 16.78%, 11.21%, and 7.18%. The output of twelve provinces and regions in western China was 13.3894 million tons (17.81%), a YoY increase of 8.44%. The growth of output in the central and western regions was faster than the national average.
   Market continued to expand. In 2017, China’s foreign trade continued to improve in general, promoting the growth of imports and exports of China's plastic products. The total export value of the plastic products industry was US$62.729 billion, an increase of 8.62% YoY, accounting for 10.46% of the export value of light industry; the import value was US$18.576 billion, YoY growth of 7.22%, accounting for 11.42% of the import value of light industry; the total foreign trade value was US$81.305 billion, and the trade surplus was US$44.153 billion. China’s plastic export destinations and values in 2017 are shown in Table 2.

    Table 2    China’s plastic export, 2017

   Enterprise integration accelerated. With the improvement of environmental protection and growing raw material prices and labor costs, some small enterprises with weak capabilities for innovation and quality enhancement were forced to leave this sector, while large and medium-sized enterprises who have courage to innovate enjoyed growth. Industrial transformation and integration of enterprises both accelerated.

Resolve difficulties and achieve breakthroughs

   In 2017, the plastic processing industry also encountered many major difficulties and severe challenges like rising raw material prices, the most stringent requirements for environmental protection renovations and a prohibition on importing waste plastics. The whole industry had to strengthen independent innovation further and accelerate industrial upgrades, resolving difficulties and achieving breakthroughs under pressure.
   1. Rising costs promote technological innovation. Raw material prices generally rose sharply in 2017, because many low-end production lines had been eliminated due to improved environmental protection and supply-side reforms, import of waste plastic was drastically reduced and transport prices increased. However, plastic product prices did not go up, bringing severe challenges to the manufacturers. The plastic processing industry, squeezed by upstream and downstream, suffered some decline in profit. The prices of PVC resin basically stabilized at RMB6 500/t in the first quarter, began to decline at the end of March and once fell to RMB5 500/t; then they started to rise at the end of June, reaching a high of RMB8 000/t at the beginning of September, and quickly dropped again below RMB6 500/t. The wide fluctuations in PVC raw material prices impacted the operations of foamed plastic processing companies. In 2017, the prices of MDI and TDI fluctuated greatly, pressuring polyurethane producers.
   Enterprises under pressure are more focused on technological innovation. They actively develop new products, increase products’ added value, and improve profitability, as well as strengthening technological transformation to improve production efficiency and reduce costs. In the meantime, they try to reduce operation cost via management innovation.
   2. Environmental protection promotes cleaner production. Since 2017, the efforts of the state to govern air pollution are increasing. Some companies have been shut down, restricted in production, or ordered to rectify due to non-compliance of emissions. In order to survive and develop better, the plastic products industry has gradually standardized, and industry leaders’ environmental awareness has increased. More attention has been paid to green products, and the pace of product transformation and upgrading has accelerated.
   3. Excessive low-end capacity has forced producers to upgrade their products. Overcapacity remains serious. Too many similar products are in the market, with medium- and low-end items in the majority. An emergent price war has compressed profitability, so some companies actively improve their technology and the quality of their products. For example, the modified plastics industry is shifting from capacity expansion to quality enhancement and from making common products to customized products. Industries like BOPET, BOPP and cast film are actively expanding applications, promoting consumption of high-end products and aiming at developing differentiated products, personalized products and special products, with remarkable success.

   4. Policies guide and promote development of the industry. The State issued a series of new policies concerning the prohibition of the entry of foreign garbage and the reform of management in the solid waste import system. In this context, Chinese plastics recycling companies have gradually transformed or started to set up factories abroad. With the rapid development of e-commerce in China, much “white pollution” has been produced. The state requires that express packaging bags should be made of biodegradable plastics. So, environment-friendly materials that fully degrade under natural conditions, such as PHA biodegradable plastics have a good opportunity for development.

Adhere to innovation and green development

   China's plastics industry is transforming, and new paths for upgrading are still being explored. It is necessary to pursue supply-side structural reform, unswervingly implement innovation-driven development strategies, promote coordinated development of the whole industry chain, and speed up structural adjustment and upgrades.
   Adhering to innovation strategy. The plastic processing industry must break through bottlenecks by innovation, industrial upgrades, enhanced core competitiveness, and further industrial progress and development.
   Implementing two guiding documents. The industry must focus on the “13th Five-Year Development Guidance Opinions for Plastic Processing Industry” and the “13th Five-Year Development Guidance Opinions for the Technological Progress of Plastic Processing Industry”, stick to the innovation and development strategy, unite upstream and downstream industries, promote high-quality development, and transform the plastic processing industry from “big” to “strong”.

   Insisting on efficient, low-cost development. We need to accelerate the elimination of enterprises with low quality, high consumption and serious pollution issues, and reorganize the industrial team with minimal environmental cost and maximum profits.