Production, Market and Investment Opportunities of Masterbatch in China

CCM Data & Primary Intelligence

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Production, Market and Investment Opportunities

of Masterbatch in China

July 2008

Researched & Prepared by:

Guangzhou CCM Information Science and Technology Co., Ltd .

Guangzhou, P. R. China

Copyright by Guangzhou CCM Information Science and Technology Co., Ltd (P. R. China) Any publication, distribution or copying of the content in this report is prohibited. Website: http://www.cnchemicals.com Tel: +86-20-3761 6606 Fax: +86-20-3761 6968 Email: [email protected]

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Description:

This report penetrates into the Chinese masterbatch industry, and discloses the market,

production and investment opportunities of masterbatch in China. With the demand from the

downstream industries including automobile, architecture, appliance, package and so on, Chinese

masterbatch industry has been growing rapidly for near 20 years. Now China has become one of

the largest masterbatch production and consumption countries in the world. Many multinational

companies have entered Chinese masterbatch, which brings in advanced technologies into China

on the one hand, and fierce competition on the other hand.

The consumption of masterbatch in China was growing rapidly with a CAGR of 27 % in 2003~

2007, but in 2008~2013, the CAGR will become much slower. What’s more, great changes will

take place in China’s market, including reorganizations and changes in production structure. What

factors attribute to such changes? You will find answers in this report.

Chinese government is becoming stricter and stricter to with the pollution and the resources.

Though the production of masterbatch would cause pollution to a certain extent, the policies do not

influence the industry much. On the other hand, the stricter policies will promote the use of

masterbatch for coloration instead of pigments, as the use of former generates less pollution and

wastewater. The cancel of export rebate also influences the masterbatch industry.

As the threshold of masterbatch industry is low, many small producers with low technology level

and poor pollution treatment equipments appear all the time. What impact have they brought on

China’s masterbatch industry?

What is the price trend of the raw materials of masterbatch, and how do they influence China’s

masterbatch industry?

As the development of downstream industries goes on, there will be a large demand for high

quality masterbatch in the future. Opportunities in China’s masterbatch industry are many.

Masterbatch is already very saturated and mature in the eastern part of China, how about the

situation in the western part of China? Are there investment opportunities in Chinese masterbatch

industry? You can find the answers in this report.



Main content:

No. Content Page Executive Summary 5 I Production situation of masterbatch in China 8 I-1 Development history of masterbatch industry in China 9 I-2 The current production situation in China 11 I-2.1 Overview of masterbatch production and producers 12 I-2.2 Introduction to major types of masterbatch, by color 13 - white masterbatch 14 - black masterbatch 15 - colored masterbatch 15 - additive masterbatch 16 I-2.3 Introduction to major types of masterbatch, by grade 17 I-3 Raw material supply situation 18 I-3.1 Supply of colorants 19 - Supply of titanium pigment 19 - Supply of carbon black 20 -Supply of other pigments 21 I-3.2 Supply of other raw materials 23 -Supply of dispersing agent 23 -Supply of Carrier resin 24 I-4 Competitive landscape 24 I-5 Pricing of masterbatch in recent years and factors for the changes 25 - Pricing of masterbatch (by value) 25 - Factors for the changes and its trend 26 II Import & Export analysis 27 III Market situation of masterbatch in China 33 III-1 Overview of masterbatch market (2003-now) by color 33 - Market analysis of white masterbatch 34 - Market analysis of black masterbatch 34 - Market analysis of colored masterbatch 35 - Market analysis of additive masterbatch 35 III-2 Overview of masterbatch market (2003-now) by grade 35 - Market analysis of injection grade masterbatch 36 - Market analysis of blow molding grade masterbatch 37 - Market analysis of fiber grade masterbatch 37 III-3 Introduction to major end use segments 38 III-3.1 Plastic 38 III-3.1.1 Automotives 38



III-3.1.2 Home appliances 41 III-3.1.3 Architecture 43 III-3.1.4 Plastic bottles 45 III-3.1.5 Films (agricultural and package) 45 III-3.1.6 Wire and cable 47 III-3.1.7 Other plastic products 48 III-3.2 Chemical fibre 48 - Textile 48 - non-woven 48 IV Future forecast of the masterbatch industry (2009-2013) 50 IV-1 Barrier and driven force for the development of masterbatch industry 50 IV-2 Quantitative and qualitative forecast of the masterbatch industry 51 V Investment opportutnities of masterbatch in China 55 VI Conclusion 68 VII Appendix: The profiles of major masterbatch producers 69 VII-1 Jiangsu Wuxi Changhong Masterbatch co.,Ltd. 69 ... ... 0 VII-30 Jiangsu Vulchem Material Science (ChangShu) Co., Ltd. 92

Executive summary:

After more than 30 years’ development, China has become one of the largest masterbatch

production and consumption countries now. Masterbatch industry developed rapidly in China in

the past few years with the CAGR of XXXX% in 2003~2007. The total capacity of masterbatch has

reach XXXXt/a in 2008 and the output was XXXX tonnes in 2007 in China, which is able to meet

the demand of plastic industry and chemical fiber industry. The masterbatch industry has entered

upon a steadily developing period and China’s manufacturers are making efforts to produce high

class masterbatch with high technology, high content and multifunction. The production and

market grew especially fleetly from 2005 to 2007 because of the bursting demand from

downstream industries.

The masterbatch industry shows outstanding regional features in China. The industry is much

more flourishing in south China than that in north, and it develops better in east than in west.

Most of China’s masterbatch producers are located in Guangdong, Jiangsu, Zhejiang, Shanghai

and Shandong, and the total capacity in these five areas accounts for about XXXX% of total

capacity in China in 2008.

There are about XXXX manufacturers producing masterbatch with the total capacity of XXXX t/a in



China in 2008. There are XXXX producers with the masterbatch capacity exceeding XXXX t/a, and

their total capacity is XXXX t/a, accounting for XXXX% of total masterbatch capacity in China.

There are XXXX producers whose capacity ranges from XXXX t/a to XXXX t/a, and their total

capacity is XXXX t/a, accounting for XXXX % of China’s total masterbatch capacity.

China has been the largest market of masterbatch, and the rate of market growth is the highest in

the world. About XXXX tonnes of masterbatch was consumed in China in 2007, and the market

was growing rapidly from 2003 to 2007 with a CAGR of XXXX %. Masterbatch is mainly consumed

in plastic industry and chemical fiber industry. China has the largest production of plastic products

and exports the most textile in the world.

In 2007, the consumption volume of masterbatch were XXXX tonnes in plastic industry and XXXX

tonnes in chemical fiber industry.

The potential investment opportunities of Chinese masterbatch industry will emerge in central

China and west China in the future, because the market of masterbatch is already very saturated

and mature in the eastern part of China and with the industrial upgrade there, the labor-intensive

industries, such as plastic industry, textile industry, electronics assembly industry, etc. will witness

a slower growth rate or even decline in the future. It’s estimated that many producers of these

industries will move to inland provinces with lower cost of labor and land and more preferential

investment policies than eastern provinces.

XXX is the most attractive province for investment in masterbatch in China.

Character of CCM' Report:

The aim of this report is to provide powerful assistance to the strategy group and the management

team in making correct decision as how to penetrate the ever-increasing China market and how to

catch the maximum commercial opportunities. The report is formulated independently by CCM’s

professional market researchers, based on the first-hand and primary data which are analyzed by

scientific methodology, confirmed with both manufacturers/end users/traders and legal authorities,

and presented in a logic way.

Sample pages：

I-2 The current production situation in China As China has become the biggest market of masterbatch and the market is the most flourishing in the world with the fastest annual growth rate of over 20%, many foreign enterprises have been attracted to rush to invest in China’s masterbatch industry since 1990s. Ngai Hing Plastic Materials Ltd. is the first overseas company to invest in Chinese masterbatch industry in 1988 in Dongguan. Claraint Chemicals has started to sell its masterbatch since early 1990s and built its first production base in Guangzhou in 1995. Toyo Ink started its masterbatch production in Shanghai in 1995. ………. Table I-2-1 Major multinational enterprises producing masterbatch in China

English name Location Start-up

time

Capacity 2008

(Unit: t/a)

Output 2007

(Unit: tonne)

Jiangsu Resin & Pigment Technologies (Wuxi) Co., Ltd. Jiangsu 2002 12,000 6,000

Clariant Masterbatch (China) Co., Ltd. Guangdong 1995 7,500 5,400

Shanghai Toyo Plastic Colorant Co., Ltd. Shanghai 1995 6,000 4,800

Polyone (China) Co. Ltd Shanghai 2000 7,000 4,500

Jiangsu Ching Leung Hi-tech(Suzhou)Co., Ltd. Jiangsu 1999 2,000 1,500

Magenta Master Fibers (Shanghai) Co., Ltd. Shanghai 2005 2,000 1,200

Guangdong Zhongshan Dainipp-On Ink And Chemicals, Inc. Guangdong 1997 1,200 500

I-2.1 Overview of masterbatch production and producers ……… The top 99 producers produced 364,490 tonnes masterbatch in 2007, accounting for 78.90% of the total output in the domestic market. Table I-2.1-1 Situation of China’s producers, by capacity in 2008 and by output in 2007

Capacity in 2008 Output in 2007 Capacity range Number of producers

Capacity (t/a) Share Output, t Share

More than 10,000t/a 22 295,000 34.50% 181,000 39.18%

3,000~10,000t/a 77 342,900 40.10% 183,490 39.72%

500~3,000t/a 160 190,100 22.23% 88,630 19.19%

Less than 500t/a 81 27,100 3.17% 8,025 1.74%

Total 340 855,100 100.00% 461,945 100.00%

I-2.2 Introduction to major types of masterbatch, by color The production of masterbatch by color has changed a lot from 2003 to 2007. The share of the largest two types of masterbatch, white masterbatch and black masterbatch, has decreased a lot due to the rapidly growing production of colored masterbatch and additive masterbatch.

Table I-2.2-1 The production structure of masterbatch in 2003~2007, by color 2003 2004 2005 2006 2007

Type Output Share Output Share Output Share Output Share Output Share

White 40,000 31.37% 63,200 34.00% 87,500 35.00% 123,160 33.50% 147,483 31.93%

Black 48,000 37.65% 78,120 42.02% 110,000 44.00% 128,700 35.01% 143,351 31.03%

Color 32,000 25.10% 33,580 18.06% 35,000 14.00% 79,050 21.50% 126,927 27.48%

Additive 7,500 5.88% 11,000 5.92% 17,500 7.00% 36,740 9.99% 44,184 9.56%

Total 127,500 100.00% 185,900 100.00% 250,000 100.00% 367,650 100.00% 461,945 100.00%

I-2.3 Introduction to major type masterbatch, by grade Masterbatch can be classified into three grades according to the processes of downstream products and they are: injection grade, blow molding grade and fiber grade. The masterbatch of these three grades are different in price and quality, but there are general products that can be used in all of these above processes. The injection grade masterbatch is used in most plastic products, such as appliances including furniture, architectural materials, wire and cable, electric equipment, automobile and so on. The blow molding grade masterbatch is mainly used in plastic bottles, bags and films. The fiber grade masterbatch is used in textile and non-woven materials. Table I-2.3-1 The production structure of masterbatch in 2003~2007, by grade

Year Injection grade Blow molding grade Fiber grade Total

Output 74,780 38,400 14,320 127,500 2003

Share 58.65% 30.12% 11.23% 100.00%

Output 103,580 58,640 23,680 185,900 2004

Share 55.72% 31.54% 12.74% 100.00%

Output 138,990 76,430 34,580 250,000 2005

Share 55.60% 30.57% 13.83% 100.00%

Output 190,920 124,750 51,980 367,650 2006

Share 51.93% 33.93% 14.14% 100.00%

Output 220,998 170,080 70,867 461,945 2007

Share 47.84% 36.82% 15.34% 100.00%

III Market situation of masterbatch in China III-1 Overview of masterbatch market (2003-now), by color The market structure of masterbatch by color has changed a lot since 2003. Though the percentage of each type masterbatch hasn’t changed much, the structure between domestic and imported product has changed a lot. The volume of masterbatch purchased from abroad has decreased greatly, with the development of China’s masterbatch production and the larger and larger foreign investment in China’s masterbatch industry.

Table III-1-1 The consumption growth of masterbatch in 2003~2007, by color Masterbatch specie 2003 2004 2005 2006 2007

Consumption tonne 48,500 63,780 85,580 121,450 146,000White

Growth rate - 31.51% 34.18% 41.91% 20.21%

Consumption tonne 68,200 83,950 99,800 123,600 144,200Black

Growth rate - 23.09% 18.88% 23.85% 16.67%

Consumption tonne 43,220 58,910 71,130 95,650 113,851Colored

Growth rate - 36.30% 20.74% 34.47% 19.03%

Consumption tonne 13,780 17,500 25,540 40,200 54,500Additive

Growth rate - 27.00% 45.94% 57.40% 35.57%

Consumption tonne 173,700 224,140 282,050 380,900 458,551Total

Growth rate - 29.04% 25.84% 35.05% 20.39%

V Investment opportunities of masterbatch in China The potential investment opportunities of Chinese masterbatch industry will emerge in central China and west China in future because of the following reasons.

The market of masterbatch is already very saturated and mature in the eastern part of China, since many large producers have already set up complete sales channels and stable procurement systems there.

As the industrial upgrade has started in eastern part of China, the labor-intensive industries, such as plastic industry, textile industry, electronics assembly industry, etc. will witness a slower growth rate or even decline in the future. It’s estimated that many producers of these industries will move to inland provinces with lower cost of labor and land and more preferential investment policies than eastern provinces.

CCM’s research mainly focuses on the major 12 provinces or autonomous regions located in Central China and West China, including Sichuan, Jiangxi, Shanxi, Xinjiang, Gansu, Yunnan, Qinghai, Ningxia, Inner Mongolia, Guizhou, Hainan and Shaanxi.

V-1 Overview of the evaluation According to the estimated total demand and growth rate of masterbatch in the next 5 years, the 12 provinces are divided into four grades: A, B, C, and D based on the market potential. Table V-1 The grade of the 12 provinces

Grade Estimated demand in 2008~2012 CAGR (08~12) Province included

A More than 50,000 tonnes About 23% Sichuan

B More than 20,000 tonnes Over 6% Xinjiang, Jiangxi, Shanxi,

C More than 10,000 tonnes Over 13% Gansu, Yunnan

D Less than 10,000 tonnes Over 12% Qinghai, Ningxia, Hainan, Inner Mongolia, Shaanxi,

Guizhou

Note: A~D stand for market potential of masterbatch (A is the largest, D is the smallest)

Education

Production, Market and Investment Opportunities of Masterbatch in China