Tuesday, November 12, 2013

Construction of Blue Ridge Tunhe's biodegradable PBS program going smoothly

On Oct. 16, 2013, Xinjiang Blue Ridge Tunhe Chemical Industry Joint Stock Co., Ltd. (Blue Ridge Tunhe) announced that 46% of its biodegradable plastic program, with a production capacity of 160,000 t/a, has been completed, and that the whole program is estimated to be completed in 2014. The biodegradable plastic products include PBS and PBT, according to CCM’s Biomaterials China News issued in November.

Construction of the biodegradable plastic program began on April 16, 2013. Previously, Blue Ridge Tunhe completed pilot production of its PBS production line, with a capacity of 10,000t/a, on July 28, 2012, which may provide technological support for the subsequent PBS program.

As a traditional petrochemical processing enterprise in Western China, Blue Ridge Tunhe has only just started its PBS business. Since its PBS product has not yet passed the related environmental protection authentication, it cannot export its products, and can only produce for domestic markets.

Generally, domestic PBS industry is witnessing a large production capacity expansion in 2013. This is intensifying the competition within the PBS industry.

On one hand, new entrants or enterprises without abundant experience in the PBS industry are faced with more severe market conditions for PBS in 2013. Similar to Blue Ridge Tunhe, their PBS products have not passed the related environmental protection authentication, so their products can only be sold in the domestic market, thus intensifying the competition in the PBS industry in 2013. The domestic PBS industry has seen an overcapacity in 2013. According to related statistics, the domestic PBS capacity has reached 118,000t/a, while the domestic demand of PBS is estimated to be only 15,000-20,000 tonnes in 2013.

In 2013, three companies established new PBS plants or further expanded their production capacity. On June 6, 2013, Shandong Fuwin New Material Co., Ltd. (Shandong Fuwin) announced that it had expanded its PBS production capacity from 5,000t/a to 25,000t/a. In April 2013, the first phase of Shanxi Jinhui Group (Jinhui Group)'s PBS program, with a production capacity of 20,000t/a, entered pilot production and is currently operating strongly. In Feb. 2013, Jiangsu Yangnong Chemical Group Co., Ltd. (Yangnong Chemical) completed the construction of its PBS program, which has a production capacity of 10,000t/a.

On the other hand, leading PBS enterprises, like Kingfa Sci&Tech Co. Ltd. (Kingfa), Zhejiang Hangzhou Xinfu Pharmaceutical Co., Ltd. (Xinfu Pharmaceutical), and Anqing Hexing Chemical Co., Ltd. (Anqing Hexing), have witnessed an upturn trend in their PBS business in 2013, mainly due to the recovery of global economy. This is because the aforementioned three companies' PBS products have passed the related environmental protection authentication and are produced primarily for export.

Xinfu Pharmaceutical has taken advantage of the global economic recovery. Xinfu Pharmaceutical's revenue and gross profit margin of its PBS business increased by 12.5% (from USD2,246 million in 2012 to USD2,725 million in 2013) and 2.95% respectively in H1 2013 year-on-year, due to the improving demand in Europe.

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