Polymer demand in China, Vietnam hit by slower economic growth

24-Apr-12
Players in both China and Vietnam report that polymer demand in their respective countries has been slowed by weakness in the construction sector and slower than expected economic growth rates, as per Chemorbis. Both traders and converters complained that their sales have dropped significantly when compared with the same period in the past year as a result of the disappointingly sluggish economic environment. According to local media reports, investment in China’s property market is slowing down while sales of new houses are declining as reduced economic growth and government efforts to constrain inflation in the country’s property sector have reined in construction activity. Chinese builders broke ground on 294.27 million square meters of new housing space in the first quarter of 2012, a decrease of 5.2% when compared with the same period of last year. 152.39 mln sq mtrs of housing space was sold during the first quarter, a drop of 13.6% yoy. Meanwhile, sources in the real estate industry estimated that the Chinese housing market contained enough unsold housing space to meet demand for the next four and half months. Housing prices declined in 46 out of 70 Chinese cities chosen in a statistical pool of the country’s urban housing market for February. An Index of China’s real estate development climate dropped to 96.92 in March, which marked the fifth consecutive month that the index stood below 100. The decline in China’s housing market has dampened polymer demand within the country, especially for PVC. A Chinese converter manufacturing PVC pipes stated, “According to the figures we received, sales of new homes were down 16% in the first quarter in China while sales of existing homes dropped 49%. The slowdown in the construction sector has dampened our end product sales and we have scaled back our raw material purchases accordingly.” Players in Vietnam also complained of slower polymer demand occasioned by higher interest rates and a weaker construction sector. A converter manufacturing artificial leather reported, “Our sales for April are down by 20-30% when compared with the same period of last year owing to slower economic growth and high inflation.” A PVC pipe manufacturer also complained of weaker end product sales. “Our end product sales fell 30% in the first quarter compared with the same period last year as the government is not issuing as many construction contracts as it did last year,” the buyer reported. Another converter manufacturing plastic pipes and fitting also complained of a 30% year on year reduction in sales. “Construction activity has slowed down significantly in Vietnam this year and most of sales are coming from our household applications division,” the buyer complained. A Vietnamese converter manufacturing plastic bags for the cement and fertilizer sectors reported that they are operating at reduced rates in the face of disappointing demand. “We are only running our plant at around 40% of capacity for now as weaker economic growth and the new tax on plastic bags are hurting our end product sales,” the buyer stated. Another plastic bag manufacturer complained, “We have reduced our sales targets by 50-60% from the same time last year and we are running our plant at around 50% capacity.” A trader offering PE products to the country stated, “Slower demand from China has led to reduced buying interest from Vietnam. Our sales targets for the Vietnamese market are down by 20% for 2012.”
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