China’s plastic market slowing in the 4th Quarter of 2011

China Plastics market will be slow through end of 2011

Dualloy Engineering Polymers Ltd.
Contact: James Gubera
Tel #: 001-281-556-6481
Email: jamesgubera@dualloy.com

I just thought I would pass on to you what I see happening in China this week, and from what I see it does not look good.  The plastic business is very very slow in China at this time, with most of our customers fearing doom / gloom.  I have been to around 8-9 plastic factories this week, and everyone is saying that business is now slower than in 2008.  The industrial park where our warehouse is located was dead, with a minimal of activity going on in the various recycling companies.  The Banks in China have severely tightened their lending practices, which has forced the private business owners to seek loans in the private sector (loan sharks).  Now the loan sharks are defaulting on the loans, and are going into hiding.

Last week we had a meeting with the largest plastics/chemical distributor in China and a large Olefins producer, and both companies are not optimistic about the plastics market in the near future.   Everyone is trying to bring their materials inventory down ahead of a continued downward market correction.  All prices are falling in China at this time for basic chemicals and plastics.  The general feel in China is that the current market conditions will continue at least through the first QTR 2012.

China has slowed their investments in infrastructure for both highways and the high speed rail system.  The local governments are having problems servicing their loans, and are looking to the central government to bail them out.  In addition the China housing market is off this year as well, with new construction slowing down in the sector.  Fortunately for China this is just a  market correction that will be followed by another period of growth, which I cannot say is the same for the USA.  China’s current inflation problem is caused by actual tightness in the market (supply/demand), while our inflation problem in the USA is being caused by the softening dollar.

Get ready because the worst is yet to come.

 

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