Masterbatch manufacturer around the world has been suffered the exhaustion in finding cheap and available material resources. The reduction in crude oil reserve due to overexploitation has placed the pressure on various masterbatch manufacturer’s shoulders, especially small and medium businesses. In the circumstance, recycled plastic is expected to be alternative that promisingly being effective in solving this problem.
What is the current situation of the vast majority of Vietnamese masterbatch manufacturer?
Plastic industry is considered as one of the most dynamic and growth sectors in Vietnam. In the past 10 years, the growth rate of this industry has always reached approximately 15 to 20%, but masterbatch manufacturer must import 80% of raw materials. Currently, domestic factories produce 780,000 tons of plastic materials annually; in which, Binh Son Refinery accounted for 150,000 tons of PP, AGC Chemicals provided for 200,000 tons of PVC, TPC Vina Plastics and Chemicals supplied 190,000 tons of plastics, etc. In the last 5 years, the demand for importing plastic materials of this masterbatch industry has continuously increased. The average growth reached 13.5% in volume and 16% in value. In 2017, Vietnamese masterbatch manufacturer imported 4.9 million tons of the primary plastic, total import turnover of plastic and plastic-based products reached nearly 12.7 billion USD meanwhile the export turnover was 2.5 billion USD and revenue was nearly 15 billion USD.
Domestic masterbatch manufacturer can not offer the adequate amount of base resins
According to Vietnam Plastics Association (VPA) analysis based on the demand of this master batch industry for raw materials in previous years, especially in the last 5 years, with an annual growth rate of 10%, it is forecasted that by 2023, Vietnamese masterbatch manufacturer may need approximately 10 million tons of plastic for production and export. However, domestic production of primary plastic is expected to reach 2.6 million tons, meeting 26% of the total volume, which means the remaining amount (7.4 million tons) need to be imported from foreign businesses. Despite the government has paid efforts on encouraging investment projects on raw material factories, the current capacity cannot meet the demand of the market. Therefore, the effective and appropriate solution of the current consumption trend of products is to partially offset the ordinary input materials by recycled plastic materials. This is considered as a strategic direction, along with tight control of standards of water and gas pollution.
Masterbatch manufacturer can reduce their product’s prices by using this material
Utilizing waste plastic for regeneration, putting it into the master batch production, prolonging the life cycle of plastic materials to bring about economic efficiency have always been the main targets of various countries, even leading economic regions such as the US and the EU. The price of finished plastic materials made by imported and recycled materials are always about 30% or even 40% lower than those of primary plastic. In most plastic products, among factors contributed to the total price of product, raw material costs account for 60-70%. So as masterbatch manufacturer taking advantages from this new production, if the material cost decreases, the product cost also decrease and the product’s price become more attractive.
FTAs and its effects to Vietnamese masterbatch manufacturer
In recent years, the opening and encouraging foreign investments have been encouraged by the Vietnamese government. Supporting this policy, various free trade agreements (FTAs) between Vietnam and the developed economies have been negotiated and signed in recent years. These agreements contribute to promoting a more stable bilateral economies, businesses enjoying more incentives, and giving more choices to consumers. The plastics industry in general and the masterbatch manufacturer in particular, as consequence, also receive these benefits. However, along with tax benefits and other incentives, businesses are also under the pressure of ensuring product quality if they want to penetrate foreign master batch markets.
Masterbatch manufacturer expected to receive support from the government
Developing the recycling industry by updating prevailing trends, modern and advanced technology is the foundation to develop the plastic industry in the future. Following this way, we not only protect the great values that the natural environment provides but also gains economic benefits. The masterbatch manufacturer expects that in the coming time, the government will set up policies to encourage and prioritize licensing for companies and projects using or delivering modern and advanced technologies with the purposes that these technologies are shared widely and in general the plastics industry will be able to grow faster.