Polyester fiber and plastics maker Shinkong Synthetic Fibers Corp (新光合成纖維) yesterday said that it expects its main product prices to remain sluggish for the remainder of this year, after it caused its revenue in the first seven months to decrease 4.53 percent annually to NT$23.51 billion (US$748.6 million).
“Prices of plastic and PET [polyethylene terephthalate] products have been on a decline due to increasing supplies in China,” company president Samson Luo (羅時銓) told an investors’ meeting in Taipei.
“As more companies relocate from China to Southeast Asia, some Chinese manufacturers are also turning to Southeast Asian markets as demand in China slows, which has also added pressure to the average selling prices of our products,” he said.
However, demand for plastic products is expected to remain robust this quarter, which should help stabilize utilization rates of its plastics and PET fiber plants in the second half of the year, he said.
The company’s average utilization rate in the first half was about 90 percent, he added.
Shinkong operates three plants in Taiwan, and several subsidiaries and plants in China and Thailand.
The company plans to spend about NT$400 million this year to replace old facilities and introduce automation as most of the equipment at its plant in Taoyuan’s Guanyin District (觀音) have been in use for 30 to 40 years, Luo said.
It also plans to expand its plant in Thailand, which mainly makes polybutylene terephthalate for plug connectors and toothbrush fibers, he said, without elaborating.
Washington’s latest decision to postpone part of the 10 percent tariffs on US$300 billion of Chinese products to Dec. 15 is welcome news to the company, which also provides engineering plastics for US-bound auto parts makers, Luo said.
“However, between 3 percent and 5 percent of sales could sill be affected by the extra tariffs next year, as some engineering plastics used for making auto parts are on the tariff list,” he said.
The company said that first-half net income dropped 2.38 percent year-on-year to NT$1.47 billion.
Earnings per share fell from NT$0.69 to NT$0.52.