The masterbatch industry is a relatively young industry compared to other long-standing industries in Vietnam such as mechanics, electronics, chemicals, textiles, etc. However, the masterbatch and plastic industry has grown strongly in recent years. It is forecasted that Vietnamese filler and colorant for plastic manufacturers are being exposed to various opportunities benefited from the new policies promulgated by the government.
The masterbatch industry in Vietnam and potentials to develop
In the period of 2010 – 2015, the masterbatch and plastic industry ranks among the top industries with the highest growth rates, with an annual growth rate of 16 – 18% per year (after telecommunications and textile industry). Especially, there are the products having a growth rate of nearly 100%.
In Vietnam, the growth potential of the masterbatch and plastic industry is still quite large due to the low demand for plastic-based products in domestic market compared to other regions and the average of world. In addition, the filler and colorant for plastic industry is one of the priority industries that Vietnamese government aiming to develop, thus we are benefiting from the tax and credit support policies of the government.
Materials from domestic resources can only meet 20% of the demand for masterbacth and plastic industry
Despite the potential for growth, Vietnam’s masterbatch and plastic industry is facing a difficult problem when the supply of raw materials is inadequate and manufacturers must import nearly 80% of raw input materials. According to the Vietnam Plastics Association (VPA), every year Vietnamese producers currently needs about 3.5 million tons of plastic materials and hundreds of additives (filler and colorant for plastic), meanwhile plastic materials produced domestically can only solve partly the whole demand of the market, accounted for approximately 20-25% of raw materials required (around 900,000 tons).
Factors affected the prices of masterbatch and plastic products
The main import partners of Vietnam include Saudi Arabia, South Korea, Taiwan, Thailand, Indonesia, India, etc. with the main imported products are PE, PP and PVC masterbactch and plastic products. The cost of raw materials usually accounts for 70-80% of the product cost, so the fluctuations of raw material prices are directly affecting business operations of almost manufacturers and suppliers.
In addition, the inability to take initiative in input materials reduces the competitiveness of domestic enterprises. Besides, enterprises focusing on exporting find it difficult to take advantage of tax incentives due to regulations related to the origin of products. The fluctuation of currency exchange rate is also an influent factor affecting masterbatch and plastic businesses in deciding to import raw materials.
Masterbatch industry in Vietnam is predicted to face hardship in input materials
It is forecasted that by 2020, Vietnamese masterbatch and plastic manufacturers will need about 5 million tons of raw materials (base resins, fillers, additives, colorant for plastic) to serve their production activities. Therefore, if the source of raw materials is not soon initiated, this will be a big obstacle for businesses in the industry to be able to carry out production as well as increase the competitiveness in the market in the context that Vietnam has and is joining the signing of a series of bilateral and multilateral free trade agreements.
Preferential policies – great opportunities for masterbatch and plastic additives industry
In recent years, domestic enterprises have made more efforts to participate in the field of producing raw materials for plastic and masterbatch industry. Government had published Decision No. 2992 / QD-BCT approving the Planning on development of Vietnam’s plastics industry up to 2020, with a vision to 2025 with significant financial, capital and tax incentives for supporting this potential industry.
For PVC and PET, there are currently two domestic producers that are able to produce with a capacity of 300,000 tons of plastic per year. With PP plastic materials, the petrochemical factory in Dung Quat (Quang Ngai) produces 150,000 tons per year. Currently, petrochemical factories are in the process of development, and the supply of raw materials is gradually increasing.
Filler masterbatch – key product of the brand name EuroPlas
Filler Masterbatch is a plastic additive which basically is CaCO3-based compound. This material is widely used in the plastic industry to alter and improve the mechanical properties as well as the hardness of substrate or polymer in the process of manufacturing plastic-based products. Blending the input materials (base resins such as polyolefin, fillers such as superfine Calcium Carbonate, colorant of plastic, plastic additives) at high temperature on modern technology lines is a part of the whole process of producing filler masterbatch products that have many applications in the plastic industry meanwhile manufacturers can reduce product costs and increase asset value of raw materials such as CaCO3 powder.
It can be said that the development orientation of the EuP company is completely consistent with the development orientation of the industry, with the development trend of the country as well as the whole world economy. We are able to be benefit from both subjective advantages and objective advantages due to market demand and policies.