With the implementation of the Shanghai Municipal Waste Management Regulations on July 1, the market demand for trash cans has been blown out. The subject matter of classified garbage bins of Shanghai Pudong Airport is at a value of about 2 million USD. However, unlike the metal trash cans at the airport, the most common household trash cans and community trash cans are plastic products. The demand for trash cans in special communities such as schools is not to be underestimated. One trash can order of Shanghai Jiao Tong University has reached 20,000 in quantity.
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Trash can is now the hottest plastic product in China
Before the waste sorting management, few manufacturers produce garbage bins only, trash can is only one of the businesses of plastic products manufacturing plants. However, the garbage bin boom has brought a number of small manufacturers specializing in the manufacture of trash cans. And plastic products factories have also tilted the resources to the trash can manufacturing to meet the demand. Meanwhile, plastic factories are still expanding their production scale by purchasing equipment.
The reason is that the strong demand for garbage cans by Chinese residents is expected to continue to the completion of waste sorting management construction. For the trash can producers, this trash can boom is not short-lived and is worth investing.
At present, China's plastic products industry has a high regional concentration, with East China, Central China and South China as core production areas. China's top six provinces (Zhejiang, Guangdong, Henan, Hubei, Jiangsu, Sichuan) accounted for more than a half of the national market. Among them, the output of plastic products in Zhejiang Province was 10.729 million tons, accounting for 13.90% of the national plastic products market, ranking first in the country.
Zhejiang province also ranks first in the comparison of asset size
In this production boom of trash cans, plastics production enterprises in Zhejiang Province and Guangdong Province are the first to seize business opportunities. It is currently in the off-season of other plastic products, and the profit of other plastic products is far less than that of trash can. Many manufacturers have stopped the production of other plastic products and put all their manpower and resources into the production of garbage cans.
However, ordinary trash cans are cheap, manufactures can only rely on small profits but quick turnover. In order to expand production, many plastic products factories have been producing garbage bins in three shifts. In the long run, blind production is likely to lead overcapacity.
By then, large plastics production enterprises will have stronger market competitiveness due to the accumulation of customer resources. Also, since other plastic products are produced at the same time, resource allocation can be adjusted to reduce losses. The new entry-level enterprises in the trash can boom, if not identified, will easily disappear as the trash can industry back to regularity.
Many manufacturers have already developed new types of trash cans to cope with the low-price competition and shrinking demand that can be foreseen in the future trash can market. Manufacturing new type of trash can needs new model, and the price of mold opening varies from 30 thousand USD to 70 thousand USD depending on the size. Coming with the higher cost is the higher profit. Developing trash cans with more functions and more beautiful appearance are important for enterprises to obtain more profits.
However, due to insufficient intellectual property protection in the industry, there will be imitations soon after the launch of new products, and the high profits of the new trash can will only last for several months. Therefore, current trash can manufacturers need to strengthen their brand image so that consumers can remember the brand of trash cans they buy, not just styles.
The promotion to material industry by trash can is limited
Shanghai's new regulations on waste sorting have driven the price of related stocks to take off at the end of June. On July 2nd, PP main contract PP1909 reached daily limit, and polyethylene main contract L1909 also rose 2.35%. The two varieties of PP and L have been sold at low prices for half a year. Many people believe that the upsurge of garbage sorting can bring the upstream raw material industry out of the low tide.
The trash can body and the lid are generally injection molded from high-density polyethylene HDPE or PP. The proportion of PP and HDPE in the trash can is currently difficult to calculate accurately, but most household small trash cans are made of PP, while large plastic trash cans in public places are mostly made of HPDE.
According to the sample of the National Bureau of Statistics, the number of Shanghai households is about 9.38 million, accounting for 2.1% of the country. The number of households in Beijing is about 7.47 million, accounting for about 1.7% of the national family.
Need of Shanghai and Beijing Families is limited
In general, the amount of PP in 20L household trash can is about 3kg, and that in 40L is 6kg. Assume that every household in Shanghai and Beijing purchases a trash can for waste sorting. If it is 20L trash can, 51,900 tons of PP raw materials will be needed. If that is 40L trash cans, 103,800 tons will be needed. In 2018, the domestic PP consumption is 28 million tons. If only the garbage classification in Shanghai and Beijing is considered, the impact of the hot sale of the trash can on the entire PP industry is very limited.
Expected Consumption of PP will not be concentrated
Accelerate the upgrade of China's injection molding machine industry
Injection molding machines are the most important category in plastic molding machinery, and the global market exceeds 100 billion. Judging from the global competition pattern, Japanese and European companies monopolize the high-end market. Domestically produced injection molding machines are mostly low-end products, and the average selling price is even below the world average price.
Profit of Chinese injection molding machine enterprises is little
The city with the largest demand for injection molding machines in China is Taizhou, and the output of plastic products from this ‘plastics kingdom’ accounts for 70% of the Chinese market. Since the implementation of the Shanghai Waste Classification, an increase in demand for classified garbage bins is seen. Online buyers of companies in Taizhou nearly doubled, and monthly sales of them have increased by more than 45%.
The prices of classified trash cans are higher than that of ordinary trash cans, of which 20-45 USD are the mainstream. Injection molding machines that can manufacture these "high-priced" sorting bins are also valuable, with an average price of around $500,000.
In China's plastic products market, general-purpose plastics account for the highest proportion. These plastic products have low manufacturing thresholds and provide a huge living space for manufactures of low-end injection molding machines. The classification of garbage bins brought about by garbage sorting is likely to affect China's injection molding machine manufacturers from bottom to top, prompting enterprises to reduce production of low-end injection molding machines, and tilting more resources to R&D and production of middle-high-end injection molding machines.
General plastic takes the biggest share in Chinese Market
China's low-end market for injection molding machines will be boosted up from the bottom, and the domestic high-end brands that represent the high level of China's injection molding industry are narrowing the gap with leading enterprises. The process of domestic injection molding machines replacing imported machines will be accelerated.
Haitian is the absolute leader of the domestic injection molding machine industry and belongs to the first-class echelon in the international market. In 2018, the global injection molding machine market is about 16 billion USD, and the Chinese market is about 5 billion USD, accounting for 31.3% of the world. And Haitian achieved a revenue of 1.566 billion USD in 2018, accounting for 9.8% of the global total, up 6.5% year-on-year.
With an absolute industry leader, other second and third echelons injection molding machine manufacturers of China can compete for market position by drawing on Haitian's development model. Enterprises still in the low-end injection molding machine market should face the downstream demand. In the case that the classified trash can is in short supply, the production should be adjusted to produce injection molding machines which are capable of manufacturing new types of garbage bins, and these enterprises should actively develop new varieties of injection molding machine for the trend of innovation in downstream garbage cans industry.
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