Plastic material maker Asia Polymer Corp (亞聚), a subsidiary of USI Corp (台聚), is to switch production lines from low-density polyethylene (LDPE) to ethylene-vinyl acetate (EVA), as EVA prices show stability.
EVA is used in foam rubber for sneakers, casual shoes and solar panel film, while LDPE is used in plastic bags, plastic containers and computer components.
“We will increase EVA output by using production lines originally used to produce LDPE,” Asia Polymer business manager Huang Ko-ming (黃克名) said at an investors’ conference in Taipei on Tuesday.
The price of EVA has been relatively stable over the past two years at about US$1,500 per tonne, while the price of LDPE — at about US$1,050 per tonne in March — has been falling since the second half of last year, the company said, adding that the stable price of EVA means a higher gross margin.
The firm has a positive outlook for this year, as demand for EVA remains strong thanks to increasing sales in the sneaker, casual shoe and solar energy markets, it said.
To meet growing demand, the company would next year finish construction of a factory in Gulei, China, Huang said.
The new factory — with an annual EVA output of 300,000 tonnes — would be a major boost to annual output, he said.
The company had about 150,000 tonnes last year of combined EVA and LDPE production.
“Since last year, we have been changing our main output from LDPE to EVA, as the price of polyethylene, a major ingredient in LDPE, stayed at a record high in the first three quarters of last year,” Huang said.
The price of polyethylene is expected to be more stable this year, but total shipments of EVA increased 33 percent last year, while shipments of LPDE fell 28 percent, as EVA’s gross margin remains higher than LDPE’s gross margin, the company said.
Asked about the effects of US-China trade tensions, Asia Polymer said that as a midstream company, it faces limited effects from the trade spat, but it plans to closely monitor fluctuations in raw material costs and foreign-exchange rates.
Cumulative revenue in the first four months of the year increased 26.88 percent to NT$2.33 billion (US$73.71 million), compared with NT$1.84 billion a year earlier, the company said, adding that EVA shipments in the first quarter rose 90.51 percent year-on-year to 24,919 tonnes, while LDPE shipments fell 17.87 percent to 11,526 tonnes.
Net income surged 65.22 percent to NT$136.7 million, from NT$82.74 million a year earlier, or earnings per share of NT$0.25 from NT$0.15, while gross margin climbed 4.48 percentage points to 10.35 percent, thanks to increased EVA output, the company said.
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