25-11-2013, 08:54 AM
Sunsine has managed its capacity expansion prudently, with little gearing (RMB205m loans vs RMB119m cash as at 30 Sep 2013).
Its accelerator capacity increased gradually from 39,000 tonnes in 2007 to 70,500 tonnes now. And the company has been able to promptly secure orders for almost all the items produced from the new facilities.
Insoluble sulphur (IS), another rubber chemical new to the company, took a while to gain acceptance. After its quality was recognised by tyre manufacturers, IS capacity expanded:
2007....5,000 tonnes
2009....8,000 tonnes
2010...10,000 tonnes
2013...20,000 tonnes
The new 10,000-tonne IS facility,costing RMB100m, will be completed before the end of 2013. Another 20,000 tonnes will be added later, with smaller incremental cost as the basic infrastructure is already included in the first RMB100m, since China is still importing large quantities of IS.
The company's venture into the anti-oxidant segment has been less smooth.
TMQ, introduced in 2008, saw sluggish demand - in 2011, only 2,000 tonnes were sold for a capacity of 10,000 tonnes.
Sales of 6PPD, a higher-end anti-oxidant with a capacity of 15,000 tonnes, has also been poor, largely due to lengthy product accreditaion processes by tyre manufacturers.
However, demand for the two types of anti-oxidants seems to be picking up:
................tonnes
1Q 2012.......413
2Q 2012.......857....(Sales of 6PPD commenced. No sales breakdown was provided)
3Q 2012.....2,070
4Q 2012.....1,842
1Q 2013.....2,072
2Q 2013.....2,900
3Q 2013.....3,489
The company is optimistic that demand for its 6PPD will pick up, and is confident of doubling the capacity in due course.
The high fixed cost for running the 6PPD facility (with infrastructure built for 30,000 tonnes) is weighing on the bottom line. As more 6PPD is sold, profit should improve.
According to the company, 1.7 tonnes of accelerator are needed to produce 100 tonnes of rubber. Production of 26.4m tonnes of rubber world-wide in 2012 (www.rubberstudy.com) therefore consumed 0.45 m tonnes of accelerators. Sunsine's accelerator capacity of 66,500 tonnes in 2012 was therefore around 15% (=66,500 /450,000) of global output. This year, another 4,000 tonnes have been added bringing total accelerator capacity to 70,500 tonnes.
Sunsine therefore plays an important role in the rubber chemical industry.
For Sunsine to be a sustainable entity, succession planning must be put in place, and the company has just done that.
Its accelerator capacity increased gradually from 39,000 tonnes in 2007 to 70,500 tonnes now. And the company has been able to promptly secure orders for almost all the items produced from the new facilities.
Insoluble sulphur (IS), another rubber chemical new to the company, took a while to gain acceptance. After its quality was recognised by tyre manufacturers, IS capacity expanded:
2007....5,000 tonnes
2009....8,000 tonnes
2010...10,000 tonnes
2013...20,000 tonnes
The new 10,000-tonne IS facility,costing RMB100m, will be completed before the end of 2013. Another 20,000 tonnes will be added later, with smaller incremental cost as the basic infrastructure is already included in the first RMB100m, since China is still importing large quantities of IS.
The company's venture into the anti-oxidant segment has been less smooth.
TMQ, introduced in 2008, saw sluggish demand - in 2011, only 2,000 tonnes were sold for a capacity of 10,000 tonnes.
Sales of 6PPD, a higher-end anti-oxidant with a capacity of 15,000 tonnes, has also been poor, largely due to lengthy product accreditaion processes by tyre manufacturers.
However, demand for the two types of anti-oxidants seems to be picking up:
................tonnes
1Q 2012.......413
2Q 2012.......857....(Sales of 6PPD commenced. No sales breakdown was provided)
3Q 2012.....2,070
4Q 2012.....1,842
1Q 2013.....2,072
2Q 2013.....2,900
3Q 2013.....3,489
The company is optimistic that demand for its 6PPD will pick up, and is confident of doubling the capacity in due course.
The high fixed cost for running the 6PPD facility (with infrastructure built for 30,000 tonnes) is weighing on the bottom line. As more 6PPD is sold, profit should improve.
According to the company, 1.7 tonnes of accelerator are needed to produce 100 tonnes of rubber. Production of 26.4m tonnes of rubber world-wide in 2012 (www.rubberstudy.com) therefore consumed 0.45 m tonnes of accelerators. Sunsine's accelerator capacity of 66,500 tonnes in 2012 was therefore around 15% (=66,500 /450,000) of global output. This year, another 4,000 tonnes have been added bringing total accelerator capacity to 70,500 tonnes.
Sunsine therefore plays an important role in the rubber chemical industry.
For Sunsine to be a sustainable entity, succession planning must be put in place, and the company has just done that.
