Rainbow Fine Chemical insists on investing bio-degradable plastic

Rainbow Fine Chemical is preparing to establish two wholly owned subsidiaries to produce bio-degradable materials with total capacity of 13,000t/a -13,500t/a, while the company's previous investment on bio-degradable materials in 2010 hasn't yielded any profit.

Online PR News – 28-September-2012 – Guangzhou – Shenzhen Rainbow Fine Chemical Industry Co., Ltd. (Rainbow Fine Chemical) is preparing to establish two wholly owned subsidiaries with total capacity of 13,000t/a -13,500t/a bio-degradable materials, while the company's previous investment on bio-degradable material in 2010 hasn't yielded any profit, according to CCM International’s September issue of Biomaterials China News.

On Aug. 29, 2012, Rainbow Fine Chemical published the notice about establishing Shenzhen Irisation New Material Co., Ltd. (Shenzhen Irisation) and then Shenzhen Irisation will establish Zhejiang Rainbow New Biomaterial Co., Ltd. (Zhejiang Rainbow) in Jiaxing District, Zhejiang Province. The main business of Shenzhen Irisation is to produce and sell bio-plastic masterbatch and end products by using starch, lignocellulose and bio-degradable polyester as raw material. It will invest USD1.57 million (RMB10 million) to construct five production lines, three of which are to produce low carbon bio-degradable masterbatch and end products, while the rest are to produce low carbon bio-degradable sheet and end products with total capacity of 10,000t/a. Zhejiang Rainbow will produce bio-degradable shopping bags, trash bags, mulching film, etc., with capacity of 3,000t/a - 5,000t/a.

In 2010, Rainbow Fine Chemical started to enter the bio-degradable material industry, and now its huge investment hasn't yielded any profit yet. The core business of Rainbow Fine Chemical covers environmental protection coating, green household products and environmental car care products. In June 2008, Shenzhen Rainbow was listed on the Shenzhen Stock Exchange. At the end of 2010, it cooperated with Hubei Green World Environmental Protection Technology Joint Stock Co., Ltd. (Green World) and invested USD8.635 million (RMB55 million) to establish Rainbow Green World Bio-degradable Material Co., Ltd. to produce bio-degradable material from plant cellulose. According to its related reports, in 2011 and H1 2012, the bio-degradable material program has lost USD248,500 (RMB1.58 million) and USD73,614 (RMB468,877) with the gross margin of -33.51% and -51.71% respectively. Maybe the reason for the loss is that the bio-degradable material is a new business for the company, which needs an appropriate period to gain profit, and the macro economy environment is a little terrible at the same time.

Though the precious biodegradable material hasn't brought any benefit, Rainbow Fine Chemical thinks the joint of new subsidiaries can help improve the company's competitiveness.

On one hand, biodegradable material is a new business for the company that has great market and gains support of the policy. On Jan. 4, 2012, the Ministry of Industry and Information Technology of the People's Republic of China published the Twelfth Five-Year Plan for New Materials Industry (Plan), and the Plan estimates that in 2015, the demand of starch based plastic in China will reach 100,000t/a. Currently, the main business of Rainbow Fine Chemical is four kinds of building materials - painting, heat insulting material, fire resistive material and windows, doors and curtain wall, and the new business can help adjust product structure and expand new market.

On the other hand, the great capacity of Shenzhen Irisation can help form the advantages of scale and cost. It's said that once the capacity is completely released, the production cost can be 40% lower than that of its largest competitor -- Novamont, created by a group of researchers following the example of Giacomo Fauser. The new program also matches the government's development direction.

What's more, it can also relieve the public's negative view brought by Rainbow Green World. On June 27, 2012, Rainbow Fine Chemistry received the punishment notice, as the company and several directors are subjected to administrative punishment due to untimely disclosure of information on important trade contract between Rainbow Green World and Crown Square International Ltd.

Source: Biomaterials China News 1209

Main content of Biomaterials China News 1209:
Garbage classification promoting biodegradable trash bag market
Xinfu Pharmaceutical remains cautious with PBS business
Dikang Pharmaceutical to expand its capacity of absorbable PLA film
Rainbow Fine Chemical insists on investing bio-degradable plastic
Jilin Chemical Fiber expands bamboo pulp capacity by 16,500t/a
Corn price may remain high in H2 2012
Plant-based raw material enters China's polyether polyol industry
Yongan Pharmaceutical: To use fossil oil or biomaterial, price decides
China's PLA export and import suffer decrease in July 2012
China's import volume of castor oil and its derivatives witnesses slight decrease in July 2012
Overview of sebacic acid import and export in China, 2007-July 2012
Biodegradable bamboo-based biological composite plastic project passes acceptance
Suzhou Well-Bridge produces non-implantable medical device made of PLA
A new approach for improving production of butanol
Cabot and Rhodia sign agreement for construction of bio n-butanol plant
Thai vetoed another THB15 billion rubber intervention plan
… …

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