Singapore – Rubber chemicals producer China Sunsine Chemical Holdings Ltd (China Sunsine) has seen its first half performance affected by weak demand from the tire industry and lower selling prices resulted from the Covid-19 pandemic.
Revenue in the first six months of 2020 decreased 26% year-on-year to Yuan1.04 billion (€127,000), due to a decrease in overall average selling price and 7% lower sales volume at 76,000 tonnes.
Net profit was down 69% at Yuan82.4 million, compared to Yuan266 million reported in the first half of 2019, said the company in its results statement 12 Aug.
China Sunsine linked the decline in profit to lower margins, resulting from intensifying competition and weak demand following the outbreak of the Covid-19 pandemic.
Average selling prices, the company said, dropped by 21% to Yuan13,560 per tonne in the first half of 2020, due mainly to the lower raw material prices, and weaker demand from the tire manufacturing industry.
Despite a 7% decline in volumes, the capacity utilisation rate stood at 80%, which the group said was “a relatively high level in the industry.”
“The international situation remains volatile and economic recovery is fraught with difficulties,” said executive chairman Xu Cheng Qiu commenting on the current business environment.
According to Xu, severe Covid-19 pandemic outside China and the relationship becoming “more toxic” between US and China are causing "greater uncertainties."
In addition, he said the industry was still experiencing low raw material prices and pressure on average selling prices.
In view of the situation, Xu said the group would aim to improve its sales, focus on operational improvement, reduce raw material consumption, control cost, and strengthen its cash flow management.
China Sunsine manufactures rubber accelerators, insoluble sulphur and antioxidant and other vulcanising agents for the rubber and tire industry.
It is claimed to be the largest rubber accelerator producer in the world and biggest insoluble sulphur producer in the China.
The company says it serves more than 65% of global top 75 tire manufacturers, including Bridgestone, Michelin, Goodyear and Pirelli.