Guanwei Recycling reports lower profits due to higher LDPE raw material costs


China’s largest recycler of LDPE has said its second quarter profits are 8.41 per cent lower year on year with higher feedstock costs being one of the factors.

While it revenues from sales increased by 18.6 per cent compared with last year, its net profits declined to $3,163,030 in the second quarter of 2012 from $3,453,360 in Q2 2011.


It noted that its raw material costs had increased to an average of $690 per tonne, although it expected this price to remain stable, which was 2.83 per cent higher than a year before.

However, a shortage of workers in southern China had led to rapidly increasing wages and welfare costs.

Guanwei Recycling chairman and chief executive Min Chen said: “While the cyclical softening in China’s economy has affected most industries, we have been fortunate in maintaining a diversified customer list which, couple with the continuing strong demand for recycled LDPE, has enabled us to see sequential quarter over quarter growth thus far this year.

“In the second half of the year, we believe we will benefit from moderate increases in prices for our products as well as stabilising raw material costs based on negotiations with our suppliers.

“Longer term, we believe the outlook for our company remains very bright, given the anticipated increasing demand in an improved economy for our low-cost, high quality products.”