CHINA'S DYE SUPPLY EXPECTED TO CONTINUE OUTRUNNING DEMAND

CHINA'S DYE SUPPLY EXPECTED TO CONTINUE OUTRUNNING DEMAND

China's demand for dyestuffs is rising strongly as people abandon the drab, uniform-like dress code of decades in favor of brighter, more stylish garb. But the growth isn't fast enough.

The country has some 600 plants producing 180,000 metric tons of dyestuffs in about 500 varieties, making China the biggest such manufacturer in the world, said Peng Youling, an official of the Ministry of Chemical Industry.Growing international demand is aiding exports, with overseas sales of 75,600 tons last year compared with 44,000 in 1991, ministry figures show. The official forecast this year's exports would remain strong.

Products are sold to more than 90 countries, including the United States, and to Western Europe, Latin America and Southeast Asia.

But expansion of exports has been

ified by higher domestic production and increased imports, leaving inventories of some 10,000 tons. A recent study suggests supply will continue to outstrip demand for the next several years.

The ministry has set annual dyestuff production at about 120,000 tons. Actual output is up to 180,000 tons, including that from small township enterprises.

Officials in Beijing attribute this to "runaway development of the industry and slow growth in consumption." That phenomenon has occurred before when firms suddenly piled into a flourishing sector, only thus to cripple it.

Consumption of industrial raw materials has slowed in many spheres thanks to higher costs, a stronger currency and generally sluggish conditions.

Production of textiles and garments, the country's leading exporter, is expected to grow marginally at best this year over last. That means dyestuff consumption will also be stagnant.

Officials forecast China will use a maximum 80,000 tons of dyestuffs this year, down from the 86,000 tons projected earlier. Textiles are likely to take 52,000 tons and other light industry 18,000 tons, with the rest in small lots elsewhere.

Even with 65,000 tons allocated for exports, total demand will fall below production.

China's dyestuff production is concentrated in coastal areas, including Shanghai and the provinces of Liaoning, Jiangsu and Zhejiang. Those easily accessible locations attracted many overseas companies eager to shift production out of high-cost areas.

About 70 joint-venture dyestuff plants have been set up in China in the last decade or so.

In April, Ciba Geigy Ltd. of Switzerland launched a joint venture in coastal Shandong province with Qingdao Dyestuff Co. The project, with total investment of $25 million, is expected to turn out 3,000 tons a year, mostly for export.

Bayer AG of Germany signed an accord this year with the Wuxi dyestuff plant in Jiangsu province. Bayer-Wuxi Leather Chemicals Co., with total investment of $24 million, is expected to turn out 9,000 tons of leather chemical products a year.