Analysis of the Acrylic Fiber Market
                          Ma Lei
1. Market environment
Acrylic fiber is a chemical fiber whose properties are most
close to wool. The output of wool in China is 250 000  t/a
and can only meet 60% of the market  demand.   The  former
Textile Industry Administration has made a provision  that
at most 5% of acrylic fiber and other chemical fibers  can
be added to all-wool yarn and other wool products. Without
doubt this provision has given a good opportunity  to  the
development of acrylic fiber production.
The textile industry is at the stage  of  readjustment  and
the state has put  great  amounts  of  investment  in  its
development. It is expected that  after  China  joins  the
World Trade Organization the international environment for
textile export will  be  greatly  improved.   The  average
annual growth rate of the export amount will reach 5%. The
annual consumption of  acrylic  fiber  will  therefore  be
increased by 6 500 tons.  China's  joining  the  WTO  will
promote the development of the acrylic fiber industry, but
on the other hand it  will  also  produce  the  impact  of
imports due to further reduction of import tariff rates.
2. Market supply and demand
The acrylic fiber production in  China  has  made  a  great
development in more than 20 years. However,   due  to  the
improvement of people's living standards,  the  population
growth and the market expansion, the  demand  increase  of
acrylic fiber is much faster than the output growth. There
has been a considerable supply shortage in the recent years.
According  to  the  projection  of  the  Textile  Industry
Administration, China will become  the  country  with  the
most rapid development of acrylic fiber production in  the
next 10 years, and the output of acrylic  fiber  in  China
will hold the first place in the world in 2000. The demand
of acrylic fiber will be more than 800 000 tons  in  2000,
940 000 - 990 000 tons in 2005 and 1.1 - 1.2 million  tons
in 2010. In spite of  the  increasing  demand  during  the
Ninth Five-year Plan period, the output growth will  bring
the import amount down a little. Table 1 shows the  supply
and demand of acrylic fiber in China.
The output of acrylic fiber in China accounts for 8. 1%  of
the total output of chemical fibers, 12.2% lower than  the
average level in the world. The demand  of  acrylic  fiber
accounts for 14.5% of the total demand of chemical fibers,
and the proportion is  becoming  higher.   The  output  of
acrylic fiber will therefore increase at an annual rate of
around 10% during the Ninth Five-year Plan period and  the
demand will increase at an annual rate of 4%.
The per-capita consumption of acrylic fiber in China is 4.6
kg, but the per-capita share of  the  domestic  output  is
only 0.15 kg. In terms of  total  consumption  China  will
become the biggest consumer of acrylic fiber in the world.
In terms of per-capita consumption  the  growth  potential
will also be quite big. Table 2 shows the structure of the
final uses of acrylic fiber in China.
The most extensive final  uses  of  acrylic  fiber  are  in
knitted goods. Acrylic fiber is faced with  the  challenge
from its substitute cotton in this field. The briskness in
signing cotton purchase contracts by  textile  enterprises
and the good harvest of cotton in the  recent  years  have
produced an impact on the acrylic fiber market.
3. Production capacity
Table 3 shows the existing and planned acrylic fiber  units
in China. The production  capacity  of  acrylic  fiber  in
China was around 400 000 t/a in 1997. East  China  is  the
major acrylic fiber producing region. The distribution  of
the planned units shows that East China will still be  the
main battlefield of competition in the acrylic fiber market.
4. Trade flow
The acrylic fiber market is almost saturated in the  United
States, Europe and Japan in the recent years.   The  rapid
economic  development  in  the  Asia- Pacific  Region  has
however brought about a constant increase of acrylic fiber
demand. The Asia-Pacific Region has therefore  become  the
major inflow region in the world acrylic fiber market. The
output of acrylic fiber in Korea and Taiwan  Province  has
increased fast. The output in Korea reached 237  000  tons
and the output in Taiwan Province reached 141 000 tons  in
1995, much higher than the local market volume. They  have
placed their hope on export, especially export  to  China.
According to statistics, the average annual import  amount
of acrylic fiber in China was 200  000  -   300  000  tons
during the Eighth Five-year Plan period, accounting for 50
- 60% of the total domestic consumption. The import amount
in 1996 reached 478 000 tons, a rise  of  28%  over  1995.
Around 60% of the total  import  amount  came  from  Asian
countries and regions, and the import  amount  from  Japan
reached 138 000 tons, accounting for  30%  of  the  total.
Table 4 shows the structure  of  the  export  amount  from
source countries and regions to China in 1996.
The rapid expansion of the petrochemical  industry  in  the
surroun-
ding countries and  the  oil  producing  countries  in  the
Middle East has  brought  along  the  development  of  the
downstream chemical fiber  industry.   As  their  domestic
demand is limited, most of the products  are  for  export.
The domestic market is therefore seriously affected.   The
import of acrylic &