Viscose Staple Fiber Capacity Increases Stably

Owing to the brisk demand promoted by the rapid growth of the
textile industry in recent years, the viscose staple fiber
sector has seen rapid expansion in production capacity,
remarkable improvement in product quality and constant
optimization in product portfolio. The capacity of viscose
staple fiber was 956 thousand t/a, the output was 897 thousand
tons, and the consumption was 939 thousand tons in 2005. The
development trend of the viscose staple fiber sector has become
a focus of attention in industrial community during the Eleventh
Five-year Program period (2006-2010).

The new capacity will release in the earlier stage of the
Eleventh Five-year Program period

According to statistics, in the years from 2003 to 2005 the
capacity of viscose staple fiber in China increased by 352
thousand t/a with an average annual growth rate of 12%. It is
expected that a capacity of 155 thousand t/a will start
production in 2006 and the growth rate will reach 16%. The 30
thousand t/a unit in Xinjiang Manasi Aoyang Technology Co., Ltd.
has already put on stream. The 40 thousand t/a unit in Hubei
Jingwei Chemical Fiber Co., Ltd. started production at the
beginning of 2006. The 25 thousand t/a unit in Tangshan Sanyou
Group will be completed and put into operation in 2006. The
viscose staple fiber production line with a design capacity of
60 thousand t/a constructed by Lenzing Group of Austria will
start production in the fourth quarter of 2006.
    Besides, the capacity growth will slow down during 2007-2008,
but several production lines will still be completed and put into
operation in that period. A 60 thousand t/a unit in Xiaoshan
Fulida Group will put into operation during 2007-2008. A 30
thousand t/a unit in Shandong Yihai Co., Ltd. will start
production at the beginning of 2008. A 40 thousand t/a unit in
Shandong Gaomi Silver Hawk Chemical Fiber Co., Ltd. will put on
stream in 2008. After the completion of all these projects, the
capacity of viscose staple fiber in China will reach 1.24 million
t/a in 2008.
     After 2008, the newly added capacity will further decrease,
and mainly be contributed by companies’ technical renovation.
It is expected that the capacity of viscose staple fiber in China
will be over 1.30 million t/a in 2010.

The demand growth is lower than that in the textile industry

The textile industry in China will retain its competitive
advantages in the next few years. Both the output and the export
amount in the textile industry will maintain a rapid growth of
10% - 15% during the Eleventh Five-year Program period
(2006-2010). The market demand of viscose staple fiber will
therefore also have a relatively rapid growth. Due to impacts
from the cotton supply amount and price, however, the market
demand growth rate of viscose staple fiber will likely be
slightly lower than that in the textile industry and also present
a trend of constant decline.

The readjustment to industrial distribution is accelerated

    (1) The single-line production scale has expanded
constantly: The largest single-line capacity in China is 45
thousand t/a today, being doubled compared with 2000. The
production cost has been further reduced and the competitive
edge has enhanced constantly.
　  (2) New products have kept emerging: Many new products have
appeared in recent years such as flame-retarding fibers, profile
fibers, antibacterial fibers and bamboo fibers with
intellectual property right.
    (3) The production concentration has been increased:
Expansion by producers themselves has been shifted to merging
and reformation. With the completion of large production lines,
small production lines have gradually phased out of the picture.
A capacity of 134.6 thousand t/a was eliminated from 2003 to 2005
and the production distribution has optimized remarkably.
  With further production concentration, small units with a
single-line capacity of less than 20 thousand t/a will also be
gradually eliminated. It is expected that the capacity to be
eliminated before 2010 will reach 150 thousand - 200 thousand
t/a. With the aggravation of market competition, the mode for
the increase of industrial concentration will quickly shift from
expansion by producers themselves to merging and reformation.