PU Sizing Agent Sector Starts Reform
By Wang Lei

Polyurethane (PU) sizing agent is a thermoplastic PU elastomer
extensively used in synthetic leather, artificial deerskin and
electrostatic flocking sectors. The drastic production and
demand increase of synthetic leather in China in recent years
has promoted rapid consumption growth of PU sizing agent.

Rapid capacity expansion

The capacity for producing PU sizing agent in China was 550
thousand t/a in 2003 and the output was around 400 thousand tons.
The market price of PU sizing agent in China increased constantly
in 2004 and the output reached 660 thousand tons, an increase
of 65% over 2003. Large and medium producers expanded capacity
and capacity had reached 1.10 million t/a at the end of 2004.
The capacity further increased to 1.27 million t/a in 2005. Due
to restricted export of shoes and textiles, however, the demand
growth of PU sizing agent declined dramatically in 2005. The
operating rate of PU sizing agent units was down and output
dropped to around 800 thousand tons.
     There are nearly 40 PU sizing agent producers in China,
mainly in the Yangtze River Delta region. Through constant
capacity expansion, the total capacity of Yutian Group, Defa
Group and Huafeng Group already accounted for 46.5% of the
national total in 2005. Large PU sizing agent producers are
usually tied to particular synthetic leather units. They have
formed an industrial chain with upstream/downstream integration
and have become large groups producing PU products.

Reducing demand growth

PU sizing agent is mainly used in the production of PU synthetic
leather. China has become the biggest synthetic leather producer
and consumer in the world. China had more than 2 000 synthetic
leather producers in 2005. There were more than 1 000 production
lines including 516 dry-process production lines, 364
wet-process production lines, 200 calendering production lines
and 22 superfine fiber production lines. In terms of output
distribution, the output of synthetic leather in Zhejiang,
Jiangsu and Guangdong provinces accounted for 80% of the
national total.
     Due to an unduly rapid capacity expansion and an export
restriction of synthetic leather, the economic performance of
the synthetic leather sector in China has experienced a drastic
downslide. An extreme challenge has been posed for the sustained
development of the PU sizing agent sector. The market demand
growth of PU sizing agent has already slowed down. Construction
and expansion projects are much reduced compared with the period
from 2000 to 2004. Medium and small producers suffer great
difficulties. It is expected that the PU sizing agent sector will
soon start a new round of reforms.
    With the shift of consumption concept and the high
requirements in downstream manufacturing sectors, the product
portfolio of synthetic leather is developing toward high-grade,
differentiated and functional products. Requirements for the
formula and quality of PU sizing agent are also getting more
stringent. Development focuses in the synthetic leather market
include new flame-retardant and heat-insulating varieties, air
permeable and moisture permeable varieties, fireproof and
anti-static coated varieties, anti-bacterial finish varieties
and silicone-modified varieties. Strong companies should
develop related sizing agent products to meet new demands in the
market.

Table 1  Production of PU Sizing Agent in China from 2003 to 2010
(thousand tons)
Year    2003    2004    2005    2006*    2007*    2008*
    2009*    2010*
Output    400    660    800    1 000    1 120    1 210    1 300    1 380
Growth (%)    -    65.0    21.2    20.0    12.0    8.0    7.4    6.1
Note: * expected figures
Source: CNCIC

Table 2  Major PU Sizing Agent Producers
                in China in 2005  (thousand t/a)
Producer                                                            
Capacity
Yutian Chemical Group    300
Defa Group    170
Huafeng Group    120
Wenzhou Dongtai Resin Co.    60
Wenzhou Zhengnali Polyurethane Co.    40
Jiaxing Hexin Chemical Industry Co.    40
Guangzhou Panyu Panyi Chemical Industry Co.    35
Wenzhou Yuanfa Resin Co.    35
Yantai Huada Chemicals Industry Co.    30
Wenzhou Dabang Chemical Co.    30
Nan Ya Plastics (Nantong) Co.    30
Wenzhou Five-Star Synthetic Leather Co.    25
Wenzhou Jinlai Resin Co.    25
Shanghai Huide Resin Co.    25
Wenzhou Baoye Fulai Resin Co.    25
Nan Ya Plastics (Huizhou) Co.    24
Zhangjiagang Jinguan Chemical Co.    20
Wuxi Double Elephant Chemical Industry Co.    20
Suzhou Furen Chemical Co.    20
Weifang Evertrust Arts & Crafts Co.    20
Hefei Anli Group Co.    15
Jiangsu Changlong Chemicals Co.    15
Source: CNCIC