Capacity of Nylon Industrial Silk Is Surplus

The total nylon (polyamide) industrial silk output worldwide was
1.025 million tons in 2005, mostly provided by the producers in
Asia, Europe and America, in which the ratio of nylon 6 to nylon
66 was 6:4. The applications of polyamide in Europe and America
are increasingly diversified. A small amount of polyamide was
used in tires. However, the tire industry was the main consumer
of polyamide in Asia, representing a monotonous application
field.

Heavily surplus capacity and declining profits

The production capacity and output of nylon industrial silk in
China was 450 thousand t/a and 330 thousand tons respectively
in 2005. The manufacturers with a production capacity of over
50 thousand t/a included China Shenma Group, Jiangsu Junma
Chemical Fiber Company Ltd. and Ningbo Kingring Group. The
manufacturers with a production capacity of 20 thousand-50
thousand t/a included Jiangsu Qunfa Chemical Company Ltd.,
Qingdao Lianchuang Industrial Co. Ltd. and Taizhou Chemical
Fibre Company of Nanjing Chemical Industry Group, etc.
  Presently China's nylon industrial silk sector features four
characteristics:
     (1) Excessively high growth of production capacity.
According to statistics, since 2003 the augment of production
capacity has been as high as 201 thousand t/a, while the tire
industry's local demand for cord fabric increased slowly,
representing a serious surplus of production capacity.
     (2) Fierce competition led to the low prices in a long term
and dropping profit.
     (3) The ratio of nylon 66 in China's overall output of nylon
industrial silk is lower than the average level in Asia.
     (4) Products are applied in narrow fields with little
application in fields other than tires.
     In China the nylon industrial silk is mainly used as the
framework material for bias tires. The output of bias tires
showed a negative growth in recent years, because of being
substituted by radial tire. According to forecasts, the output
of radial tires will make up 70% of China's total tire output
in 2010, and the consumption of nylon industrial silk in the tire
industry will decline gradually. Although nylon industrial silk
manufacturers are actively developing new application fields,
it can not totally offset the supply surplus caused by declined
demand from bias tire.
     Because of surplus capacity and slack demand, local nylon
6 manufacturers are going through intense competition, and the
price has dropped. In 2005, the price difference between nylon
6 industrial silk and caprolactam (CPL) was RMB2 500 - 3 000/t
only; and the price difference between cord fabric and CPL was
RMB5 000 - 5 500/t. Margin is thin. Recently driven by the upsurge
of CPL prices, the prices of nylon 6 industrial silk and cord
fabric have gone up somewhat, but are still holding at rather
low levels. Although the prices of nylon 66 industrial silk and
cord fabric are far higher than nylon 6, the margin was narrowed
by the raising the price of raw materials such as adipic acid.

Increasing exports and developing new application fields

    (1) In the next few years, exports of nylon industrial silk
and cord fabric still have some potential for growing. The
developed countries will no longer expand their capacity, and
the developing countries have no way to develop because of
restricting factors such as funding, technology and manpower,
all of which will ensure opportunity for the export of China's
nylon industrial silk.
     (2) The exported amount of bias tires will continue growing.
The price of the bias tires made by China has obvious competitive
advantage in international market. Chinese government support
of the agricultural economy has speeded up the mechanization of
agriculture. Rural demand for agricultural tires, mainly of bias
tires, has been increasing fast. Tires for heavy construction
machinery are also a type of bias tire. Presently China has large
number of infrastructure construction projects, so the usage of
such tires is increasing and has good development prospects.
     (3) The application of industrial nylon cloth in non-tire
applications has been expanded gradually. Because China's
industrialization level has been promoted gradually, with
enhanced consuming ability and consuming level, the demand for
high performance fibers has also increased, and the demands for
industrial nylon cloths such as in the manufacture of rubber
products, very wide industrial fabrics and air bags has been
increasing gradually.
   These favorable factors have left the local industrial silk
manufacturers some hope.

Major Nylon Industrial Silk Manufacturers
                       in China in 2005
          (thousand t/a)
Manufacturer               Capacity     Output
China Shenma Group           100           75
Jiangsu Junma Chemical Fiber Co.    100     86
Ningbo Kingring Group       60          55
Jiangsu Qunfa Chemical Co.    30             25
Taizhou Chemical Fibre Co.    28             27
Qingdao Lianchuang Industrial Co.    22      20
Shandong Shifeng Co.           15       N.A.
Source: CNCIC