Foreign Trade Continued to Increase in September
Year:2007 ISSUE:31
COLUMN:MARKET REPORT
Click:338    DateTime:Nov.06,2007
Bright Prospect for the Polyester Industrial Filament Sector      

Some large companies from America and Europe have constructed plants in China or established long-term stable cooperation relationship with Chinese enterprises. A bright development prospect has therefore been brought to the polyester industrial filament sector in China.

  1   Rapid capacity expansion of the polyester industrial filament

During the period from 2000 to 2004 the polyester industrial filament market in China suffered a supply shortage and the import amount was larger than the export amount. The root cause for supply deficit was the drive by the demand growth. Polyester industrial filament was mainly used in narrow width fabrics and mine core alignment tapes. The consumption in these two application sectors accounted for more than a half of the total. After the WTO accession of China in 2001 products in these two sectors developed rapidly.
   The high growth of the market demand effectively promoted the development of the polyester industrial filament sector. The polyester industrial filament production in China entered a stage of rapid growth in 2001 and reached a peak of capacity expansion in 2005. The capacity increased from 155 000 t/a in 2004 to 316 000 t/a in 2005 with a growth of 103.87%.
   After a drastic capacity expansion in 2005, the polyester industrial filament sector started a period of stable development in 2006. Competition became fierce and the market of low-end products basically reached supply/demand balance. Some producers with small scale and weak technical force could only produce low-end products with relatively low properties. Due to high production cost they had to suspend production or shift to other product lines. The operating rate of the polyester industrial filament sector therefore presented a declining trend.
   By the end of 2006 China had more than 46 polyester industrial filament producers and the total capacity was 413 000 t/a. Sixteen of them used equipment imported from abroad. The total capacity of the first five producers was 176 000 t/a, accounting for around 42% of the national total. The production was highly concentrated.

Table 1  Major Polyester Industrial Filament
      Producers in China in 2006   (thousand t/a)
Producer                          Capacity
Zhejiang Guxiandao Industrial Material Co., Ltd.    55
Heilongjiang Longdi Co., Ltd.                        37
Zhejiang Hailide New Material Co., Ltd.               30
Hyosung (Jiaxing) Co., Ltd.                         30
Performance Fibers (Kaiping) Co., Ltd.              24
Wuxi Taiji Industry Limited Corporation              21
Sinopec Shanghai Petrochemical Co., Ltd.            21
Zhejiang Unifull Industrial Fiber Co., Ltd.          21
Source: CNCIC

   With the rapid capacity expansion of polyester industrial filament in China, the supply in the domestic market has become sufficient. The market mode of supply shortage has started to change. Some producers with strong technical force and large production scale such as Zhejiang Guxiandao, Shanghai Petrochemical and Zhejiang Hailide have started to augment exports. The export amount of polyester industrial filament in China reached 78 000 tons in 2006, an increase of 160% over the previous year. It is expected that the position of China as a major producer of polyester industrial filament worldwide will have no change in the next few years and the export amount of polyester industrial filament in China will still increase constantly.

Table 2  Supply and Demand of Polyester Industrial Filament
              in China in Recent Years          (thousand tons)
Year    2001    2002    2003    2004    2005    2006
Output    67      84       107     140     253     294
Operating rate (%)    90    90     90     90      80      71
Import    7       11      17      25      21      20
Export    1       6       8       8       30      78
Consumption    73    89      116     157     244     236
Source: CNCIC


  2    Product portfolio readjustment of polyester industrial filament

With the rapid capacity expansion of polyester industrial filament in China, conventional (general purpose) varieties already have sufficient supply, the competition in price is fierce and the supply and the demand are basically balanced. As the requirements of downstream clients on the product quality of polyester industrial filament are getting higher and higher and domestic polyester industrial filament producers are merged into the international market, there will be a greater demand for high-end products by foreign clients. Differential products, especially varieties used in products with high requirements on performance such as automobile safety belts and tire cords, will still have a supply shortage.
   Different market supply/demand modes of conventional varieties and differential varieties have impacts on the following two aspects: (1) The products portfolio in the entire sector has started readjustment. The rate of differential products is getting higher; (2) The capacity expansion in the entire sector has started to slow down. As differential products have high requirements on equipment, technology and management, only a few leading enterprises in China such as Shanghai Petrochemical and Zhejiang Hailide can make R&D and production. For numerous small and medium enterprises with small scale and outdated technology, the completion of the products portfolio readjustment still needs to take a long time. They have no ability to make investments and construct production lines of differential products. The capacity expansion therefore started to slow down in 2006 and the growth of capacity dropped sharply from 103.87% in 2005 to 30.70% in 2006. It is expected that the capacity will increase by 47 000 t/a and the growth will further drop to 11.38% in 2007.