China’s Production and Consumption of Synthetic Fibers Grew in 2014

By Zhao Rui, Sinopec Group

Production and consumption

In 2014, China’s capacity to make synthetic fibers further increased to 51.9 million t/a, up 7% annually. The varieties with larger capacity growth were polyester fiber and polyamide fiber (see Table1). The output of synthetic fibers reached around 40.44 million tons, up 8.4% YoY. Driven by demand growth in the international market, China’s export volume of synthetic fibers climbed constantly. China’s net export volume of synthetic fibers reached 2.0 million tons, a YoY growth of 25.8%, and the consumption of synthetic fibers was 38.44 million tons, up 7.6% YoY.
It is expected that by 2015, China’s capacity to make synthetic fibers will exceed 55.0 million t/a, and the domestic consumption will be around 40.6 million tons, with average annual growth of 9.8% and 8.1%, respectively during 2010-2015. China’s net export will continue to grow. Due to the synchronous growth of capacity and output, operating rates will remain at the previous years' level of around 78%.
In recent years, the domestic capacity to produce polyester fibers has climbed rapidly, and overcapacity has remained fairly constant. With the improvement of downstream processing technology and fabric development level, polyester fiber can not only be used as a fabric fiber, but also blended with other fibers. The blended fabrics, which have rich fabric sensory effect and function, have provided a broad space for the consumption of polyester fiber. The proportion of clothing fabrics in polyester fibers has maintained growth. It is expected that the domestic consumption of polyester fibers will reach 35.3 million tons by 2015, up 5.4% YoY.
Owing to the higher price and the replacement of polyester fibers, the demand for acrylic fibers has shrunk continually. Acrylic fiber in China is used mainly for making textile products like clothing, wool and artificial fur. At present, the consumption of cotton-spun acrylic fiber accounts for around 30% of the total acrylic fiber consumption, and the cotton-spun acrylic fiber is mainly used to produce thin fabrics. Wool fiber can be mainly used for making wool textiles, wool and acrylic fiber blankets, etc. The consumption of acrylic fiber in the industrial sector is less; however, in recent years, the consumption of acrylic fiber in the industrial sector has increased constantly. In the industrial sector, acrylic fiber is mainly used as tarpaulin, filter materials, packing materials, insulation materials and medical materials, etc., and the products include carbon fiber, flame retardant fiber, profiled and hollow fiber, etc. With the market’s increased requirements on the quality and performance of acrylic fiber products, the consumption proportion of differential acrylic fiber has increased. The output of domestic differential acrylic fiber still cannot fully meet the market demand, and among imported products, the proportion of differential fiber is higher. Despite the lower consumption proportion in the total acrylic fiber consumption, with the promotion and application of the downstream carbon fiber civil products, the consumption of PAN (polyacrylonitrile) based carbon fiber will maintain rapid growth.
Polyamide fiber features bright color and comfort to wear, and is widely used in ski jackets, mountain climbing clothes, outdoor travel clothes, tents, technical jackets, etc. Due to the constant price reduction of polyamide fiber, the market competitiveness of polyamide fiber has enhanced continuously, and the supply and demand of polyamide fiber has maintained rapid growth. Due to polyamide’s characteristics, polyamide fiber products will have better development prospects in the clothing sector. The demand for polyamide fiber will see double digit growth in 2015, firmly promoting the domestic consumption growth of synthetic fibers.

Raw materials

In 2014, the domestic development of synthetic fiber raw materials was unbalanced, and structural surplus and shortage coexisted. The use for non-fiber and fiber jointly promoted the demand growth of synthetic fiber raw materials as well as polymers. China’s capacity to make major synthetic fiber raw materials, including purified terephthalic acid (PTA), ethylene glycol (EG), acrylonitrile (AN) and caprolactam (CPL), rose by more than 11.0 million t/a (being mainly concentrated in PTA) to 54.71 million t/a, up 25% YoY. The output climbed by 4.6 million tons to 35.23 million tons, up 15% (the varieties with larger output growth were mainly PTA and CPL). The consumption increased by 2.59 million tons to around 45.12 million tons, up 6.1%, of which the varieties with larger consumption growth were mainly CPL and PTA. China’s supply and demand of synthetic fiber raw materials as well as polyester during 2013-2015 are listed in Table 2.
It is expected that by 2015, China’s capacity to make synthetic fiber raw materials will reach 65.89 million t/a, and capacity growth will reduce to 14.4% annually, mainly for PTA, AN, EG and CPL. Domestic output is expected to reach 39.2 million tons, output growth will decrease to 11.3%, the operating rate of major producers will increase, and some units will still be unable to form an effective capacity. Consumption will reach 47.77 million tons per year, and annual consumption growth will reduce to 5.9%.

Table 1  China’s supply and demand of synthetic fiber products during 2013-2015

Item    2013     2014     2015
(expected)    YoY growth in 2014 (%)    YoY growth in 2015 (%)
Synthetic
fiber    Capacity (kt/a)    48 500    51 900    55 450    7.0    6.8
    Operating rate (%)    77    78    78    ?    ?
    Output (kt)    37 320    40 440    43 010    8.4    6.4
    Consumption (kt)    35 720    38 440    40 620    7.6    5.7
Polyester
fiber    Capacity (kt/a)    42 200    45 000    48 000    6.6    6.7
    Operating rate (%)    79    80    79    ?    ?
    Output (kt)    33 410    35 810    37 800    7.2    5.6
    Consumption (kt)    31 620    33 500    35 300    5.9    5.4
Acrylic
fiber    Capacity (kt/a)    830    830    830    0    0
    Operating rate (%)    83    82    82    ?    ?
    Output (kt)    690    680    680    -1.4    0
    Consumption (kt)    900    840    840    -6.7    0
Polyamide fiber    Capacity (kt/a)    3 100    3 600    4 000    16.1    11.1
    Operating rate (%)    68    73    74    ?    ?
    Output (kt)    2 110    2 620    2 950    24.2    12.6
    Consumption (kt)    2 150    2 610    2 930    21.4    12.3


1. PX
In 2014, China’s newly added capacity to make para-xylene (PX) mainly came from the capacity expansion of the 650 kt/a unit of PetroChina Sichuan Petrochemical Co., Ltd. and the 300 kt/a unit in Qingdao Lidong Chemical Co., Ltd., as well as Fujian Dragon Aromatics Co., Ltd.’s second 800 kt/a unit whose effective capacity was not released in 2013. China’s capacity to make PX reached 12.53 million t/a, up 13% YoY. Due to the increased operating rate of new units, the output of PX was around 9.0 million tons, up 15% YoY. In spite of this, because the output growth of downstream PTA was also relatively large, the domestic PX was still in short supply and the net import volume reached 9.87 million tons. The consumption reached 18.87 million tons, a YoY growth of 12.8%.
In 2015, China’s newly added capacity to produce PX will mainly be the 600 kt/a new unit of Sinopec Jiujiang Petrochemical Co., Ltd. and the 1.6 million t/a unit of Ningbo Rongsheng Zhongjin Petrochemical Co., Ltd. Driven by the output growth of downstream PTA, it is expected that the consumption of PX will exceed 20.0 million tons/year and reach 20.4 million tons, up 8.1% YoY.


Table 2  China’s supply and demand of synthetic fiber raw materials & polyester, 2013-2015

Item    2013     2014     2015 (expected)    YoY growth in 2014 (%)    YoY growth in 2015 (%)
EG    Capacity (kt/a)    5 380    5 690    8 300    5.8    45.9
    Demand (kt)    11 920    12 210    12 920    2.4    5.8
PTA    Capacity (kt/a)    35 090    45 290    52 240    29.1    8.4
    Demand (kt)    27 190    28 950    30 450    6.5    5.2
AN    Capacity (kt/a)    1 390    1 520    2 040    9.6    34.2
    Demand (kt)    1 820    1 870    1 940    2.7    3.7
CPL    Capacity (kt/a)    1 810    2 210    3 310    22.1    49.8
    Demand (kt)    1 600    2 090    2 450    30.6    17.2
Synthetic fiber raw materials    Capacity (kt/a)    43 680    54 710    65 890    25.3    14.4
    Demand (kt)    42 530    45 120    47 770    6.1    5.9
PET    Capacity (kt/a)    42 450    46 200    49 300    8.8    6.7
    Demand (kt)    29 750    31 240    33 000    5.0    5.6
PX    Capacity (kt/a)    11 090    12 530    14 730    13.0    17.6
    Demand (kt)    16 730    18 870    20 400    12.8    8.1



2. PTA
China’s newly added capacity to make PTA exceeded 10.0 million t/a in 2014, and the domestic capacity to produce PTA reached 45.29 million t/a by the end of 2014, a YoY growth of 29.1%. China’s export volume of PTA rose drastically in 2014, year-on-year. Due to soft domestic demand, most PTA producers relieved their overcapacity through export. The monthly average export volume of PTA was close to around 40 kt, and China’s export volume reached 465 kt in the whole year, up 272% YoY.
In 2015, the newly added capacity of PTA in China will mostly be put into operation in the first quarter, mainly including capacity that was planned to be put into operation by the end of 2014 but postponed -- the third phase 2.2 million t/a of Hengli Petrochemical Co., Ltd. and the third phase 1.25 million t/a of BP Zhuhai Chemical Co., Ltd. The newly added capacity of PTA was expected to reach 3.45 million t/a in the first quarter. Due to the basic transportation construction, the startup of Sichuan Haoda’s 1.0 million t/a project was postponed to around June 2015. The second phase 2.2 million t/a PTA unit of Hanbang Petrochemical Co., Ltd. is expected to be put into operation in the fourth quarter, and other units will not be put into operation on schedule. The total domestic capacity to make PTA will reach 52.24 million t/a by the end of 2015. At present, the pressure of released capacity is less; however, the new capacity for making polyester will also be less in 2016. It is expected that by the end of 2015, China’s total capacity to make PTA will exceed the total capacity to produce downstream polyester for the first time, and overcapacity will still be serious, so quite a few PTA enterprises will keep expanding export channels. It is expected that by 2015, China’s export volume of PTA will climb significantly; however, at the same time, the import volume will still decrease, and the domestic PTA market will be transformed into a net export pattern.
It is expected that China’s total consumption will reach 30.45 million tons by 2015, up 5.2% YoY.
3. EG
In 2014, China’s newly added capacity to make EG mainly came from the 200 kt/a unit of Sinopec Hubei Chemical Fertilizer Co., Ltd., the 300 kt/a unit of PetroChina Sichuan Petrochemical Co., Ltd. and three EG units of Danhua Chemical Technology Co., Ltd. By the end of 2014, the domestic capacity of coal-to-EG reached 1.1 million t/a. China’s capacity to make EG reached 5.69 million t/a in 2014, up 5.8% YoY, and output was 3.76 million tons, a YoY growth of 3.5%. Due to brisk demand, EG in China was still in seriously short supply, consumption was 12.21 million tons in 2014, up 2.4% YoY, and net import volume hit a new historic high level, reaching 8.45 million tons. Because of the immature coal-to-EG process technology, the operating stability of units was poor. According to preliminary statistics, the output of coal-to-EG was less than 500 kt, and the overall operating rate was around 45%.
In 2015, China’s newly added capacity to produce EG will mainly be a 400 kt/a ethylene-based EG unit of Sinopec Fujian Refining & Chemical Co., Ltd., the 200 kt/a ethylene-based EG unit of Zhejiang Jiaxing Sanjiang Petrochemical Co., Ltd. and over 1.0 million t/a coal-to-EG capacity. It is expected that by 2015, China’s capacity to make EG will reach 8.3 million t/a, up 45.9% YoY, and consumption will be close to 13.0 million tons, a YoY growth of 5.8%. In the last two years, polyester consumption has still occupied a major proportion of EG consumption; however, with output growth in the automotive sector, the demand for antifreeze has increased considerably, and the demand for EG in downstream chemical sectors like unsaturated resin has also climbed. Therefore, the growth of EG demand will be faster than the growth of polyester output.
4. AN
In 2014, both the output and price of AN maintained an overall trend of growth, and the non-fiber uses of AN became the main driving force to promote the growth of AN consumption. A 130 kt/a AN unit of Shandong Keluer Chemicals Co., Ltd., which is a joint venture between Sinopec and Wanda Group, was put into operation in 2014. It was estimated that China’s capacity and output of AN reached 1.52 million t/a and 1.35 million tons, respectively, up 9.6% and 6.4% YoY, and the consumption was 1.87 million tons, a YoY growth of 2.7%. In 2014, the output of acrylic fiber had a negative growth; however, the products like ABS (acrylonitrile-butadiene-styrene) /SAN (styrene-acrylonitrile copolymer) resin, polyacrylamide and acrylonitrile-butadiene rubber still maintained growth, effectively supporting the growth of AN consumption.
In 2015, there will be new AN units including the 260 kt/a expansion unit of Shanghai Secco Petrochemical Co., Ltd. (being put into production in the second quarter), the 260 kt/a unit of Jiangsu Sailboat Petrochemical Co., Ltd. (a wholly-owned subsidiary company of Shenghong Holding Group) and the 130 kt/a unit of Shandong Zibo Haili Chemical Co., Ltd., and the newly added capacity of AN will total 520 kt/a. China’s capacity to make AN will reach 2.04 million t/a, up 34.2% YoY, and the consumption will be 1.94 million tons, a YoY growth of 3.7%. Of that, the demand for acrylic fiber will be stable, the demand for downstream synthetic resins will climb constantly, and at the same time, the support of urban sewage and oil field assistants to the demand for polyacrylamide will make the consumption proportion of AN in this sector increase constantly.
5. CPL
China’s capacity to make CPL remained at 530 kt/a in 2011, and reached 2.21 million t/a (up 22.1% YoY ) by the end of 2014, being around three times more than that in 2011. China’s newly added capacity to make CPL mainly came from the startup of a 200 kt/a new unit of Fujian Tianchen Yaolong New Material Co., Ltd. and a new 100 kt/a unit of Zhejiang Juhua Co., Ltd. It is expected that China’s capacity to produce CPL will reach 3.31 million t/a, up 49.8% YoY, and CPL will become the product with the fastest growth in China’s chemical industry.
The manufacture of polyamide fiber civil yarn, industrial yarn and modified plastic are the main sectors consuming CPL. In 2015, the domestic polyamide fiber sector will maintain rapid growth, and the demand for civil fibers will still be the main driving force to promote the growth of demand for CPL used for fiber, and driven by the development of automobile industry, industrial yarn will also maintain a certain growth. Benefiting from the rapid development of manufacturing sectors like automobiles, electronics and electrical appliances, and machinery (such as mechanical transmission parts), the domestic demand for CPL in non-fiber sector will maintain rapid growth, and the non-fiber sector will become the second largest downstream consumption sector. It is expected that China’s consumption of CPL will reach 2.45 million tons by 2015, up around 17.2% YoY. Capacity will expand rapidly, but demand will not keep up, so the sector will enter a period of excess capacity.
6. PET
In 2014, 16 new PET (polyethylene terephthalate) units were actually put into operation, and the combined newly added capacity exceeded 4.0 million t/a. By the end of 2014, China’s total capacity to make PET reached 46.2 million t/a, up 8.8% YoY, and the overall operating rate reduced to 72.3%, down 2 percentage points year-on-year. In 2014, China’s output of polyester reached 33.4 million tons, up 6% YoY, and the net export volume was around 2.16 million tons, a YoY growth of 23%.
In 2015, the capacity to make PET will continue to climb drastically, the capacity being built will exceed 3.0 million t/a, and it is expected that by the end of 2015, China’s effective capacity to make PET will reach 49.3 million t/a, up over 6%. With the constant growth of PET capacity, the growth of terminal demand will continue to slow down, the imbalance between PET supply and demand will still be prominent, and some large polyester enterprises will continue to dominate the restriction of production.

Price

The prices of the polyester-polyester fiber chain: in 2014, in the context of the excess capacity and the drastic price drop of crude oil since July, the prices of PTA, PET and polyester fiber dropped with some fluctuation. The prices of major synthetic fibers and their raw materials fluctuated in the first half and went all the way down in the second half (see Figure 1 for details). The average prices of the major products in 2014 were significantly lower than those in 2013, down over 10%, and the prices of PX and PTA were down about 20%.
The prices of AN-acrylic fiber chain: in the first half of 2014, due to tight supply and lower inventories, the price of AN climbed constantly. Beginning from September, the supply was sufficient, and the price began to decrease, and because of the startup of new units in 2014, prices were reduced significantly (see Figure 2). It is expected that in 2015, the market supply will be sufficient, but demand growth will slow down, and the price of AN will drop with fluctuation, mainly due to weak cost support. In the first 11 months of 2014, the price of acrylic fiber in both domestic and international markets rose with fluctuation, and by the end of 2014, prices were reduced significantly. The prices of acrylic fiber basically grew with the prices of raw materials, but the fluctuation of fiber prices was somewhat narrowed. In 2014, the gross margin of AN climbed, whereas the profit of acrylic fiber had a YoY decrease of 20%. It is expected that the gross margin of acrylic fiber will be better.
In 2015, a large amount of newly added capacity to make CPL will be put into operation, oversupply will be aggravated, CPL prices will decline constantly, the profit level will drop drastically, and cost will become the only factor for supporting the price of CPL. At the same time, the price of polyamide fiber products will continue to decrease, and with a drop of raw material chip prices, the prices of polyamide fiber will also decline.