How Long Will the Boom of Polyester Industry Last with Unreasonable Expansion in Capacity
Year:2019 ISSUE:16
COLUMN:POLYMERS
Click:170    DateTime:Aug.23,2019


By Gu Chaoying


The supply-demand pattern will change

China's PTA production capacity reached 52 million t/a (including idle capacity) in 2018, and the output was about 40 million tons. Although Xinjiang Zhongtai, Xinfengming Phase I and Hengli Petrochemical Phase IV all have plans of trial run at the end of 2019, the PTA new capacity launch peak is expected to arrive after 2020. Polyester’s demand for PTA can be as high as 40 million tons per year. After 2020, due to the substantial expansion of polyester capacity, the demand for PTA will continue to grow.

   Before 2019, the world’s demand for polyester was about 80 million tons annually. During 2018-2019, polyester capacity and output have once again experienced rapid growth and reached a historic peak. From 2017 to 2018, the production capacity of polyester increased by 8 million t/a. By the end of 2018, the total production capacity reached 54 million t/a, with the output at 46 million tons. The new capacity planned to come on stream in 2019 will be 6.85 million t/a. From 2019 to 2020, more than 8 million t/a of new polyester capacities will be put into the market. All these are undoubtedly good news for the upstream PTA industry.

   With the expansion of capacity, the concentration of production of China's leading polyester fiber enterprises has once again increased. At present, Hengyi Petrochemical's holding companies have a total capacity of 6.3 million t/a of polyester, including 1.5 million t/a bottle chips, 4.15 million t/a polyester filaments, and 0.65 million t/a polyester staple fiber. Rongsheng has a polyester filament production capacity of over 1.1 million t/a. Hengli Group’s spinning and polymerization capacity is 1.6 million t/a. At the beginning of 2019, China's polyester fiber industry had a total production capacity of 36.34 million t/a. The top six enterprises and their market shares are: Tongkun 14.9%, Hengyi 13.7%, Xinfengming 9.1%, Shenghong 5.2%, Hengli 4.8% and Rongsheng 4%.

   Except for Shenghong, the market shares of the other top five enterprises will be on the rise in the next three years. The newly added capacities are almost all from the above-mentioned industry leaders. In the next three years, the polyester fiber industry is expected to see another 7.77 million t/a of new capacities, with the top five contributing 6.4 million t/a.


Will the boom cycle end?

   More than 70% of polyester end products are related to textiles and garments. Therefore, it is necessary to judge the actual demand for polyester according to the sales situation of textiles and garments. China's textile and apparel exports are much higher than imports. In 2018, the export volume was US$276.731 billion, an increase of 2.45%; among them, textile exports amounted to US$119.098 billion, an increase of 7.61%; clothing exports amounted to US$157.633 billion, a decrease of 1.14%. From January to April this year, the export momentum of polyester chips, polyester filaments and polyester staple fibers remained strong, as polyester chips’ imports and exports were respectively 173 300 tons and 178 800 tons; polyester filament’s imports and exports were 35 600 tons and 899 700 tons; and polyester staple fiber’s imports and exports were 65 000 tons and 320 300 tons.

   The slackened end market investment cannot fully match the rapid release of polyester capacity, leaving it great pressure.

   At the same time, the number of DTY machine reduced in 2019 after an explosive increase in 2017-2018, reflecting certain market risks. Textile and apparel domestic demand will remain weak until the first half of 2020.


Recycled polyester’s strong replacement of prime materials

   The application value of recycled polyester PET materials in various fields is prominent. For example, it is processed into fibers in the melt spinning equipment, and its filaments and staple fibers are widely used in the field of apparel fabrics, which is currently the most applied area of recycled PET. Recycled PET granules can be used in the production of food-grade packaging containers. PET bottles can be used to make non-crystalline PET sheets, packaging strips and corrugated awnings. Reinforced by glass fiber and other fillers, recycled PET can be applied to automobiles and household appliances and computers. Alloys and composites can make recycled PET bottles realize high value-added applications.

   In recent years, the capacity of China's recycled polyester PET fiber has exceeded 10 million t/a. In fact, more than 90% of China’s recycled PET fibers are digested in the domestic market, and more than 60% of them are related to the home textile and related industries. Recycled polyester fibers have fully replaced the prime polyester PET in these markets thanks to their high cost performance. In these market segments, the physical, chemical and mechanical properties of the new polyester PET fibers are the same as those of the recycled PET fibers, except that the new products have a better performance in color. For example, recycled PET staple fibers and their products are widely used as filling materials and skeleton materials in bedding, sofa and fabric furniture, and interior decoration products. Other application markets are mainly concentrated in industrial textiles (especially non-woven materials) and apparel. The end-use market covers medical and sanitary textiles, geotextiles and construction textiles, vehicle textiles, textiles for filtration and separation, and safety protection textiles. 

   The application of recycled polyester fiber in China will continue to expand in the future. Some civilian recycled polyester fiber products will be more widely used in fields like various types of mosquito nets, tablecloths and cotton quilts, awning construction fabrics, and sunshade tents.