China to restructure troubled fibre sector

18 December 1995 00:00  [Source: ACN]

CHINA may adjust the structure of its chemical fibre industry next year with a view to strengthening the production capacity of raw materials, said market sources.

In the first half of this year, 55 of the 83 filament production lines in China suspended production. About half of the remaining 38 lines suffered losses.

The country now has 30 filament manufacturing enterprises, including Shanghai Petrochemicals, Yizheng Chemicals, and Foshan Chemical Fibres, said the China National Council of Textiles. Production and operating conditions, in general, are poor.

The polyester filament industry has experienced five major downturns since the late 1970s as a result of unsteady cotton crops in the country and import/export situations.

This year's crash was caused by a surge in raw material costs. The tight supply of chemical fibre raw materials on the international market since the second half of 1994 pushed international and Chinese market prices up sharply.

In the six months between October 1994 and April 1995, PET prices increased from Rmb11 000/tonne (US$1232.2/tonne) to Rmb24 000/tonne. Filament prices also rose during the period, from Rmb18 000/tonne to Rmb30 000/tonne, but not to an equal extent.

Chinese textiles officials said upturns in chemical fibre prices in the country always start from the upstream sector but downturns start downstream, reflecting structural defects in the country's chemical fibre industry.

The pace of development of fibre production in China is too rapid relative to the speed with which raw material capacity is increasing, they said. In addition, manufacturing enterprises are too scattered and of too small a scale, and their products lack variety and are of too low quality, making them vulnerable in tough market conditions.

Moves to eliminate these flaws are likely to focus on raising the production capacity of raw materials, sources said.

This would enable enterprises such as Yizheng Chemicals and Shanghai Petrochemicals to source material domestically, thus lowering production costs.

For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.

Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.

Printer Friendly