Major events of Chinese spandex market in 2023

In 2023, the international situation is complex and changeable, geopolitical conflicts and local wars occur one after another, the war between Russia and Ukraine is protracted, and the war between Palestine and Israel is escalating, resulting in an energy crisis that affects the world. However, the impact of the epidemic has gradually decreased, and the global industrial chain and supply chain have gradually returned to smooth flow. The spandex market in the Chinese mainland is creeping forward in the multiple games of continuous capacity expansion, strong cost and limited demand recovery, and the market continues to supply more than demand. At present, spandex prices are shivering near the historical bottom.

 

Macro market

1. Tax rate of spandex related products in RCEP agreement

The Regional Comprehensive Economic Partnership Agreement (RCEP) enters into force on January 1, 2022, mainly involving six ASEAN members, including Brunei, Cambodia, Laos, Singapore, Thailand and Vietnam, and four non-ASEAN members, including China, Japan, New Zealand and Australia.

 

2023 is the second year of the entry into force of RCEP, the terms of trade and tariff dividends of exports to ASEAN are further released, and the year-on-year decline of exports to RCEP is smaller than the exports to the European Union and the United States. From January to November 2023, China's textile and clothing exports totaled US $268.561 billion, down 8.88% from the same period of last year, of which textile exports were US $113.36 billion, down 9.2% year on year, and clothing exports were US $145.2 billion, a year-on-year reduction of 8.6%. From January to November 2023, exports of China's textile and clothing to RCEP accounted for nearly 30% and RECP continued to become China's largest export market. The proportion of US and EU was at 15.8% and 13.1% respectively.

 

2. Administrative measures for the use and reporting of disposable plastic products by business operators

 

On May 16, 2023, the Department of Circulation and Development issued a document for further implementation of Xi Jinping's Ecological civilization thought, in accordance with the Law of the People's Republic of China on the Prevention and Control of Environmental pollution caused by solid waste, the Ministry of Commerce and the Development and Reform Commission jointly formulated and recently issued the "measures for the Administration of the Use and Reporting of Disposable Plastic Products" (hereinafter referred to as the "Management measures"). The "Management measures" propose that the state promotes green development, advocates a simple, moderate, green and low-carbon lifestyle, encourages the reduction of the use of disposable plastic products, and scientifically and steadily promotes the application of alternative products, and guides the public to actively participate in the treatment of plastic pollution.  Operators in the commercial fields of retail, e-commerce, catering, accommodation and exhibitions shall abide by the relevant state regulations on prohibiting and restricting the use of disposable plastic products such as non-degradable plastic bags.

 

3. Vietnam approves a surtax on multinational corporations, with an effective tax rate of 15%

 

Vietnam's parliament voted on November 29 to approve a surtax on multinational corporations, which will raise the effective rate of corporate tax to 15% from January 1, 2024.  Vietnam's basic corporate income tax rate is 20%, but for many years it has provided large foreign investors with an effective tax rate as low as 5% and a long-term zero tax period.  According to Vietnamese government documents, after the implementation of the new tax rate, the tax costs of 122 foreign companies will increase sharply, and Vietnam is expected to increase tax revenue by 14.6 trillion dong (601 million US dollars) a year.

 

4. The Ministry of Industry and Information Technology and other four departments jointly issued the "Implementation Plan for Quality Improvement and Upgrading of Textile Industry (2023-2025)"

 

On December 7, the Ministry of Industry and Information Technology, the National Development and Reform Commission, the Ministry of Commerce and the General Administration of Market Supervision recently jointly issued the "Implementation Plan for Quality Improvement and Upgrading of Textile Industry (2023-2025)"  (hereinafter referred to as "Implementation Plan"). The "Implementation Plan" points out that by 2025, substantial progress will be made in the construction of China's modern textile industry system, the business income of textile enterprises above the scale will increase steadily, and the quality and efficiency of development will maintain a good level. The international dominant position of the textile industry will be further consolidated and enhanced.

 

Upstream feedstock sector

1. Capacity of BDO and PTMEG surges

BDO-PTMEG-Spandex market enters a new round of capacity expansion in 2023. The growth rate of MDI capacity is also high compared with previous years.

 

The capacity of BDO is expected to be near 3.4 million tons/year by the end of 2023, up by 34% year on year. Huaheng Energy, Blue Ridge Tunhe, Inner Mongolia Dongyuan, Sanwei, Wuheng Chemical and Xinjiang Markor's units were put into production.

 

The capacity of PTMEG is expected to approach 1.14 million tons/year by the end of 2023, up by 24% year on year. Wuheng Chemical, Hangzhou Sanlong, Blue Ridge Tunhe and Hyosung Ningxia's plants started operation.

 

The capacity of MDI is expected to approach 4.36 million tons/year by the end of 2023, a year-on-year rise of 10%. In 2023, only one MDI unit, Fujian Wanhua, began operation in China.

2. Wanhua Chemical acquires some stake from Yantai Juli

According to the announcement, Wanhua Chemical Group Co., Ltd. (hereinafter referred to as "Wanhua Chemical") acquired the 47.81% stake in Yantai Juli Fine Chemical Co., Ltd. (hereinafter referred to as "Yantai Juli") held by Xinjiang Heshan Dongxu Investment Management Center (Limited Partnership) at a price of 1.785 billion yuan. The two parties completed the delivery of the equity on April 28, 2023.  After the settlement of the acquisition, Wanhua Chemical and its concerted actor Ningbo Zhongdeng Investment Co., Ltd. (hereinafter referred to as "Ningbo Zhongdeng") held a total of 67.81% of Yantai Juli Fine Chemical Co., Ltd.

 

3. BASF and Huntsman will independently operate the MDI plant in Shanghai

On July 31, 2023, BASF and Huntsman, together with their Chinese partners Shanghai Huayi Holdings Group Co., Ltd., Sinopec Shanghai Gaoqiao Petrochemical Corporation, and Shanghai Chlor-Alkali Chemical Co., Ltd., announced the split of the joint venture MDI (Methylene Diphenyl Diisocyanate) production facility of Shanghai Lianheng Isocyanate Co., Ltd. (SLIC).  In the future, the two companies will independently operate MDI plants located in Caojing, Shanghai.  Huntsman & Shanghai Chlor-Alkali Chemical, and BASF & Shanghai Huayi &Gaoqiao Petrochemical will respectively take over one MDI plant.

 

4. Mitsubishi Chemical to revise up its capacity of BioPTMG

In October, 2023, Mitsubishi Chemical Group announced that its Yokkaichi plant's bio-based raw material PTMG (Polytetramethylene Ether Glycol) (BioPTMG) can provide flagship BioPTMG 1000 and BioPTMG 2000 products.

 

5. Announcement of Huafon Chemical's investment in natural gas integration project including BDO

According to the announcement on December 8: the 15th meeting of the eighth board of directors of Huafon Chemical Co., Ltd. approved the motion on investing in the construction of an integrated natural gas project with an annual output of 1.1 million tons (first phase). It is proposed that its subsidiary company Chongqing Fufeng Chemical Co., Ltd. to build an annual natural gas integration project with an annual output of 1.1 million tons (phase I), with investment at 5.02 billion yuan.   Huafon Chemical through the wholly-owned subsidiary Huafon Chongqing Biomaterials Co., Ltd. invested 2.04 billion to build a 120kt/year of PTMEG- spandex industry chain deepening project.

 

Spandex field

1. The growth rate of spandex capacity is estimated to be 13% in Chinese mainland in 2023.

 

By the end of 2023, the spandex capacity is anticipated to be 1239.5kt in Chinese mainland, up by 13% year on year. Many new spandex plants including Huafon Chemical, Xiamen Lilong, Tayho New Material, Hyosung Spandex and Xinxiang Chemical Fiber were put into production.

2. Huafon Chemical Fiber

2.1. Huafon Chemical won P&G's Best Global Partner Award in 2022

 

On January 6, 2023, Huafon Chemicals won the Best Global Partner Award from P&G BABY CARE. This prestigious honor is the annual award bestowed by P&G, a Fortune 500 company, to its global partners, and winning it is considered extremely difficult.

 

2.2 Huafon Chongqing successfully passes AEO advanced certification of customs

 

On January 16, 2023, Huafon Chongqing Spandex Co., Ltd. successfully passed the document review of Chongqing Customs Certification expert Group and was officially awarded "AEO Advanced Certified Enterprise ".  The certified "gold business card" not only obtains business convenience in import and export customs clearance, but also helps the company to enhance its international image and comprehensive competitiveness and promotes the improvement of various business processes and the standardization of management.

 

2.3 Huafon Chemical's Qianxi recycled spandex completes LCA life cycle assessment and obtains Intertek Green Leaf Certificate

 

In April, 2023, Huafon Chemical Co., Ltd. completed the carbon footprint certification of Qianxi® recycled spandex products according to the life cycle assessment (LCA) method.  The results show that Qianxi® recycled spandex has excellent environmental benefits.

 

3. Hyosung Spandex

3.1 Hyosung TNC has reached a new partnership with XEXYMIX, a sports and leisure brand that sells TOP1 in South Korea

 

In early-December, Hyosung TNC signed an exclusive business agreement (MOU) for the supply of "creora ®Fresh" fiber with XEXYMIX, a sports and leisure brand that sells top1 in South Korea.

 

3.2 CREORA: integrate spandex, polyester and nylon functional fiber brands

 

Hyosung TNC decided to merge the existing spandex brand "CREORA", which is located in the first place in the world, with functional fiber brands such as polyester fiber and nylon fiber.

 

4. Xinxiang Chemical Fiber

4.1 The project of "key technology research and industrialization of fungus fiber" of Xinxiang Chemical Fiber has successfully passed the acceptance of the expert group of academicians

 

On August 21, the China Forestry Industry Federation organized an expert group to review and evaluate the scientific and technological achievements of the project "key technologies and industrialization of fungus fiber manufacturing" completed by the company.

 

4.2 Xinxiang Chemical Fiber Co., Ltd. was recognized as the first batch of high-tech enterprises in Henan Province in 2023

 

On December 13, Xinxiang Chemical Fiber announced that the company was recognized as the first batch of high-tech enterprises in Henan Province in 2023 (certificate number: GR202341002092). The certificate would be issued on November 22, 2023, with a validity period of 3 years.

 

5. Tayho New Material

Tayho New Material: Scientific Innovation promotes the High-quality Development of Chinese fabirc manufacturing

 

Yarnexpo Spring/Summer was held in National Exhibition and Convention Center (Shanghai) on March 28-31, 2023. Tayho New Material booth unveiled green printing and dyeing EcodyTM technology and Litme Lettermex smart fiber materials. Green printing and dyeing EcodyTM technology has the characteristics of "instant dyeing, environment-friendly, natural bacteriostasis, energy saving and consumption reduction, process safety". It can realize the "personalized customization" of terminal brands and users green, safe and efficient, and help the textile industry to achieve low-carbon green transformation as soon as possible. Litme smart fiber is the first braided electroluminescent fiber in the world, which can be directly processed by sewing, weaving, embroidery, knitting and other weaving methods like ordinary yarns, thus obtaining corresponding light-emitting fabrics and patterns, providing new basic materials and flexible solutions for product innovation in the automotive industry, smart wear, information electronics and toy accessories.

 

6. Lycra Company

Lycra Company: Add "strength" to the sustainable development of the industrial chain

 

On August 28-30, Lycra Company, with the theme of "working together to create the future", joined hands with 28 joint exhibitors to unveil China International Textile Fabrics and Accessories (Autumn and Winter) Expo with an exhibition size of 932 square meters. Lycra ®Smart Fiber-BLACK, Lycra ®Smart Fiber-XTRA LIFE and LYCRA ®SHEER SENSATION technology were demonstrated for the first time.

 

7. South Korea Taekwang

South Korea Taekwang's 108kt/year differential spandex project starts construction in Ningdong, Ningxia

 

On February 18, on the construction site of Ningdong base branch site, the differential spandex production line and supporting facilities, with a total investment of 4.5 billion yuan, from the South Korea Taekwang Industrial Co., Ltd. (the largest comprehensive chemical fiber manufacturer in South Korea) will be built in three phases, and each phase will have 36kt/year of capacity.

 

8. Nanjing Tech University, Lianyungang Duzhong New Aoshen and SUMEC develop a brand-new bio-based spandex new material

 

It was reported that the first bio-based spandex new product in China has been born, becoming the only bio-based spandex fiber product in the world with a bio-carbon content that meets the EU three-star standard (EU OK Biobased standard)! Professor Guo Kai's team from Nanjing Tech University, together with Lianyungang Duzhong New Aoshen Spandex Co., Ltd. and SUMEC Light Textile International Group, jointly designed and developed a new structure and new products of bio-based spandex materials.  The developed bio-based spandex fibers have excellent performance in all aspects, with costs much lower than international counterparts and a significantly higher bio-carbon content than similar international products.