Major events of Chinese spandex market in 2024

In 2024, the difference between supply and demand of spandex industry narrows slightly. The startup of some new units is delayed slightly. The spandex capacity is expected to see narrower year-on-year growth rate in 2024 and demand may see near 12% of growth rate. The indicators of spandex market including operating rate and profit recover on the year in 2024. In addition, alongside medium-to-high growth of the whole industrial chain, spandex market also tends to witness higher integration, higher capacity concentration ratio and green fiber.

I. Raw materials

1. Huafon Chemical: Chongqing Materials Co., Ltd. and Fufeng Chemical Co., Ltd. obtained the real estate certificate

On January 31, according to the announcement of Huafon Chemical, Chongqing Materials and Fufeng Chemical under the company respectively obtained the Real Estate Right Certificate of the People's Republic of China, providing a solid land use foundation for the future project construction of the company. It was reported that the two plots of land will be used for the construction of the first phase of the 1.1 million tons of natural gas integration project.

2. The first special train of Inner Mongolia Huaheng Energy PTMEG products was launched

On February 2, the first launch ceremony of PTMEG product railway special train of Inner Mongolia Huaheng Energy Technology Co., Ltd. was successfully held in Wuda District, Wuhai City.

3. Hyosung will invest 1 billion US dollars to build a 200kt/year bio-based BDO plant in Vietnam

In April, Hyosung TNC announced that it would build a bio-based 1,4-butanediol (Bio-BDO) plant with a capacity of 50,000 tons in Vietnam, and plans to expand the future plant to 200,000 tons per year.

4. Dairen Chemical Co., Ltd. joins in the development cooperation of bio-based Lycra Fiber between Lycra and Qore

In May, The LYCRA Company announced that it had signed a letter of intent with Dairen Chemical Industry Co., Ltd. to convert QIRA brand bio-based BDO (1,4-butanediol) into a low-carbon and environmentally friendly PTMEG, the main ingredient of patented bio-based LYCRA fiber. Dairen Chemical will also become the world's first company to mass produce this low-carbon, environmentally friendly bio-based PTMEG.

5. BASF expands the biomass balance product portfolio of chemical intermediates such as BDO and PTMEG

In May, BASF announced that it would expand the range of biomass balance intermediates, including BMBCertTM 1,4-butanediol (BDO), tetrahydrofuran (THF), polytetrahydrofuran (PolyTHF) and 3-dimethylaminopropylamine (DMAPA); After the production site in Ludwigshafen, Germany, BASF's Gasma, Louisiana, U.S.A., site also obtained relevant certification for the above products, while the Ulsan site in South Korea also obtained relevant certification for PolyTHF.

6. The effect of suspension of ECFA tariff concessions on THF and PTMEG

According to the announcement of the Tariff Commission of the State Council on May 30, from June 15, 2024, the application of the agreed tax rate of the Framework Agreement on Cross-Strait Economic Cooperation shall be suspended for 134 imported products such as lubricating oil base oil listed in the annex originating in Taiwan, China and shall be implemented in accordance with the relevant existing regulations.

The cancellation of ECFA tariff concession involves tetrahydrofuran (THF tariff No. 29391100), polytetramethylene ether glycol (PTMEG tariff No. 39072910) and other upstream chemical intermediate products of spandex industry chain, as well as raw and auxiliary materials, equipment accessories and other tariff No. products in chemical fiber, printing and dyeing industries. According to the tax rate implemented for the products, the cost of import sources of PTMEG and THF will increase significantly after the suspension of tariff concessions. The provisional tax rate of PTMEG is 3%, and the MFN tax rate of THF is 6%, and the cost of import sources will also increase accordingly.

7. Huafon Chemical Co., Ltd.: plans to invest an additional 800 million yuan to expand the capacity of the original "Spandex Industry Chain Deepening Project"

Huafon Chemical announced on July 12 that it plans to adjust the original "Spandex Industry Chain Deepening Project," and invest an additional 800 million yuan to expand the capacity by means of self-raised funds of the company on the basis of the original project; the original construction content is "120,000 tons/year PTMEG device; supporting process units, utilities and auxiliary facilities, etc.," and the adjusted construction content is "240,000 tons/year PTMEG device; supporting process units, utilities and auxiliary facilities, etc."

8. Huafon 10.08 billion yuan! Invest projects including 500kt/year of BiOPTMEG

In September, the annual output of 500,000 tons of bio-based polytetramethylene ether glycol (BiOPTMEG), 20,000 tons of tetrahydrofuran and by-products of 45,500 tons of methyl acetate, 3,500 tons of 1.4-butanediol and 1,500 tons ofγ-butyrolactone of Jiangsu Huafon CovationBio Co., Ltd. was publicized on relevant websites.

9. Middle East oil giant acquires German chemical company Covestro

In October, Covestro AG entered into an investment agreement with entities of ADNOC Group, including ADNOC International Limited and its subsidiary ADNOC International Germany Holding AG (hereinafter referred to as the "Acquirer"). The agreement stipulates, among other things, that the acquirer will publicly acquire all of Covestro's outstanding shares at a price of 62 euros per share. In addition, ADNOC International is committed to fully supporting Covestro's "Sustainable Future" strategy.

10. 1.5 Million tons/year MDI technical transformation and capacity expansion integrated project of Wanhua Chemical (Fujian) Isocyanate Co., Ltd.

Wanhua Chemical (Fujian) Isocyanate Co., Ltd.'s 1.5 million tons/year MDI technical transformation and capacity expansion integration project is as follows, the project on the basis of the original 800kt/year of MDI device condensation unit, photochemical unit, separation unit capacity to 1.5 million tons/year MDI capacity, supporting the relevant raw material production device, synchronous change, expansion of related utilities, auxiliary facilities and environmental protection facilities.

11. Wuhai BDO product railway transportation train is officially opened

On November 8, with the loud whistle, a freight train loaded with 100 tank containers containing BDO products slowly left Wuhai West Station and ran southward to Shanghai, Zhejiang, Guangdong and other places, marking the official opening of the railway transport train for BDO products in Wuhai City.

II. Spandex field

1. Yinchuan Binhe spandex fiber project cooperation signing ceremony held

On April 17, the signing ceremony of Yinchuan Binhe spandex fiber project was held. Tao Shaohua, Deputy Secretary of Yinchuan Municipal Party Committee and Mayor, and Gary Smith, CEO of Lycra Corporation of the United States, attended the ceremony and witnessed the signing of the contract. It was reported that Yinchuan Binhe spandex fiber project is located in Suyin Industrial Park, aiming at building a leading spandex production base in China.

2. The proposed raised capital of Xinxiang Chemical Fiber shall not exceed 1.38 billion yuan.

In April 2024, Xinxiang Chemical Fiber Co., Ltd. planned to raise no more than RMB 1.38 billion yuan in this issuance of shares to specific objects. The net amount after deducting the issuance expenses will be used for the third phase project of the project with an annual output of 100,000 tons of high-quality superfine denier spandex fiber, the project with an annual output of 10,000 tons of biomass cellulose fiber and supplementary working capital.

3. Xinxiang Chemical Fiber's functional textile new material project landed in Dongying, Shandong province, with a total investment of 3.6 billion yuan

Xinxiang Chemical Fiber's 5000 tons of fungus grass industrialization project will be put into production in December, opened the prelude of the ultimate strategic goal of 5 million tons. Superimposed recently, Xinxiang Chemical Fiber (000949.SZ) functional textile new material project signed a contract in Dongying Economic and Technological Development Zone, Shandong Province. The signing of Dongying Project means that after Xinjiang, its cross-regional cooperation and development has taken a solid step forward, and also marks that the industrialization process of Xinxiang Chemical Fiber Fungus Grass Fiber is further improved. The projects signed by Dongying include two major sectors: fungus grass planting and biomass fiber industrialization, with a total investment of RMB 3.6 billion yuan in the first phase, jointly invested by Xinxiang Bailu Investment Group Co., Ltd., Dongying Economic and Technological Development Zone Management Committee and CYTS Urban Development Holding Co., Ltd.

4. Construction of Phase III of Hyosung Spandex, the largest foreign-funded project in Ningxia, commenced

On May 13, at the commencement ceremony of the third phase of Hyosung Spandex Project, General Manager of Hyosung Spandex (Ningxia) Co., Ltd. and General Director of Hyosung Spandex Project An Zhunmo told reporters. It was reported that the total investment of the third phase of Hyosung Spandex Project will reach 1.8 billion yuan. The construction contents include the differential spandex production line with the designed capacity of 70,000 tons/year, the PTMEG production line with the designed capacity of 100,000 tons/year and the supporting facilities. The construction period of the project is 10 months, which will create "Ningdong Speed" again in industrial projects.

5. The factories in India and Turkey of Hyosung expand the production of "Spandex for hygiene materials"

Hyosung said on May 14 that it plans to expand polymerization engineering and other equipment in spandex factories in India and Turkey by February 2025 to build a local production system for spandex used by hygiene materials. The investment is to meet the demand for spandex for hygiene materials in global markets such as India, Europe, the Middle East and Africa, as well as to ensure supply stability. Hyosung TNC plans to increase the production of spandex for hygiene materials by 11,000 tons in India and Turkey by 2026.