On September 22, 2022, Xinfengming announced that it plans to invest in a new 150,000-ton surfactant and 100,000-ton spinning oil project in Dushan Port Economic Development Zone, Zhejiang, through its wholly-owned subsidiary Dushan Energy. The total investment is 2 billion yuan, including 1.7 billion yuan in fixed assets investment.
The project is planned to start construction in the second quarter of 2023 and be put into operation in the fourth quarter of 2024. The project will reach full capacity 2 years after it is put into production, with an annual output value of approximately 3.1 billion yuan.
According to the announcement, in order to enhance operational stability and obtain cost advantages, improve the flexibility of corporate development and anti-risk capabilities, the company actively optimizes the corporate product structure based on its own development needs. As a supporting auxiliary material project for the industrial chain, the company’s external investment project is an important measure to realize the company’s self-supply of auxiliary materials and oils. It is also the implementation of the company’s long-term development strategy. It will help optimize the company’s industrial layout, enhance the company’s core competitiveness, and enhance The company’s overall profitability level has positive strategic significance for the company.
Xinfengming’s 2025: Will achieve the annual PTA production capacity target of 10 million tons
According to public information, in 2018, the subsidiary Dushan Energy PTA project officially started construction. This marks Xinfengming’s official entry into the PTA industry and its development upstream in the polyester industry chain. According to information from the Jiaxing Municipal Ecological Environment Bureau, the environmental impact assessment of Xinfengming Dushan Energy’s 1.4 million tons PTA technical transformation and expansion project has recently passed. According to the environmental impact assessment report, this project adds an annual production capacity of 1.4 million tons to Xinfengming’s original approved annual production of 4 million tons of PTA. This also means that the company’s total PTA production capacity under construction will reach 5.4 million tons. . Xinfengming currently has a PTA production capacity of 5 million tons, plus a production capacity of 5.4 million tons under construction. It will eventually achieve an annual production capacity target of 10 million tons in 2025.
PTA is the upstream of polyester filament, accounting for 85.5% of the raw material cost. This means that opening up the upstream industrial chain will help stabilize raw material prices on the one hand, and ensure stable supply of raw materials on the other. At present, Xinfengming’s polyester filament production capacity is 6.3 million tons. Based on the calculation that 1 ton of polyester filament requires 0.855 tons of PTA, the corresponding PTA production capacity is about 5.4 million tons. At present, the company has built PTA production capacity that can basically meet its own needs. From a planning point of view, as the company’s polyester filament yarn planning goal of 10 million tons is approaching, PTA supporting production capacity will also advance accordingly.
The company’s self-built PTA project has many advantages in terms of cost, energy consumption, and material consumption.
Judging from the geographical location of Dushan Energy, it has the dual advantages of “location + technology”. From a geographical point of view, Dushan Energy Base is located in the southeast of Pinghu City, Zhejiang Province. It is close to the company’s Pinghu base for polyester filament. It can transport raw materials locally and is close to the Zhouquan and Huzhou bases. PTA products can be transported to the company through pipelines. Filament base transportation greatly saves transportation costs.
In addition, Xinfengming’s PTA Phase I and II project installations have selected industry-leading process technology and patented equipment. According to the 2020 ranking of petrochemical companies’ PTA energy consumption indicators announced by the China Petroleum and Chemical Industry Federation, Dushan Energy PTA The project has the best energy consumption and power consumption indicators, ranking first. In terms of material consumption, compared with traditional PTA technology, it can reduce 95% of solid waste, 65% of greenhouse gases and 75% of wastewater emissions, and has obvious environmental advantages.
It is worth noting that the PTA project adopts a waste heat power generation solution, which can be used in reverse to generate power for self-use. In 2021, the Dushan PTA project generated a total of approximately 979 million kw/h throughout the year, accounting for approximately 53.35% of Xinfengming’s electricity purchase in 2021. This means that PTA production has zero electricity cost, and reverse power supply also reduces polyester production costs. . In addition, in addition to self-use, the power supply of Dushan PTA device can also be gained through the use of surplus electricity to go online. According to the 2021 annual report data, the sales revenue of Dushan Energy’s waste heat power generation in 2021 reached 102 million yuan.
Bucking the market trend, increasing investment in R&D and production capacity
Xinfengming’s market share continues to increase
On August 29, Xinfengming released its semi-annual report. The company achieved revenue of 23.7 billion yuan, a year-on-year increase of 0.14%, and net profit of 394 million yuan, a year-on-year decrease of 70%. The company stated that the decline in performance was mainly affected by fluctuations in crude oil prices. At the same time, affected by the domestic COVID-19 epidemic, downstream operating rates were also under greater pressure, which in turn affected production, sales, and price differences.
Although its performance declined due to the impact of the external environment, Xinfengming still maintained high investment in R&D. In the first half of the year, it invested 480 million yuan in R&D, a year-on-year increase of more than 60 million yuan, an increase of 15%. According to Flush iFind data, among the more than 4,000 Shanghai and Shenzhen listed companies that have been disclosed, Xinfengming ranks 168th in R&D investment, ranking first.
In terms of research and development results, Xinfengming has successfully developed a number of differentiated products. From the perspective of market demand, the application fields of high-performance, differentiated and ecological fibers are constantly expanding into industrial fields such as transportation, new energy, medical and health care, infrastructure, safety protection, environmental protection, aerospace and other industries. In the future polyester market, chemical fibers with high added value will gradually become a new growth point in the industry.
In terms of production capacity, the company currently has a production capacity of 6.3 million tons of polyester filament, 600,000 tons of polyester staple fiber, and 5 million tons of PTA. It is expected that by the end of 2022, the company will also add approximately 300,000 tons of polyester filament production capacity and 600,000 tons of polyester staple fiber. By then, it will have a polyester filament production capacity of 6.6 million tons and a polyester short fiber production capacity of 1.2 million tons.
As production capacity continues to be released, Xinfengming’s market share has been rising. In 8 years, the market share has increased from 5% to over 12% currently. However, the development of small and medium-sized enterprises is not optimistic. They are affected by environmental protection, production restrictions, epidemics, logistics and other external factors.The influence of many factors has brought great challenges to chemical fiber companies in recent years, driving low-end production capacity to gradually withdraw. According to media reports, Changle Fiber, a long-established chemical fiber company, has recently been shut down for liquidation and 300,000 tons of polyester filament production capacity has been withdrawn. This means that external influences continue to compress the living space of medium-sized chemical fiber companies. As the industry structure becomes clearer, industry concentration is increasing day by day. CR4 production capacity currently accounts for more than 60% of the country’s total production capacity, an increase of approximately 6 percentage points compared to 2019. The market expects that the concentration of production capacity will further increase in the future, demonstrating an industrial trend in which the strong will always be strong.
</p
