Zhejiang Chemical Fibers wants to take the high-end route

In recent months, the Zhejiang Provincial Economic and Trade Commission released a significant policy document titled "Circular on Accelerating the Structural Adjustment of the Chemical Fiber Industry." This directive marks a decisive step in addressing long-standing issues within the chemical fiber sector, which constitutes over 40% of the national industry's profits. The move signals a comprehensive restructuring effort aimed at resolving deep-rooted challenges that have hindered sustainable growth. Despite a sharp decline in overall profitability across the national chemical fiber industry last year, Zhejiang’s sector has shown remarkable resilience. In 2023, the province's chemical fiber companies reported a 30% increase in sales revenue, reaching 93.05 billion yuan, with a profit of 2.08 billion yuan—accounting for 42.9% of the nation’s total chemical fiber profits. This performance highlights the region’s strategic importance in the broader industry landscape. The success of Zhejiang’s chemical fiber industry is not accidental. It comes amid a backdrop of global economic volatility, including rising oil prices, trade tensions, and fluctuating currency values. Additionally, domestic factors such as electricity shortages and macroeconomic controls have further complicated operations. These pressures led to a period of stagnation, with many firms facing declining performance, reduced investment, and waning confidence. Zhejiang’s chemical fiber industry has long been a key player in the national market. With over 43 production enterprises and a total capacity of 3.38 million tons, the region holds significant shares in polyester polymerization (16%) and spandex (16%). However, since 2004, the sector has faced a severe downturn, often referred to as a “winter” period. During this time, many companies operated at a loss, struggling to remain profitable amid intense competition and overcapacity. This situation prompted the government to take action. The latest circular emphasizes structural reforms, focusing on limiting new investments, encouraging high-tech development, and phasing out outdated technologies. By promoting advanced production methods and higher-value products, the industry aims to improve efficiency and reduce environmental impact. One of the key strategies outlined in the circular is the encouragement of 12 specific technology and product categories, including ultra-fine filaments, functional fibers, and eco-friendly production techniques. These innovations are expected to drive long-term growth and enhance the industry’s competitiveness. Looking ahead, the restructuring of Zhejiang’s chemical fiber industry serves as a model for other regions grappling with similar challenges. Its transformation from a low-margin, overcapacity-driven sector to a more efficient and technologically advanced industry offers valuable lessons for the broader economy. As the sector continues to evolve, it is poised to play an even greater role in supporting Zhejiang’s textile and manufacturing industries, reinforcing its position as a vital economic pillar.

Chemical Engineering

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