Taiwan's synthetic fiber makers seeing rosy picture this year

Taipei, March 15, 2004 (CENS)--Thanks to upbeat economic climate, Taiwan's leading synthetic fiber manufacturers, including Zig Sheng Industrial Co. and Li Peng Enterprise Co., are seeing rosy picture for the market this year.

In February Zig Sheng saw its revenue soar to a new monthly high of NT$713 million (US$20.97 million) and projected its nylon products to score profits of NT$300 million (US$8.8 million) for the full year. In the same month, Li Peng also registered record high revenue of NT$450 million (US$13.24 million), and is confident of enjoying even better performance in March.

Insiders said that the first quarter is traditionally a boom season for polyester and nylon industries. However, polyester is facing oversupply due to the rapid expansion by manufacturers in mainland China, whose growth volume in 2003 alone already outstripped Taiwan's accumulated production volume recorded in the past three decades.

In contrast, the global market demand for nylon is quite stable. Recently many mainland Chinese textile manufacturers started or increased their purchases of nylon filament from Taiwan as the mainland authority legally ruled that the manufacturers in Europe, the U.S. and Japan dumped caprolactam (CPL), the raw material of nylon, in the mainland.

With the patronage of textile manufacturers across the Taiwan Strait, Taiwan's nylon industry has greatly gained strength, and the price of CPL is rising due to growing market demand. In February Taiwan's CPL price rose to US$1,580 per metric ton from January's US$1,480 and has soared further to US$1,670 for the moment. In the international market the price of CPL has risen to US$1,750 per metric ton.

Japan is Zig Sheng's major export outlet for nylon filament, absorbing more than half of the company's exports of the product. S. T. Yeh, Zig Sheng's general manager, disclosed that the market for nylon filament in Japan is pretty good, and Zig Sheng is now selling its nylon filament at US$1,700 per metric ton to its Japanese buyers.

To meet the booming market demand, Zig Sheng is spending NT$1.5 billion (US$44.12 million) to expand the operation of its nylon plant, which is believed the company's largest expansion project in three decades. The expansion project is slated for completion in June of this year.

Last year Zig Sheng netted after-tax profit of NT$250 million (US$7.35 million), becoming the most profitable false twist manufacturer in Taiwan. The firm estimated to score pretax profits of NT$150 million (US$4.4 million) in the first quarter of this year.

Starting this year Li Peng has also experienced booming business for its nylon products. The company already sold out all of its nylon filament inventory early this month, and its monthly output of nylon filament currently overpasses its ceiling capacity to hit 6,900 metric tons. To meet the soaring demand, Li Peng is now planning to spend NT$200-300 million (US$5.88-8.8 million) to expand its operations, which is slated for completion next year.