Tuesday, October 23, 2012

Qixiang Tengda to raise USD316 million to produce PBS

On Sep. 25, 2012, Zibo Qixiang Tengda Chemical Co., Ltd. (Qixiang Tengda) publishes a notice that it plans to raise USD316 million (RMB2 billion) by non-public offering shares to step into China's biodegradable industry. The company tries to invest USD618 million (RMB3.91 billion) to construct PBS (poly butylenes succinate) program with capacity of 150,000t/a, according to CCM International’s October issue of Biomaterials China News.
The company tries to offer no more than 120 million shares with price of no less than USD2.212 (RMB14) per share. At present, the company's holding company—Zibo Qixiang Petrochemical Industry Group Co., Ltd. (Qixiang Group) will input no less than USD15.8 million (RMB100 million). The company will satisfy the balance between the total investment and raised fund by self-financing.

Qixiang Tengda will divide the program into two phases, and construct a whole work flow of PBS including the raw material succinic acid (SA) and butanediol (BDO).
It will spend one year on the first phase. At first, Qixiang Tengda will make use of its abundant by-product—butane to produce maleic anhydride (MA) with capacity of 100,000t/a. MA can be used to produce SA and BDO. During the first phase, the production facilities of MA and BDO with capacity of 100,000t/a and 55,000t/a respectively should be completed.
It will spend one and a half years on the second phase to construct production facilities of MA, BDO and SA with capacity of 100,000t/a, 55,000t/a and 75,000t/a respectively. At last, it will construct the PBS facilities with capacity of 150,000t/a.

Qixiang Tengda is entirely optimistic about the prospects of PBS though its current market is not so good. It thinks that domestic potential demand for PBS can exceed 500,000 tonnes per year.
Qixiang Tengda thinks that PBS is the most excellent biodegradable materials in mechanical performance such as tensile strength, elongation at break, and toughness, and it also has an outstanding processing property. The biodegradable plastic industry has also been encouraged by the government. In H2 2007, PBS, PLA and PCL were listed in the 11th Five-Year Plan as products to be encouraged, and in the 12th Five-Year Plan, their position hasn't changed. 
In fact, the current market of PBS is not so good, and its capacity of 150,000t/a may not be digested. Zhejiang Hangzhou Xinfu Pharmaceutical Co., Ltd. (Xinfu Pharmaceutical) is also a listed company that produces PBS for more than 6 years with capacity of 13,000t/a. However, according to the 2012 semiannual report of Xinfu Pharmaceutical, the sale volume of this company’s PBS is less than 1,000 tonnes (Please refer to Biomaterial China News 1209, Xinfu Pharmaceutical remains cautious with PBS business). Besides, Xinfu Pharmaceutical has operated overseas market for a long period, and its understanding of the PBS market may be better than Qixiang Tengda. Mr. Liu, Secretary of the Board of Qixiang Tengda, said that compared to Xinfu Pharmaceutical, they don't have any special measures to expand market, so it may be a difficult task to make a breakthrough in sales volume.
Even though, Mr. Liu still insists that the future of PBS is good, as Qixiang Tengda owns the whole processing chain, and the cost may be smaller than that of other producers. On the other hand, more countries start to care about the environment, which will promote the growth of the industry.
It's no doubt that PBS is a promising industry, but all commercial production should be led by consume market. As the growth of the new market is slow, it is estimated that Qixiang Tengda will have a tough road to expand its market after it finishes the construction.

Source: Biomaterials China News 1210

Main content of Biomaterials China News 1210:
Domestic lyocell fiber starts to sprout
Main barriers for China's PLA industry: unstable quality and market imbalance
New environmental protection measures help biodegradable materials grow faster
Qixiang Tengda to raise USD316 million to produce PBS
Longlive Bio-technology: enzymatic hydrolysis lignin program to replace a corn deep processing one
Tianrui Technology received capital support from Anhui Provincial Government
Chemical enterprises to beach biological succinic acid market
Thailand government plans to release its national dry cassava stocks to China
Biological alcohol business of Global Bio-Chem Technology may be better in H2 2012
Domestic demands led to increasing import and decreasing export of China's PLA
Import analysis of cassava upon new extracting season in Aug. 2012
Import volume of China's castor oil and its derivatives decreases significantly in Aug. 2012
Wuhan Boiler manufactures boiler for bio chemical alcohols waste burning
Green Process and Collaborative Innovation of Chemical Resources Center establishes
Output of agricultural film increases by 3.72 percentage point in Q1 2012
Potato production may reduce in 2012 due to potato late blight
Corn production may suffer decrease due to typhoon
… …

Biomaterials China News, with 12 to 14 topics in one issue, published on the 8th every month, will bring you the latest information on the latest market dynamics, company dynamics, new biomaterials products, new biomaterials technology development, new legislations and policies and raw material supply dynamics that are shaping the market.

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