CCF: Mr. Chen, could you please briefly introduce Zhongyuan?

Chen Xingfu: Zhongyuan Group and its subsidiaries Yizheng Zhongxing Environmental Protection Technology Co., Ltd., Jiangsu Yongyin Chemical Fibre Co., Ltd. has engaged in the resource reuse industry since 2012. It has fostered a number of talents in the recycled industry and quite a number of suppliers of AAA grade post-consumer PET bottle flakes in China. Currently, our RPET chip capacity has reached 420 tons/day, about 150,000tons/year, by end of 2020, annual capacity will increase to 220,000 tons. The recycled polyester filament is 80,000tons/year, future aims to achieve 200,000tons/year.

CCF: In what aspects has the COVID-19 pandemic influenced Zhongyuan? What are your views on the current recycled market?

Chen Xingfu: The market was weak in the 2nd quarter, factory inventories began to rise. But comprehensively, the RPET chip sales volume in the 1st half of 2020 has increased by 92% compared with the same period of 2019, the recycled polyester filaments sales volume didn’t drop too much and was basically the same as last year. From later July, demands in the downstream goes up, which is mainly driven by recover of the European market.

CCF: In recent years, the recycled polyester capacity expanded in a fast way, what is your view over it?

Chen Xingfu: The fast expansion of the recycled polyester capacity is mainly driven by the market. Many virgin polyester producers also engage in the recycled. This has brought the recycled filament capacity to over 300,000tons/year in China, and the aggregate RPET chips now is building towards 300,000tons to 400,000tons/year.

Affected by the pandemic, the virgin polyester price slumped greatly, the end demands contracted, which led to about 30% drop in the recycled price. Since more and more manufacturers began to engage in the recycled, the RPET quality is not all in the top level. What Zhongyuan aims to do is to provide the best quality recycled polyester chips & filaments comparable to the virgin to our customers. In 2019, Zhongyuan has establish its recycled brand, Recoyarns®. Recoyarns® can be separated with other recycled products in the market by using its own proprietary tracing technology.

While the RPET chips is no longer rare in the market, the gap between Zhongyuan RPET chips and the market is becoming smaller, so we are investing to develop new products, the differentiated products, e.g., 100% RPET CD chips, high shrinkage RPET chips for sea island fiber, high and low IV chips, etc, to increase the added value of our recycled products. We do the same for recycled filaments and aims（ to provide the best quality filaments as top enterprises may provide. Also, Zhongyuan is now converting itself from OEM for brands to foster its own brands, so as to face the  brands directly in future.

CCF: Any plans for future development and investment?

Chen Xingfu: Zhongyuan has invested over 50 million yuan in  capacity construction and technology upgrading. In 2021, Zhongyuan will further increase its capacity in two ways, one is to upgrade its equipment & technology, the second is seeking cooperation with top recycled manufacturers.