Grasp the industry trend, layout of new carbon fiber materials

Civil large tow carbon fiber industry turning point has arrived: Wang Tiankai, former president of the carbon Fiber Branch of the China Chemical Fiber Association, announced at the 2021 annual meeting: The domestic carbon fiber industry in 2021 for the first time to achieve industry-wide profit, the market is currently showing a trend of short supply. The domestic carbon fiber industry has ushered in a new stage of development and entered the track of sound development. We believe that wind power blades drive the increase in demand for carbon fiber, and superimpose technological progress to bring about a decline in costs, and jointly promote the improvement of industry profitability. Looking to the future, we believe that China's civil carbon fiber industry has opportunities for overtaking corners. From the current global carbon fiber pattern, Japan's carbon fiber industry has the most significant advantages, but historically carbon fiber is not the first to develop and develop in Japan, and Japan then has advantages in technology and industry chain from two perspectives to achieve corner overtaking. First of all, at the technical level, in the 1960s and 1970s, the carbon fiber industry did not find large-scale commercial application scenarios, and the entire industry fell into losses. Japanese carbon fiber manufacturers digested and absorbed the carbon fiber industry chain technology during the industry downturn and re-innovated due to the lifelong employment of employees and the resistance to stage performance pressure. And the application of carbon fiber products was developed, and the basic conditions of industry were completed. In the 1980s, Boeing aircraft adopted carbon fiber materials on a large scale, opening up the market space for carbon fiber. Although Boeing aircraft is an American manufacturer, there are many Japanese companies in Boeing's suppliers, such as Kawasaki, Mitsubishi Heavy Industries, etc., and Japanese carbon fiber manufacturers indirectly enter the Boeing supply chain with the help of Boeing suppliers, seizing technology and industry chain opportunities to achieve curved overtaking.

2.4 Jilin's chemical fiber production capacity expanded rapidly

In 2019, large-scale production of large tow carbon fibers was successfully achieved. In July 2019, Jilin Jinggong (Baojing) 's large tow carbon fiber #2 line was successfully tested. The core equipment of the production line is independently developed, the device runs smoothly, and the product performance basically meets the needs of downstream users, marking the large-scale production of large tow carbon fiber in China. Jilin Chemical Fiber has the advantage of stable supply of carbon fiber precursors. Carbon fiber is the basis to achieve the qualified rate of carbonized products. At present, Jilin Carbon Valley is the main company with the ability to sell raw fiber abroad in China. Jilin Carbon Valley and Jilin Chemical Fiber belong to the State-owned Assets Supervision and Administration Commission of Jilin City, and are positioned as the carbon fiber raw fiber platform and carbonization platform under the State-owned Assets Supervision and Administration Commission of Jilin City respectively.

By 2024, the company will have an equity capacity of 40,000 tons/year. At present, Jilin Chemical Fiber's carbon fiber assets mainly include Baojing (49%) 8,000 tons of large tow production line, wholly-owned subsidiary Kemek two small tow production lines with a total of 600 tons, in addition, the company plans to build 12,000 tons of carbon fiber and composite production line. The company's brother unit Guoxing carbon fiber has 12,000 tons of large wire tow capacity by the end of 2021, and the large wire tow capacity under construction is gradually reaching production. 2022/3/20 The company has explained the competition in the industry for the fixed increase project in the non-public offering response letter: Jilin Chemical Fiber Group, the controlling shareholder, promised to inject Guoxing carbon fiber into the listed company within three years. If the project under construction is successfully implemented and the smooth injection of Guoxing carbon fiber, the company will have 40,000 tons of large tow carbon fiber equity capacity in the future, becoming the main domestic large tow carbon fiber supplier. In addition, on July 5, 2022, Jilin Chemical Fiber Group started the construction of an annual output of 60,000 tons of carbon fiber project with a total investment of 10.3 billion yuan. After the completion of the project, due to the listed company Jilin Chemical Fiber as the group's carbon wire business listing platform, and there are also problems of industry competition after the completion of the project, We believe that the Group has the possibility to further inject the project into the listed company.

3. Jilin Chemical Fiber is one of the largest viscose filament producers in China

Viscose fiber is a kind of artificial fiber, natural plant fiber (cotton, wood, bamboo, etc.) as raw materials, through the process of alkalization, aging, sulfonation to make soluble cellulose xanthan ester, then dissolved in dilute lye to make viscose, made by wet spinning. This fiber is skin-friendly and non-irritating, has excellent moisture absorption and breathability, and is known as "breathable fabric". Viscose fiber can be subdivided into viscose filament and viscose staple fiber. The company started from viscose staple fiber and gradually extended to viscose filament business. In comparison, the company's staple fiber business advantages are not outstanding, 2022/7/15 the company issued an announcement, the original viscosi staple fiber series products by Hebei Jiguang commissioned the company to produce and process, so this report will not be discussed.