(Yicai Global) April 20 -- Shares in Shandong Longhua New Material advanced today, despite a dip in the broader market, after the Chinese polyether polyol manufacturer said it plans to invest CNY7.3 billion (USD1.1 billion) to construct China’s biggest nylon 66 chip factory as the country faces a shortfall of the synthetic polymer used in engineering plastics and synthetic fibers.

Longhua New Material’s share price [SHE:301149] closed up 0.14 percent at CNY14.17 (USD2). Earlier in the day it had gained more than 5 percent to hit CNY15. The index of the Shenzhen Growth Enterprise Market where the company is listed fell 3.66 percent for the day.

The new facility, to be located in Zibo, eastern Shandong province, will have an output of 1.08 million tons a year once completed in June 2028, Longhua New Material said last night. Construction will take place in three phases, with each phase lasting two years. The first phase will have an annual output of 160,000 tons, the second phase will add another 320,000 tons and the final phase an additional 600,000 tons.

Production of nylon 66 in China has been limited by a shortage of the raw material adiponitrile, which needed to be imported. However, China National Chemical Engineering Group Corp.'s new adiponitrile plant in Zibo, with a capacity of 300,000 tons a year, is expected to start production this month. Longhua New Material also plans to source other raw materials locally.

China produced 390,000 tons of nylon 66 last year and imported 250,000 tons, according to industry research site Huaon.

Editor: Kim Taylor