Covestro sets up supply chain partner program to drive PU coatings

The synthetic leather market is dominated by polyurethane coating products and these are increasingly moving towards water-based systems. Jane Ho visited Covestro in Shanghai and found out more.

In the past the world of synthetic leather was dominated by plasticised polyvinyl chloride (PVC) coated leather-cloth products, but technology changed and polyurethane systems started to take market share. Now solvent-based polyurethane systems are dominant and, as technology evolved to replace polyvinyl chloride, so it continues to evolve; waterborne systems are starting to eat into the world of solvent-based polyurethane systems.

China is the home of synthetic leather production and even small changes in the volume of solvents used there could have a big impact on the global environment and long-term health of many people.

To put it in perspective over 4 bn m² (4000km²)-year of PU synthetic leather worth $10bn are manufactured worldwide every year.

Fully, 90% comes from China, according to China Plastics Processing Industry Association’s synthetic leather committee, sometimes translated into China Synthetic Leather Association. The country has 500 PU leather makers with 1,500 production lines spread between Zhejiang, Fujian, Jiangsu and Guangdong provinces.

Shoes, bags, clothing

Each year, China produces around 7 bn pairs of fashion shoes, 1 bn pairs of sports shoes, 2 bn bags and 1 bn garments with PU leather and other PU coated fabrics.

And as demand increases environmental concerns grow and there is an increasing demand for waterborne coatings.

“China’s waterborne PU textile coating sector is expected to see up to three digit growth in the next few years, and it has the capability to become the world’s largest market,” said Nick Smith, vice president of Covestro’s textile coatings business.

China’s waterborne PU leather production is expected to reach 140m m² – or $662 m (Yuan4.2bn ) in value – over the next few years, added Tian Jingyan, vice chairman of China Plastics Processing Industry Association’s synthetic leather committee.

“Innovation and sustainability are not two different things,”

Nick Smith, Covestro.

This spectacular growth prediction arises from the fact that waterborne PU coated textiles currently account for less than 1% of China’s overall synthetic leather production.

It was against this backdrop that Covestro launched Insqin in 2014. This waterborne polyurethane dispersion (PUD) technology has 60% solid content, said the firm.

Its also reduces water consumption by up to 95% and energy consumption by up to 50% in the coating process, Covestro claims. “Innovation and sustainability are not two different things,” added Smith.

Drier and waterborne?

Covestro has been taking that message to the brand owners and OEM factories in fashion as well as sportswear including as H&M and Adidas, with whom it has been developing customised coatings – both solvent and waterborne – since 2011.

This work with international clothing and footwear brands helped to encourage Covestro to roll out a number of new products in its Impranil range in May 2015 using Insqin technology.

These products are mostly produced by Covestro. A majority of upstream materials – isocyanates and polyols – are supplied from Bayer’s sites in Caojing, Shanghai and Dormagen in Germany, the same sites where the Insqin products are made.

It also encouraged Covestro to develop the Insqin Partner Manufacturer Program. This is designed to connect Covestro’s direct leather and fabrics manufacturers with the ultimate specifiers, the brand owners.

A further impetus to develop waterborne PU coatings came in 2011 when a group of major multinational clothing bands including Adidas, Nike, G-Star, Puma, GAP, Li-Ning, H&M and Levi Strauss formed a group called ZHDC. This stands for Zero Discharge of Hazardous Chemicals (ZDHC) and the group has set 2020 as the deadline to achieve this.

Get with the programme

The Insqin Program should benefit the brands, Smith said. “It’s hard to find out the origin of the materials for brands and we are offering more transparency in the supply chain,” Smith explained.

In addition the  Insqin Program requires each member to be subject to yearly third-party audit by Bureau Veritas Consumer Products Services (BVCPS) to ensure that their products meet the requirements of the scheme. Member companies are trained in technology and process management to enable them to better adjust to the changes in technology.

“As the only coating maker among ZDHC members, Covestro has strong influence in setting the benchmark,” said Tian

“I believe this innovative program can truly help the sector,” he added.

"There is a Swiss brand that has been considering us for five years, and initiated contact with us after they saw the news we are joining the Program,"

Xue Taiwen, Xiefu

The Insqin Program signed its first manufacturer, a subsidiary of Korea’s sportswear fabrics maker Duksung in Guangzhou, Guangdong this July, and its second, fashion-focused PU leather maker Xiefu New Material in Kunshan, Jiangsu in October.

Another China-based supplier in the fashion industry is also likely to sign up before the end of 2015, Covestro believes.

So far ten brands have been connected to Duksung under the programme. “The brands are looking for manufacturers with integrity and commitment to sustainability,” said Smith. “When there are more manufacturers in the Program, we will provide all their names to the brands and they can make their own choice. Competition is not something that should be controlled.”

The third party audit alone has already helped Xiefu. “There is a Swiss brand that has been considering us for five years, and initiated contact with us after they saw the news we are joining the Program,” said the company’s general manager Xue Taiwen. “It means we are trust-worthy.”

Build trust

Xiefu was set up in 1989 and is one of China’s top five PU leather exporters with 90% of its products sold to international brands. This figure includes plants within China. The company currently has 40m m² /year capacity for PU leather, which includes 3.6m m² /year waterborne PU coated leather. Customer brands include H&M.

It is possible that the rigours of the programme are helping the firm in difficult economic times. In 2014 Xiefu saw $99m  revenue, a 10% drop from 2013. The company is looking at a 20% revenue drop this year due to a rise in raw material prices and a sluggish Chinese market – “most of our Chinese competitors are seeing a 30% to 50% drop,” said Xue.

Xiefu has been working with Covestro for three years. “Their products have better quality – most of their Chinese rivals have only 50% solid content. Also, unlike Chinese companies, Covestro also provides sustainability in upstream materials and better functional products,” Xue explained. “We are trying to work out a better deal with them - their price is higher, but I think our customers are willing to accept around 3% higher price for better quality.”

That might be difficult for waterborne products, which Xiefu finds are more expensive than solvent products, but waterborne seems to be the path for international brands, Xue said.

Each year H&M is replacing solvent products with waterborne products in about 20% of its total products. This is good news for the environment because it will help the brand to meet its ZDHC requirement by 2020, it is also good news for the consumer – the waterborne and solvent-based products are sold at the same price in H&M stores.

Associated benefits

China Plastics Processing Industry Association’s synthetic leather committee joined the ZDHC programme in early 2015. This makes it more likely that other Chinese brands are expected to join. As we went to press Chinese sportswear brand Li Ning was a member.

“We think more Chinese brands will need to meet similar zero discharge requirements by 2025,” said Xue. By that time “a PU leather maker will need over 30% waterborne capacity to survive.”

Making the change

Waterborne coatings can be applied to any fabrics, so if a manufacturer is switching from solvent to waterborne, they will not need to change substrate materials, said Rolf Irnich, head of Covestro’s application and technology development

But, Irnich confirmed, the processor will need to upgrade existing production lines or purchase new ones. The brands would like to see their ideas realized in applications as soon as possible, said Irnich, but customised development takes time, let alone changes and trailing for manufacturers.

“A minor modification might take a short period like four weeks, but a brand new solution is a lot more time consuming – it took us three years to develop a high flexibility coating for Adidas,” said Irnich.

Covestro started a €3m pilot coating line in April 2014. The 12 metre long line consists of a coating blade, a drying oven and a printing section with a temperature controlling system that can simulate different production conditions when the materials are rotated. Direct coating and transfer coating, including both wet and dry methods, can be trailed with this facility. It is used for product development and technical service.