Kolon Industries shares soar on high aramid demand

[Courtesy of Kolon Industries]

Shares of Kolon Industries Inc., a chemical and textile manufacturing company in South Korea, gained by more than 18 percent on Thursday on the back of business diversification and expectations for an improved market for aramid fibers.

Shares of Kolon Industries closed 18.42 percent higher at 55,300 won ($42.5) Thursday. The stock price rose to as high as 58,700 won in the morning, surpassing the previous day’s closing price by 12,000 won and approaching the daily limit increase.

Stock prices of Kolon’s affiliated companies also gained on the same day. Kolon Inc. was up by 3.37 percent and Kolon Plastics Inc. 3.56 percent.

Kolon Industries was once classified as a hydrogen-theme stock and experienced rapid surges in the past. However, its stock price had been steadily declining, and earlier this year, it even dipped below the 30,000 won mark at one point.

The rise in Kolon Industries shares is attributed to the improving market conditions for aramid, its flagship product.

Aramid is a lightweight and durable material that can withstand temperatures as high as 500 degrees Celsius, making it suitable for applications such as bulletproof vests.

Recently, there has been explosive demand for aramid as it began to be used to enhance the strength of 5G fiber optic cables. It is also experiencing a sharp increase in demand as a reinforcing material for electric vehicle tires and exhibiting excellent performance as brake pads.

The company has invested in expanding its Gumi plant’s production capacity, aiming to double its output from the previous annual 7,500 tons to 15,000 tons in the second half of this year, with full-scale production commencing early next year.

It also plans to invest 22 billion won to expand production of aramid pulp, which is used in brake pads, by doubling the capacity from 1,500 tons to 3,000 tons by next year.

The company also recently announced it is diversifying its business by investing in hydrogen and battery anode materials (lithium metal) and entering the battery recycling market.

“Global demand for aramid has grown at an average annual rate of 5 percent over the past decade, and a stable growth of 6 percent per year is expected until 2030,” said Lee Jin-myung, an analyst at Shinhan Investment Corp.

In the global aramid market, Kolon Industries ranks third after Japan’s Teijin Ltd. and the U.S. DuPont Co.