Brief Analysis Of Chemical Fiber Industry Operation In The First Three Quarters Of 2023

Since 2023, the series of national policies to promote consumption have continued to work effectively, the consumption scene has fully recovered, and residents' income and consumption confidence are gradually recovering. Against the background of "strong expectations", the chemical fiber industry ushered in a "weak recovery". The supply side was in high production and high start-up, and the start-up load was not light in the off-season, exceeding the market expectations; However, the average price of major chemical fiber products has declined, the volume has risen and the profit has shrunk, and the pressure on corporate profits is still prominent. On a quarterly basis, the impact of the Spring Festival this year is greater than that of previous years. In the first quarter, the industry's performance was sluggish. In the second and third quarters, it was gradually repaired, and the overall industry profit improved month on month. In addition, chemical fiber exports performed well, especially the cumulative export growth of polyester products in the first three quarters exceeded 20%.

Basic information of industry operation

　　 （1） Production and sales

Since March, the overall starting load of the industry has basically remained at a high level. Take direct spinning polyester filament as an example, the average load in the second quarter is about 84%, and the average load in the third quarter is about 90%; In October, the traditional peak season entered, the downstream demand was fair, and the average load remained at 90%. In addition, although the Asian Games led to the reduction and shutdown of some units in Xiao Shao area, they were basically restarted after the National Day holiday.

According to the data of the National Bureau of Statistics, the output of chemical fiber from January to September 2023 will be 52.3 million tons, with a year-on-year growth of 6.86%, 7.18 percentage points higher than that of the same period last year. The growth rate of chemical fiber output showed a gradual upward trend, and the growth rate from January to September was 2.96 percentage points higher than that from January to June. In terms of provinces and cities, the output of chemical fiber in Zhejiang Province increased by 4.7% year on year from January to September; The output of chemical fiber in Jiangsu Province increased by 19.6% year on year; Fujian's chemical fiber output decreased by 7.6% year on year.

In the first three quarters, the overall inventory of the industry was in good condition, especially from June to September, the inventory was at a low level. Since October, inventory has rebounded. By the end of October, the average inventory of polyester POY, polyester staple fiber and nylon was about 20 days, 15 days and 23 days respectively, which was basically within the normal range, but the inventory of spandex was relatively high, reaching 39 days.

　　 （2） Market price

From the price trend of polyester industry chain, polyester prices basically follow the trend of crude oil prices, rising slightly in the first quarter, falling in the second quarter, and rising again in the third quarter. In the first two quarters, crude oil basically remained at 70-80 dollars/barrel. In the third quarter, affected by the delay of macro interest rate increase and Saudi Arabia's production reduction, the crude oil price started to rise, with an increase of 32.62%, and exceeded 90 dollars/barrel in the middle and late September; PTA and polyester prices rose along with raw materials, but the increase was limited, only about 10%. Since October, crude oil has declined in shock, PTA and polyester have all followed suit. At present, the price has fallen back to the low price at the end of the second quarter.

In terms of the nylon industry chain, the price trend was more stable than that of last year. In the third quarter, the price rose significantly, and reached the highest point in the year in the middle and late September. From the price increase of the industrial chain in the previous three quarters, nylon chips>nylon POY, FDY>raw material CPL.

In terms of the spandex industry chain, the price level is far lower than that of last year. In the first quarter, the price rose and reached the highest point in the year in mid February. The price fell in late March. Since May, the price has basically maintained. From the price increase of the industrial chain in the previous three quarters, raw material PTMEG rose 17.86%, while spandex products fell about 3%.

　　 （3） Import and export

According to the statistics of China Customs, the total export volume of major chemical fiber products from January to September was 4.73 million tons, up 19.0% year on year. The chemical fiber export continued to maintain an overall growth trend, and the growth rate from January to September was 1.6 percentage points higher than that from January to June. By product, polyester filament and polyester staple fiber drove export growth, nylon filament was basically flat, and other products decreased year on year. Among them, since this year, the average monthly export of polyester staple fiber has been 100000 tons, with strong overall export, far exceeding the level of the same period in previous years. In addition, the export growth of polyester bottle tablets slowed down, and since August, the cumulative growth rate has turned negative.

　　 （4） End market

Since this year, the vitality of the domestic market of the textile industry has continued to emerge, maintaining a rapid growth momentum. According to the data of the National Bureau of Statistics, in the first three quarters, the retail sales of clothing, shoes and hats, and knitwear and textiles of units above the designated size increased by 10.6% year on year, 14.6 percentage points higher than that of the same period last year, ranking second among 16 categories of goods. During the Mid Autumn Festival and the National Day holidays, the demand for textile and clothing consumption was well released, and the sales of key large-scale clothing retail enterprises in China increased significantly by 17.5% year on year. The online retail sales of clothing products increased by 9.6% year on year, 4.9 percentage points faster than the same period last year. However, from the cumulative growth of online retail sales, since August, the growth of clothing and consumer goods has slowed down, while the growth of food has increased.

Affected by factors such as shrinking overseas demand and high risk of trade environment, the export pressure of China's textile industry has increased significantly since this year, but exports to some markets still show a bright performance. According to Chinese customs data, China's textile and clothing exports in the first three quarters totaled $223.15 billion, a year-on-year decrease of 10.1%, 19.2 and 1.3 percentage points higher than the same period last year and the first half of this year, respectively. Among the main export products, the export value of textiles (textile yarns, fabrics and finished products) was USD 101.92 billion, a year-on-year decrease of 10.3%; The amount of clothing exports was US $121.23 billion, a year-on-year decrease of 8.8%. Among the major export markets, China's textile and clothing exports to the United States, the European Union, Japan, and ASEAN have all decreased year on year, but during the same period, China's exports to Turkey and Russia along the "Belt and Road" have achieved good year-on-year growth of 6.2% and 20.1% respectively.

　　 （5） Economic benefits

In the first three quarters, the economic benefits of the chemical fiber industry continued the downward trend in 2022, but the benefit indicators showed a quarter by quarter positive trend, the year-on-year decline of operating income and total profit gradually narrowed, and the growth rate of loss of loss making enterprises also showed a downward trend. According to the data of the National Bureau of Statistics, the operating income of the chemical fiber industry increased by 2.81% year on year from January to September, and since August, the cumulative growth rate has become positive; Total profit decreased by 10.86% year on year, 44.72 percentage points lower than that from January to June; The operating profit margin was 1.67%, 0.51 percentage points higher than that from January to June.

In terms of variety, the profitability of polyester POY in the second half of the year was better than that in the first half of the year, especially in May, June, September and October, but since November, the profitability has declined; Acrylic fiber remained profitable as a whole, but its profitability in the second half of the year was lower than that in the first half of the year; The profit of nylon FDY is better than that of nylon POY; The loss of viscose staple fiber has narrowed since the second half of the year; Spandex cash flow fell below the profit and loss line from May. Although it improved in late August, it was still below the profit and loss line.

　　 （6） Investment in fixed assets

According to the data of the National Bureau of Statistics, the investment in fixed assets in the chemical fiber industry from January to September decreased by 11.6% year on year, 4.6 percentage points deeper than that from January to June. However, judging from the actual new capacity, nearly 10 million tons of polyester capacity has been put into production so far.

Future market forecast

In the short term, the demand of chemical fiber market tends to weaken on a month on month basis. Printing and dyeing is an important indicator of the trend of terminal demand. At present, the operating rate of printing and dyeing in Jiangsu and Zhejiang has declined. With the official implementation of BIS certification in India, the overall export volume of polyester filaments, which performed well this year, is expected to decline. In addition, after the National Day holiday, the chemical fiber inventory has accumulated, the inventory center has moved up, and the enterprises have given up profits for promotion, and the benefits have also dropped to a low level.

Looking forward to the whole year, the chemical fiber industry is expected to operate stably in the fourth quarter, and the pressure may increase towards the end of the year. On a year-on-year basis, due to the low base in the fourth quarter of last year, the year-on-year growth rate of various indicators of the industry this year is expected to be better repaired.

In the long run, with the continuous recovery of the economy, the continuous improvement of the employment situation, the steady improvement and optimization of market supply, and the effective promotion of consumption policies, the foundation for the recovery and expansion of consumption will continue to be consolidated. The macro expectation is warmer, which will provide good support for the economic operation of China's chemical fiber industry. However, the key issue facing the industry is still whether the supply and demand relationship can be effectively improved. It is expected to go through a longer repair cycle, and the industry is more likely to improve next year. Specifically, the pressure on the supply side is expected to be eased. For example, since 2024, the capacity growth of polyester filament industry will enter a low range, which will help avoid further escalation of the supply and demand contradiction. The potential of the demand side is expected to be released. In terms of domestic sales, thanks to the implementation of a series of policies to expand domestic demand, China's textile and clothing consumption stock can be guaranteed, and its increment needs to be tapped, such as rich consumption circles, continuous expansion of industrial textile application fields, and endless emergence of new online retail formats; In terms of export, with the change of the international division of labor in China's textile industry, the foreign trade structure of various major products in the industrial chain is being adjusted and optimized. It is expected that the export share of chemical fiber and its products will still show a good growth trend.

(Source: China Chemical Fiber Industry Association)