Industry Data: Brief Analysis Of Chemical Fiber Industry Operation In The First Half Of The Year

In the first half of 2024, factors such as the continuous release of macro policy effects, the recovery of foreign demand, and the accelerated development of new quality productivity will support the continued recovery of the national economy and achieve a year-on-year growth of 5.0% in GDP. In this context, the operation of chemical fiber industry shows a recovery growth trend. Specifically, the output grew rapidly on a low base year on year basis, and the growth rate gradually fell; The starting load is generally at a high level, and the downstream demand is better than the same period; The economic benefits increased significantly year on year, and the operation quality improved; The growth rate of fixed asset investment picked up, and the actual new capacity slowed down. However, affected by trade barriers and geopolitical conflicts, the export volume of chemical fiber has declined.

　　 01 Basic Information of Industry Operation

　　 （1） Start up is at a high level, and inventory performance is inconsistent

In the first half of the year, the load of chemical fiber industry was at a high level. From the perspective of major industries, the average load of direct spinning polyester filament is more than 90% from March to April, and 85%~90% from June to July; The average load of direct spun polyester staple fiber is 80%~90%, and it drops in June and July; The load of nylon filament is always above 90%. According to the data of the National Bureau of Statistics, the output of chemical fiber from January to June 2024 is 38.85 million tons, with a year-on-year growth of 13.24%, but the growth rate is 6.86 percentage points lower than that of the first quarter (Figure 1). From a monthly perspective, the output of chemical fiber is basically stable, and the change in growth rate is largely due to the low base first and then high base in the same period of 2023. It is expected that with the increase of base, the output growth rate may further fall back.

Figure 1 Change in year-on-year growth rate of chemical fiber output since 2023

Data source: National Bureau of Statistics, China Chemical Fiber Industry Association

Since 2024, the inventory pressure of polyester filament and spandex industries has been high; The inventory of polyester staple fiber and polyamide fiber is relatively low, but from June to July, it shows a rising trend; Viscose staple fiber inventory is low. Specifically (Figure 2), the inventory of polyester POY gradually increased first, and maintained after the last ten days of March; The maximum inventory in the first half of the year is 29 days, the average inventory in the second quarter is 25 days, and the current inventory is 25 days. The nylon inventory will be gradually increased first, and gradually removed from the inventory in April to May, and then the inventory will be increased again; The maximum inventory in the first half of the year is 21 days, the average inventory in the second quarter is 12 days, and the current inventory is 15 days. Spandex inventory continued to increase. The average inventory in the second quarter was 48 days, 10 days higher than that in the first quarter. At present, the maximum inventory was 57 days.

Figure 2 Inventory of main chemical fiber varieties since 2023

Data source: Huarui Information

　　 （2） The fluctuation of chemical fiber market is generally stable

In the first half of the year, crude oil prices rose and fell significantly, but the correlation between PTA, polyester products and crude oil prices was slightly weak (Figure 3), market fluctuations were relatively stable, and prices were more affected by the supply and demand game. In terms of stages, in the first quarter, the price of crude oil rose in shock. By the end of March, it had exceeded US $80/barrel, up 18.2%. For the chemical fiber industry chain, the oil price provides a strong cost support, but the supply of PTA and polyester is relatively loose, so the upward momentum is insufficient, which generally shows a strong resilience under the cost support, and the fluctuation is relatively stable compared with the same period in 2023. From April to May, the price of crude oil fell in shock. At the end of May, it fell to $75/barrel, a decline of about 14.3%. However, PTA and polyester staple fiber declined by only 1%, while polyester POY rose by 2%. In June, the price of crude oil rebounded from the bottom. At the end of June, it basically rose back to $80/barrel, up 13.2%, while PTA, polyester POY and polyester staple fiber rose 3.1%, 1.3% and 6.7% respectively.

Figure 3 Price trend of international oil price, PTA, polyester POY and polyester staple fiber since 2023

Note: WTI futures (right axis, USD/barrel), PTA, polyester POY and polyester staple (left axis, yuan/ton)

Source: Huarui Information

On the whole, by the end of June, the prices of polyester and viscose fiber industry chains had risen; Nylon and spandex industry chain prices showed a downward trend (Table 1).

Table 1 Price changes of main chemical fiber products and raw materials since 2024

　　 （3） Chemical fiber exports declined

According to the statistics of China Customs, the total export volume of main chemical fiber products from January to June fell 4.09% year on year, but the decline was 3.97 percentage points lower than that from January to March. In terms of products, the export of polyester filament fell by 7.25% year on year, with a reduction of 151000 tons. The main reason is that India implemented the BIS certification for polyester filament in October 2023, and enterprises rushed to export before that. The export volume increased significantly, but after that, the export volume decreased significantly; From January to June 2024, the export of polyester filaments to India will be reduced by 238000 tons. Therefore, the export of polyester filaments to other countries and regions will continue to grow after India is removed. Thanks to the contribution of export growth in the second quarter, the export of polyester staple fiber and nylon filament increased year on year; The export of viscose filament, acrylic fiber and spandex keeps growing. In addition, the export of polyester bottle tablets resumed its growth trend, with the growth rate increasing by 20.16 percentage points over the same period of 2023. In the same period, the import volume of chemical fiber increased by 19.56% year on year, but the volume only accounted for 0.6% of the chemical fiber output.

Table 2 Import and export of main chemical fiber products from January to June 2024

　　 （4） Terminal domestic demand grew steadily, and foreign trade was better than expected

In the first half of the year, domestic demand for textile and clothing commodities grew steadily. According to the data of the National Bureau of Statistics, the per capita clothing consumption expenditure of the national residents increased by 8.1% year-on-year from January to June, which is better than the same period in 2023; The retail sales of clothing, shoes and hats, knitwear and textiles of units above the designated size increased by 1.3% on a year-on-year basis, and the retail sales of online clothing goods increased by 7% on a year-on-year basis, all of which slowed down compared with the same period in 2023. In the medium and long term, China's domestic demand market has entered the stage of consumption upgrading in an all-round way, and the slowdown in growth and structural upgrading have become important phased characteristics of textile and clothing commodity consumption. Strengthening product design and development and actively exploring consumption hot spots are important innovation and development directions under the new situation.

According to the data from China Customs website, in the first half of 2024, China's textile and clothing exports totaled US $143.18 billion, up 1.5% year on year. Among them, the textile export volume was US $69.35 billion, up 3.3% year on year; The clothing export volume was 73.83 billion US dollars, unchanged from the same period in 2023. The economy of developed countries represented by the United States has achieved a "soft landing", and the retail market of clothing and apparel products has been basically stable, which not only drives the direct export of China's textiles and clothing, but also indirectly drives the export of supporting products in the upstream and midstream industrial chains. In addition, cross-border e-commerce shows new trends. In the first half of 2024, China's cross-border e-commerce import and export volume will reach 1.22 trillion yuan, with a year-on-year growth of 10.5%, 4.4 percentage points higher than the growth rate of China's goods trade in the same period.

　　 （5） YoY growth of benefits and improvement of operation quality

According to the data of the National Bureau of Statistics, the operating revenue of the chemical fiber industry from January to June was 570.986 billion yuan, up 14.51% year on year (Table 3); The total profit was 12.652 billion yuan, with a year-on-year increase of 7.102 billion yuan. Due to the base, the year-on-year increase was significant; The profit margin of main business is 2.22%; The loss of loss making enterprises was 5.817 billion yuan, a year-on-year decrease of 29.78%; The industry suffered a loss of 31.26%. By industry, polyester and nylon are still the main contributors, contributing 60.2% and 12.3% respectively to the profit increment of chemical fiber industry, and the profitability of spandex industry is declining.

Table 3 Economic benefits of chemical fiber and related industries from January to June 2024

　　 （6） The growth rate of fixed asset investment rebounded, and the actual new capacity slowed down

According to the data of the National Bureau of Statistics, the investment in fixed assets in the chemical fiber industry from January to June increased by 6.4% year on year, compared with - 7.0% in the same period of 2023. Investment growth picked up under the low base effect. From the perspective of new capacity, the new investment of polyester fiber is 800000 tons/year, and the capacity growth slows down; Polyester bottle tablets are still in the expansion cycle, with 2.7 million tons/year newly put into production, and 3.5 million tons/year to be put into production.

Figure 4 Change of fixed asset investment growth rate in chemical fiber industry since 2008

Data source: National Bureau of Statistics

02 2024 Industry Operation Trend Forecast

At present, China's economy is still facing many challenges, such as the increasing complexity, severity and uncertainty of the external environment, and the deepening of domestic structural adjustment. In the second half of the year, the implementation of national macro policies will be further strengthened. With the gradual implementation of various policies, the policy effects will gradually emerge, which will play a positive role in promoting stable economic operation and guiding industrial transformation and upgrading. For example, we should focus on boosting consumption to expand domestic demand. The focus of economic policy should be more on benefiting people's livelihood and promoting consumption. We should increase residents' income through multiple channels, and enhance the consumption capacity and willingness of low - and middle-income groups. In the industrial field, we will continue to deepen the innovation driven development strategy, encourage enterprises to research and develop new technologies and products, enhance industrial added value, and accelerate the transformation of scientific and technological achievements; Strengthen expectation guidance, enhance enterprise confidence, and stabilize market order; Expand the demand, especially seize the opportunity of "going to sea", help enterprises expand the global market, and further enhance the profitability and international competitiveness of enterprises.

With the expectation that China's economic situation will maintain steady growth in general, the chemical fiber industry has the foundation to maintain stable operation. Raw material side: the driving force of crude oil price trend on chemical fiber price has weakened, and the raw material cost will remain relatively loose; Supply side: the growth rate of new capacity slows down, but in the case of a high base of capacity, if the continuous high start will also bring supply pressure; Demand side: The domestic market is expected to maintain a medium to low growth rate, while the export market is still under pressure. Looking forward to the future, industry enterprises should deeply understand the spirit of the Third Plenary Session of the 20th CPC Central Committee, and lead high-quality development with new quality and new strength. For example: strengthen product development and innovation, and actively stimulate market vitality; Continuously promote the application of advanced manufacturing technology and improve labor productivity; Cultivate and develop new quality productivity and improve total factor productivity.

(Source: China Chemical Fiber Industry Association)