Analysis of chemical fiber industry in the first half of 2017

by+Shen+Da

In the first half this year， chemical fiber industry continued to maintain a good momentum. With textile market picking up， demands for chemical fiber were recovering and the overall operating ratio of the industry has improved from a year earlier. In addition， due to the transmission of rising crude oil prices， the average price of chemical fiber products was higher than the same period last year. The operation quality and profitability have enhanced， and investment tended to rebound， which needed to pay close attention.

Basic operating conditions

Production

According to the National Bureau of Statistics， the output of chemical fiber amounted to 25.5927 million tons， an increase of 4.82% year on year， with growth down by 3.57 percentage points from a year earlier， which indicated that structural adjustment and total amount control have achieved certain results. Among them， output of polyester was 20.3576 million tons， an increase of 3.59%； output of nylon reached 1.7962 mullion tons， up by 11.41% year on year； output of man-made fiber registered 2.2491 million tons， an increase of 10.53% year on year. （See Table 1）

In the first half this year， the rate of operation in chemical fiber industry was higher than the same period last year， and maintained a high load in the traditional off-season. Especially， the average load of polyester filament industry kept a higher level of nearly 80%， with lower stock and better production and marketing. The average loads of direct spinning and chip spinning have made a significant improve- ment over the same period last year， and the direct spinning load reached over 85% in June and July.

Market

Affected by the rise of commodity prices， the average price of major chemical fiber rose by 20%- 40% in the first half this year. Due to the price fluctuation of crude oil， game of PTA spatial stock， and supply-demand relationship， polyester products showed two wave of significant ups and downs of the quotations； price of nylon changed radically， whose quotations tendency was almost same with CPL， and its average price was 40% higher than the same period last year； affected by the overall trend and raw material of chemical fiber， the price of viscose staple fibre also fell after initially rising， but with the recovery of rigid demand and environmental pressure in June and July， its actual operating capacity decreased， so there was an inversion of supply and demand.endprint

Since the second half of 2016， chemical fiber prices increased significantly， but looking back the year of 2010， we could find the price of chemical fiber products was on a declining path， with its declines more than oil prices， which indicated that chemical fiber industry squeezed a certain profit space for the downstream industry through structural adjustment and technological progress. This round of rising since the second half of last year， was the cost driver led by the rise of commodity prices， and also the value return of chemical fiber prices， but it was still at historical lows.

Inventory

The year of 2016 was an destocking process for chemical fiber industry， during which main prod- ucts were in low stocks， but with the reduction of inventory， improvement of economic efficiency and increase of operating rate， the inventory of chemical fiber continued to grow since 2017， and the reduction of output in Spring Festival caused an decrease of demand， so it accumulated stock of chemical fiber and reached peak by the end of March this year. The accumulated inventory has increased the pressure on the chemical fiber market， so when raw material price fell， products lost cost support and its price fell rapidly. With the picking up of downstream demand， chemical fiber saw another round of destocking， and the stocks of major products have dropped to a lower level in July.

Import and export

Form January to June， the imports of chemical fiber reached 437.8 thousand tons， an increase of 6.56%， indicating that China maintained a certain rigid demand for imported products. The imports of acrylic and spandex were in slight decrease， while other products increased in different degrees. Viscose staple fiber was still the largest variety of imports， with main products of modal fiber； the growth of polyester filament yarn was the largest， up to 10.36%.

For external demand， with the accelerated growth of global economy and picking up of manufacturing， economic and trade growth hit a new high over nearly six years. At the same time， with layout adjustment of global textile industry accelerated， demand for chemical fiber products increased. In the first half this year， direct export volume of chemical fiber reached 2.09 million tons， an increase of 5.49%， and it was expected to exceed 4 million tons. The top five export markets were Turkey， the United States， Pakistan， Vietnam and Egypt， among which， the export of polyester filament yarn to Egypt increased rapidly. （See Table 2）endprint

Demand

With the recovery of terminal demand， the operating rates of main downstream industries have different degrees of improvement， especially draw texturing machine （DTY） industry maintained a higher operating rate， while circular knitting machine in a weak performance. It was understood that in recent years， DTY consumption for the production of weaving fabric in downstream reached around 65%， especially DTY amount reached over 75% in velvet products of warping knitting and weft knitting.

Investment

In the first half， the actual investment in fixed assets amounted 63.064 billion yuan， an increase of 20.3%， with a rebounded growth. Among them， the growth rate of nylon industry fell slightly over the past few years. （See Table 3）

The chemical industry has entered a period of adjustment since 2012， during which the growth rate of fixed asset investment continued to drop， but the growth rate of 20.3% in the first half this year showed a significant rebound over the precious years. Although the investment in smart manufacturing， green manufacturing and new fiber material have increased， but we also should track closely to prevent failure in total amount control.

Quality and efficiency

According to National Bureau of Statistics， main business income registered 425.4 billion yuan， an increase of 15%； total profits amounted to 20 billion yuan， a whopping increase of 53% year on year， with the fastest growth. Scale of losses was 17.02%， down by 5.5 percentage points； total loss of loss-suffering enterprises sharply decreased by 42%.

The industry profits mainly from man-made fiber， polyester and nylon industry， among which total profit of polyester industry was 8.214 billion yuan， an increase of 82.35%； total profit of manmade fiber industry registered 6.503 billion yuan， up by 35.17% year on year； total profit of nylon industry amounted to 2.273 billion yuan， up by 22.5% year on year； total profit of spandex industry greatly increased by 62.53%. （See Table 4）

For the operation quality of chemical fiber industry， industry profitability has improved， and main business profit rate reached 4.81%， up by 1.2 percentage points； the average debt level has decreased and debt paying ability has increased； capital usage efficiency improved slightly； the ratio of three fees declined， among which financial cost fell significantly.endprint

In the first half this year， the overall price of chemical fiber was significantly higher than the same period last year， and the processing range of major products expanded， which were also the reason of substantial increase in industry profits.

Forecast of chemical fiber in the whole year

The influential factors of chemical fiber industry include crude oil will be in low oscillation at$50； the supply of major raw materials （PTA， EG， CCPL） is expected to increase； new capacity and restarted capacity will result in greater pressure on the market； environmental rectification affects downstream enterprises and so on. The domestic demand will be in steady growth and external demand will also be warming up， especially for the markets along “Belt and Road Initiative” and African markets.

Chemical fiber market is expected to be stable in the second half this year， but the price range and profitability level of major products will be lower than the first half this year. The overall operation quality and efficiency are better than last year， and with the increase of base last year， profit growth will be down significantly.endprint