Th e main economic indicators of the chemical f iber industry rebounded

Edited by Zhong Mengxia

In the f irst half of the year, unexpected factors, such as the rebound of domestic pandemic and international geo—political conf licts, have impacted China's economic opera—tion, and the risks and challenges faced by its development are constant. In this context, the crude oil price f luctuates greatly, the downstream demand continues to be low, and the overall production and operation situation of chemical f iber industry is grim. However, under the support of a series of "steady growth" policies and measures of the state, the main operational indicators of the textile industry have been under pressure and rebounded. It is expected that in the second half of the year, with the further implementation of policies and measures, it will bring more positive impacts on the smooth operation and recovery of the industry.

The basic situation of industry operation

Production and sales

In the f irst half of the year, the overall starting load of the chemical fiber industry was weaker than that of the same period of last year, especially after mid—March, with a significant decline. Since then, the overall low—load op—eration has been maintained. According to the data of the National Bureau of Statistics, the year—on—year growth rate of chemical fiber output has generally slowed down since the beginning of this year. From January to June, the output of chemical f iber was 33.67 million tons, achieving a slight positive growth year—on—year, and the growth rate from January to June was slightly higher than that from January to May. In the f irst half of the year, terminal texturing and weaving were aff ected by the pressure of orders and high inventory, and the starting load was weak, so the demand for chemical f iber continued to be low. Th erefore, the pro—duction and sales pressure of chemical f iber industry was high, and the overall inventory was at a high level, while the inventory of polyester staple f iber and viscose staple f iber was relatively low.

Market price

Since 2022, crude oil prices have generally remained at a high level and fluctuated greatly. WTI futures broke through USD 120/barrel twice in early March and early June,and then showed a downward trend of shock, dropping to USD 106/barrel at the end of June, and further dropping to around USD 94/barrel at the end of July, a drop of more than 20% from the high point in June. The chemical fiber market represented by polyester also showed a high level and f luctuated greatly. On the one hand, although the high price of crude oil has supported the price of chemical f iber to some extent, the downstream demand continues to be sluggish, and it is difficult for chemical fiber enterprises to smoothly transmit the rising cost downwards. Therefore,the price increase of chemical fiber products is generally smaller than that of upstream raw materials, and the profit margin is squeezed; On the other hand, the sharp fluc—tuations in the prices of raw materials and chemical fiber products increase the difficulty for enterprises to judge the market and manage production and operation.

Import and export situation

According to the statistics of China Customs, the total import volume of main chemical fiber products from Janu—ary to June decreased by 37.6% compared with the same period of last year. On the one hand, it reflects the weaken—ing of domestic market demand, and more importantly,domestic chemical fiber products have been able to meet downstream demand in terms of variety and quality. Un—der the difficult situation, the export of chemical fiber still achieved positive growth. From January to June, the total export volume of major products increased by 2.8% year—on—year, reflecting the increased demand in the interna—tional market and the improvement of the competitiveness of chemical fiber products in China. It is particularly worth mentioning that the export performance of PET bottles and chips has been brilliant in the past two years. In 2021,the export volume increased by 36% year—on—year, and in January—June 2022, it increased by 45% year—on—year.

Terminal market

From the perspective of terminal consumption, the domestic demand market once fluctuated due to the im—pact of the pandemic. Since May, with the effective control of the domestic pandemic, the national "promotion fee"policy has been effective, and the domestic textile con—sumption is recovering. According to the data of the Na—tional Bureau of Statistics, from January to June, the retail sales of clothing, shoes, hats, textiles and other goods of units above designated size decreased by 6.5% year—on—year, but the decline was 1.6 percentage points narrower than that of January to May this year; The growth of online retail channels is relatively stable. In the first half of this year, the national retail sales of online wearable goods in—creased by 2.4% year—on—year, up 1.5 percentage points from the first quarter of this year, reversing the negative growth since April.

The textile external demand market is growing steadi—ly. According to China Customs data, from January to June,China's textile and garment exports totaled 156.49 billion US dollars, up 11.7% year—on—year. Supported by the ris—ing export prices, the export amount reached the highest level in the same period of the previous year. Among the products exported, the export value of textiles was USD 76.32 billion, up by 11.3% year—on—year; Clothing exports amounted to USD 80.17 billion, a year—on—year increase of 12%. In the export market, the textile supply chain in Southeast Asia and other countries has basically returned to normal operation this year, which has driven China's export of its yarn, fabric and other industrial chain supporting products to achieve a good growth. From January to June, China exported textiles and clothing to ASEAN in total of 27.71 billion USD, with a year—on—year increase of 23.3%, of which the export growth rate of yarn and fabric reached 29.9% and 24.6% respectively; The export volume to China's Regional Comprehensive Economic Partnership Agreement (RCEP)member countries reached 45.57 billion US dollars, a year—on—year increase of 13.7%,indicating that the effective implementation of RCEP is conducive to a stable and better export environment.

Economic benefits

In the first half of the year, the profit margin of the chemical fiber industry was compressed. At the same time, due to the high base in 2021, the profit dropped significantly year—on—year. According to the data of the National Bureau of Statistics, the operating income of the chemical fiber industry from January to June 2022 was 536.7 billion yuan, an increase of 10.61% over the same period of last year; Operating cost increased by 16.35% year—on—year, 5.74 percentage points higher than the increase of operat—ing income; Realized a total profit of 16.4 billion yuan, a year—on—year decrease of 51.16%; The loss of the industry reached 33.54%, and the loss of loss—making en—terprises increased by 82.68% year—on—year, which was 88.32 percentage points lower than that of January—May.

Investment in fixed assets

According to the data of the National Bureau of Statistics, the investment in fixed assets in the chemical fiber industry increased by 31.9% from January to June, which was basi—cally the same as the growth rate in 2021. To some extent,it reflects that enterprises have enough confidence in the future development.

The second half year trend forecast

From the perspective of cost, the crude oil market in the second half of the year is mainly affected by geopolitical conflicts and the interest rate increase of the Federal Reserve.The uncertainty is still strong, but the probability of being short is increasing. It is expected that the crude oil market may still fluctuate widely, and the price center may be lower than that in the first half of the year, and the possibility of a sharp decline is not ruled out. The price drop of crude oil will reduce the pressure on raw material cost and energy cost of chemi—cal fiber enterprises, but enterprises need to control inventory well and be alert to the impact of inventory depreciation on the book benefit of enterprises.

From the consumer side, the textile industry has shown signs of gradual improvement, and has a good foundation for recovery. It is expected that in the second half of the year,with a series of solid and stable economic policies of the country continuing to show results, China's macro economy is expected to further stabilize and rebound, providing a solid foundation for the improvement and recovery of the domes—tic demand market and the smooth circulation of production and demand; At the same time, under the expectation of the traditional peak season of "Golden September and Silver October", the domestic textile market is expected to achieve a weak recovery; However, the external demand market is facing the competition from Southeast Asia and other countries. It is expected that the pressure of steady growth of China's textile and garment exports will increase in the second half of the year.

Generally speaking, it is expected that the operating pressure of the chemical fiber industry will remain high in the second half of the year, and the industry will continue to carry forward its load. It is expected that the operating income of the chemical fiber industry will still show a growth trend year—on—year, and the overall profit level is expected to improve compared with the first half of the year.