Brief on the economic operation of textile machinery industry in the first half of 2022

Edited by Zhao Xinhua

In the first half of 2022,due to the continued spread of the pandemic in the world and the impact of international tensions,the downward pressure on the Chinese economy was further intensified,and the pandemic was sporadic in multiple areas in the Yangtze River Delta and other regions,which had a direct impact on textile machinery producer.Facing unfavorable factors such as insufficient domestic market demand,high price fluctuation of raw materials,poor freight and logistics,the textile industry has problems such as insufficient orders,low operating rate and poor supply chain.The operation of the industry is facing great growth pressure.After the trough of economic indicators in April,the operation of the industry has gradually im—proved.Driven by the expansion of external demand and the strength of foreign trade policies,the industry’s exports continued to grow.

Operational quality and efficiency

Industry revenue slightly increased,profitability under obvious pressure

From January to June 2022,the operating revenue of textile machinery enterprises above designated size increased by 0.86% year—on—year,which was 0.93 percentage points lower than that from January to May.The growth rate of in—dustry’s operating revenue has gradually slowed down since 2022.Total assets increased by 4.56%,according to the sta—tistics of the National Bureau of Statistics.

The industry profits are under great pressure affected by rising energy prices,raw material costs and logistics costs.According to the National Bureau of Statistics,from January to June 2022,the total profits of enterprises above designated size decreased by 17.72 percent year—on—year.Industry profits have been falling this year,with the decline narrowing every month since it hit bottom in April.Operat—ing margin was 5.89%.The loss of loss—making enterpris—es increased by 44.33% year—on—year;the percentage of loss—making enterprises was 24.52%,up 2.68 percentage points from the same period last year.

The increase in industry costs and expenses is higher than the increase in revenue,and the proportion of three expenses is slightly reduced.

From January to June 2022,the total cost of textile machinery enterprises above designated size increased by 2.03% year—on—year,which was 1.17 percentage points higher than the growth of operating revenue.Operat—ing cost increased 2.22% year—on—year,accounting for 90.31% of the total costs and expenses;the propor—tion of the industry’s three expenses was 9.69%,0.21 percentage points less than the same period last year.Among them,the sales expenses increased by 1.46%,accounting for 3.68% of the total costs and expenses;the management expense increased by 3.20% year—on—year,accounting for 5.65% of the total costs and expenses;financial expenses decreased by 34.89%,accounting for 0.36% of the total costs and expenses,according to the National Bureau of Statistics.

The industry asset-liability ratio increased

From January to June 2022,the total assets of textile machinery enterprises above designated size increased by 4.56% year—on—year,and the asset—liability ratio was 60.63%,an increase of 0.8 percentage points over the same period last year,higher than the 56.9% asset—liability ratio of industrial enterprises above designated size,according to the statistics of the National Bureau of Statistics.

Growth rate of finished goods inventory decreased

From January to June 2022,the accounts receivable of textile machinery enterprises above designated size increased by 9.91 percent year—on—year,2.01 percentage points higher than the same period in 2021.The inven—tory of finished goods of textile machinery enterprises above designated size increased by 9.15% year—on—year in January—June 2022,2.98 percentage points lower than that in the same period of 2021,according to the National Bureau of Statistics.

Survey of textile machinery enterprises

China Textile Machinery Association conducted a survey of 120 textile machinery companies in the first half of 2022.According to the summary results,overall enterprise operation is under obvious pressure,and the impact of the pandemic and the downward pressure on the economy is gradually emerging.According to the survey,more than half of the enter—prises’ orders were lower than the same period last year,and 58.97% of the enterprises’ capacity utilization rate was less than 80%.At present,the primary problem facing enterprises is the lack of domestic and foreign market demand.Affected by multiple factors such as the pandemic in China,the industry situation in the second quarter was less than expected,and the decline was obvious.Enterprises were still cautious about the overall situation of the textile industry in the third quarter.

The outbreak in multiple areas has seriously affected 60% of the enterprises surveyed.Enterprises are most worried about the continued spread of the pandemic,the impact on production,the lack of orders,order delays or cancellations,and other problems.Suppliers’ supply constraints have improved.In the face of the pandemic,most enterprises actively responded by adopting innovative product technology,automation trans—formation and expanding online marketing methods.

Import and export

The total import and export of textile machinery from January to June 2022 was $4.30 billion,down 1.36 percent year—on—year.Among them,textile machinery import was $1.734 billion,down 14.41% year—on—year;the export was $2.566 billion,up 9.97% year—on—year,according to cus—toms statistics.

In the January—June period of 2022,China imported textile machinery from 60 countries and regions,with total import of $1.734 billion,down 14.41 percent year—on—year.Import growth has continued to decline since 2022.From the category of imported products,the total import of chemical fiber machinery ranked the first,the total import was $436 million,down 23.02 percent year—on—year,accounting for 25.17% of the total import;In the seven categories of products,except the total increase of spinning ma—chinery and weaving machinery,the other product categories all had differ—ent ranges of decline,with the largest decline of knitting machinery.

From January to June 2022,China exported $2.566 billion of textile machinery to 181 countries and regions,up 9.97% year—on—year,and the export growth rate remained relatively stable.According to customs statis—tics on textile machinery exports from January to June 2022,knitting ma—chinery exports reached $657 million,up 13.2% year—on—year,accounting for 25.6%,ranking first,and the seven categories of products all in positive territory.Exports of chemical fiber machinery increased the most from the same period last year,while exports of nonwovens machinery continued the slowdown after the high growth in 2020.

The situation of each sub-industry

In the second quarter of 2022,most spinning machinery enterprises ran smoothly,basically continuing the good trend of the first quarter.Except for roving frame,the sales of various types of spinning equipment have increased to varying degrees.It is understood that most spinning machinery enterprises have basically normal production schedules in the third quarter of this year.

Since late March,the spread of the pandemic in China has had a certain impact on the stable operation of the industrial chain and supply chain.The shutdown and production reduction of enterprises,the decline of capacity uti—lization rate,and the weakening of market expectations at home and abroad have increased the downward pressure on the operation of the weaving ma—chinery industry.But exports were better than expected.It is expected that the demand of the terminal consumer market in the third quarter is still difficult to increase significantly,and the inventory of downstream enterprises is difficult to reduce rapidly.The production and operation of weaving machinery will be under pressure.However,with the arrival of “Golden September Silver October”in the textile industry,it is expected that the market will recover at the end of the third quarter.

Among the three categories of knitting machines,the circular weft knitting,warp knitting and flat knitting are facing different degrees of downward pressure.Knitting machinery industry will still face certain pressure in the third quarter.

The production and operation of dyeing and finishing machinery industry enterprises are under great pressure.Combined factors such as the impact of the pandemic and weak consumer demand in the terminal market have resulted in the shortage of orders and operating well below capacity and the weakening demand for equipment invest—ment in upstream dyeing and printing enterprises.Dyeing and finishing machinery manufacturers mostly rely on the undelivered orders of the previous year for production,and the new orders of this year are reduced.Due to the high fluctuation of raw material price,the rise of energy cost and logistics cost,the comprehensive production cost of equipment manufacturing enterprises rises,and the profit of enterprises decreases.In the second half of the year,the industry will still face pressure such as insufficient demand at home and abroad and high costs,and the overall market situation is not optimistic.

Due to the inability of some chemical fiber equipment enterprises to resume normal work and production,trans—portation and logistics constraints,market demand decline and other problems,the production of polyester filament de—creased significantly compared with the same period last year,and the number of new orders was less.It is expected that the current situation will be maintained in the first three quarters,and there will be no big change.The sales of texturing spindles compared with the same period last year increased rapidly,texturing spindles manufacturers continue to maintain full load production.However,due to the influence of pandemic and logistics,the production and supply of the texturing spindles enterprises are more difficult.In particular,some imported parts have a long customs clearance time,resulting in delivery delay,which seriously restricts the normal delivery of the original orders of the texturing spindles manufactur—ers.Some small and medium—sized customers due to their own reasons delayed delivery and reduced the original orders.As the downstream operating rate continues to decline,it is expected that the texturing spindles market in the second half of the year is not optimistic.In staple fiber equipment market,the new capacity in the first half of the year is higher than the same period last year.The new supply is mainly focused on product differentiation specifications,and the increment of conventional varieties only comes from the resumption of production of individual enterprises.

In terms of nonwovens machinery,affected by changes in the down—stream industry,equipment for filtration textiles,textiles for synthetic leath—er,automotive interior and other fields performed relatively well.Due to the large amount of spunlaced fabric production capacity put on the market in recent two years,the new orders decreased significantly;Due to the recov—ery of the downstream industry,the demand for needle loom has increased significantly;spunbond products are currently paying more attention to filtration materials.

Outlook

In the first half of 2022,under the complicated situation of the recur—rence of the pandemic and geopolitical tensions,the economic performance indicators of the textile industry showed a slowing trend,and the dilemma of low profit and high cost has not been substantially improved.

The world is undergoing rapid changes unseen in a century.Global inflation,supply chain constraints,international tensions and other is—sues will not be fully resolved in the short term,and economic recovery still face uncertainties.Internationally,the conflict between Russia and Ukraine and the game between major powers have had a profound im—pact on the global political and economic order,the global industrial and supply chains.In the post—pandemic period,many countries around the world will face a total shortage of everything from energy,commodi—ties to daily necessities,and supply chains have not fully recovered.The International Monetary Fund sees the global economy in 2022 as more fragile than previously thought,with the global recovery expected to weaken overall.

In terms of the domestic situation,the Chinese economy is still recov—ering from the impact of the pandemic,with insufficient driving force for economic development and increasing unstable and uncertain factors.The pandemic spread throughout the country,consumption contracted in the short term,manufacturing investment expectations weakened,and invest—ment willingness declined.The industrial chain and supply chain problem is still outstanding.Since the second quarter,various unexpected factors have been beyond expectations.The stable operation of the industrial chain and supply chain in some fields and some areas in the country has been affected.

Although the economy is facing downward risks and the recur—rence of the pandemic,corporate performance and market expectationshave been affected to a certain extent,the fundamentals of China’s long—term economic well—being have not changed,and certain conditions are still in place for the steady de—velopment of the industry.Policies to stabilize growth will continue in the second half of the year.Some commodity prices are expected to fall from their high levels in the second half of the year,which will reduce manufacturers’ costs.With the policy of maintaining supply and price stability,the price pressure of raw materials faced by enterprises will be eased.

Outlook for 2022,the world’s economic stagflation risks rise,economic growth will slow further,major econo—mies tend to tighten policy,unstable external uncertainty increased,inflation will remain high,the impact of the pan—demic has not been completely eliminated in China,and it is still difficult for market players to operate,the textile ma—chinery industry is still facing a slowdown in demand and rising cost pressure,it is more urgent to address the chal—lenges and needs of “employment,efficiency and quality improvement”.Since the second quarter,the pressure of industry operation has increased.With the reduction of the influence factors of pandemic,the impact of the pandemic on the economy is expected to be further weakened in the second half of the year.A series of economic stabilization policies will gradually become effective,the industry opera—tion has the possibility of stabilizing and recovering,and exports are expected to maintain stable growth.At present,China’s textile industry has entered a stage of high—quality development,and the industrial chain is expected to remain stable and sustainable under the environment of better control of the pandemic in China.Based on the “14th Five—Year Plan” development guidelines,the textile industry’s demand for continuous,automatic,intelligent,and large—scale customization of equipment at different levels of de—mand continues to emerge.In terms of green manufactur—ing,energy saving and emission reduction,textile machine enterprises will also make great achievements.Under the current situation,textile machine enterprises should work hard,improve their quality,enhance their competitiveness,and make plans for the future.