In the first half of the year, unexpected factors such as the rebound of the domestic epidemic and international geopolitical conflicts had an impact on my country’s economic operation, and development faced constant risks and challenges. Against this background, crude oil prices have fluctuated sharply at high levels, downstream demand has continued to be sluggish, and the overall production and operation situation of the chemical fiber industry has been grim. However, with the support of the country’s series of “stabilizing growth” policy measures, the main operating indicators of the textile industry have shown a rebound under pressure. It is expected that in the second half of the year, as the policy measures are further implemented and effective, it will bring more stable operation and recovery to the industry. positive influence.
1. Basic situation of industry operation
(1) Production and sales situation
In the first half of the year, the overall operating load of the chemical fiber industry was weaker than that of the same period last year, especially after mid-March, when there was a significant decline. Since then, the overall operating load has remained low. Data from the National Bureau of Statistics show that since the beginning of this year, the year-on-year growth rate of chemical fiber output has generally shown a slowing trend (Figure 1). From January to June, chemical fiber output was 33.67 million tons, achieving weak positive growth year-on-year, and the growth rate from January to June was higher than that from January to May. There was a slight rebound.
Figure 1 Changes in year-on-year growth rate of chemical fiber output in 2022
In the first half of the year, terminal texturing and weaving were affected by orders and high inventory pressures. The operating load was weak, and the demand for chemical fibers continued to be sluggish. Therefore, the production and sales pressure of the chemical fiber industry was relatively high, and the overall inventory was at a high level. Polyester staple fiber and viscose staple fiber inventories were Relatively low (Figure 2).
Figure 2 Inventory status of major chemical fiber products since 2020
(2) Market price
Since 2022, crude oil prices have generally remained high and fluctuated sharply. WTI futures exceeded US$120/barrel twice in early March and early June, and then showed a downward trend, falling to US$106/barrel at the end of June and further to US$94 at the end of July. At around US$/barrel, the price has dropped by more than 20% from the high point in June. The chemical fiber market, represented by polyester, has also shown a trend of high and sharp fluctuations (Figure 3). On the one hand, although high crude oil prices have provided certain support for chemical fiber prices, downstream demand continues to be sluggish, making it difficult for chemical fiber companies to smoothly transmit rising costs downwards. Therefore, the price increase of chemical fiber products is generally smaller than that of upstream raw materials (Table 1), and profit margins are squeezed. On the other hand, the sharp fluctuations in the prices of raw materials and chemical fiber products have made it more difficult for companies to judge the market and manage production and operations.
Figure 3 International oil prices, PTA, and polyester POY price trends since 2020
Table 1 Price changes of main chemical fiber products and raw materials in the first half of the year
(2) Import and export situation
According to China Customs statistics (Table 2), the total import volume of major chemical fiber products from January to June decreased by 37.6% year-on-year. On the one hand, it reflects the weakening of domestic market demand. More importantly, domestic chemical fiber products can meet downstream demand in terms of variety and quality. . Despite the difficult situation, chemical fiber exports still achieved positive growth. The total export volume of major products from January to June increased by 2.8% year-on-year, reflecting the increase in international market demand and the improvement of the competitiveness of my country’s chemical fiber products. It is particularly worth mentioning that the export performance of polyester bottle flakes has been outstanding in the past two years. In 2021, export volume increased by 36% year-on-year, and from January to June 2022, it increased by 45% year-on-year.
Table 2 Import and export status of main chemical fiber products in the first half of 2022
(4) Terminal market
From the perspective of terminal consumption, the domestic demand market has fluctuated due to the impact of frequent epidemics. Since May, as the domestic epidemic has been effectively controlled and the national “promotion fee” policy has taken effect, domestic textile consumption is recovering. Data from the National Bureau of Statistics show that from January to June, the retail sales of clothing, shoes, hats, and knitted textiles in units above designated size nationwide decreased by 6.5% year-on-year, but the decline was 1.6 percentage points narrower than that from January to May this year; the growth of online retail channels was relatively stable. In the first half of the year, national online retail sales of clothing products increased by 2.4% year-on-year, 1.5 percentage points higher than the first quarter of this year, reversing the negative growth trend since April.
The textile external demand market has grown steadily. China Customs data shows that my country’s textile and apparel exports totaled US$156.49 billion from January to June, a year-on-year increase of 11.7%. Supported by rising export prices, the export amount hit the highest level in the same period in history. Among the export products, the export value of textiles was US$76.32 billion, a year-on-year increase of 11.3%; the export value of clothing was US$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, driving my country to invest in its yarn, fabric and other industries.��The export of supporting products has achieved good growth. From January to June, my country’s textile and clothing exports to ASEAN totaled US$27.71 billion, a year-on-year increase of 23.3%, of which the growth rates of yarn and fabric exports reached 29.9% and 24.6% respectively; my country’s “Regional Comprehensive Economic Partnership Agreement (RCEP) member countries’ exports reached US$45.57 billion, a year-on-year increase of 13.7%, indicating that the effective implementation of RCEP is conducive to the stability and improvement of the export environment.
(5) Economic benefits
In the first half of the year, the profit margins of the chemical fiber industry were compressed. At the same time, due to the high base in 2021, profits fell significantly year-on-year. According to data from the National Bureau of Statistics (Table 3), the operating income of the chemical fiber industry from January to June 2022 was 536.7 billion yuan, a year-on-year increase of 10.61%; operating costs increased by 16.35% year-on-year, 5.74 percentage points higher than the operating income growth; the total profit was 16.4 billion yuan, a year-on-year decrease of 51.16%; the industry’s loss rate reached 33.54%, and the loss of loss-making enterprises increased by 82.68% year-on-year, which was significantly narrowed by 88.32 percentage points from January to May.
Table 3 Economic benefits of chemical fiber and related industries from January to June
(6) Fixed asset investment
According to data from the National Bureau of Statistics, fixed asset investment in the chemical fiber industry increased by 31.9% year-on-year from January to June, which is basically the same as the full-year growth rate in 2021 (Figure 4). To a certain extent, it reflects that companies have sufficient confidence in future development.
Figure 4 Changes in the growth rate of fixed asset investment in the chemical fiber industry since 2008
2. Forecast of industry operation trends in the second half of the year
From the cost side, the crude oil market in the second half of the year will be mainly affected by geopolitical conflicts, the Federal Reserve’s interest rate hikes, etc. Uncertainty is still strong, but the probability of being bearish is increasing. It is expected that it may still fluctuate widely, and the price center may be low In the first half of the year, the possibility of a sharp decline cannot be ruled out. The fall in crude oil prices will reduce the pressure on raw material costs and energy costs for chemical fiber companies, but companies need to control their inventories and be wary of the impact of inventory depreciation on their book profits.
From the consumer side, the textile industry has shown signs of gradual improvement and has the foundation to recover. In the second half of the year, it is expected that as the country’s series of solid economic stabilization policies continue to show results, my country’s macro economy is expected to further stabilize and pick up, providing a solid foundation for the domestic demand market to improve and pick up, and the production and demand cycle to maintain a smooth flow; at the same time, during the “Golden Nine and Silver Ten” traditional peak seasons, it is expected In the second half of the year, the domestic textile demand market is expected to achieve a weak recovery; while the external demand market faces competition from Southeast Asia and other countries, it is expected that my country’s textile and apparel exports will face increased pressure to maintain stable growth in the second half of the year.
Generally speaking, it is expected that the operating pressure of the chemical fiber industry will still be high in the second half of the year, and the industry will continue to bear the burden and move forward. 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.
Industry enterprises must strengthen their confidence, believe that difficulties are temporary, and believe that the industrial foundation and industrial advantages accumulated over many years in my country’s chemical fiber and textile industries are still outstanding. In the face of uncertainty, do certain things. It is recommended that enterprises prevent risks and cultivate internal strength, actively implement the overall requirements and key tasks of the “Guiding Opinions on the High-Quality Development of the Chemical Fiber Industry”, and move toward high-end, intelligent, and green To move towards high-quality development and welcome the successful convening of the 20th National Congress of the Communist Party of China with practical actions!