Events Are Not Good! The First Half Of This Year, Printing And Dyeing Enterprises Loss As High As 402!

In the first half of 2019, the most important incident in the dyestuff market was the "3. 21" explosion in Xiangshui. The accident not only caused heavy casualties and huge direct economic losses, but also had a profound impact on many industries. Dye is one of the most influential industries.

Figure 1

At present, China's dyestuff industry is mainly distributed in East China, led by Zhejiang and Jiangsu. The dye intermediates industry is also mainly Zhejiang and Jiangsu, and some intermediates are concentrated in Henan, Hebei, Inner Mongolia and other places.

Figure 2

On the one hand, the 3. 21 accident directly resulted in the production of many dyestuffs production enterprises in Jiangsu and the surrounding areas. On the other hand, in the final accident handling plan, Xiangshui Industrial Park was permanently shut down, and the relevant factories needed to be relocated, which would not be able to restore effective production for a long time.

Affected by this, the supply market of the dye market began to gradually clear the pattern of contraction, is expected to tighten the supply of suppliers driven by the mood of selling. In the end of March and the beginning of April, the rising prices of dyestuffs factories stimulated the market bullish mood. The market prices of disperse dyes and reactive dyes rose rapidly. In 5-6 months, the market prices of disperse dyes and reactive dyes rose to the high point near 2015.

Figure 3

However, in addition to the favorable support from the supply side, the rise in market prices also requires adequate support from the downstream. But from this year's perspective, the downstream market of dyestuff has a poor overall performance. After entering the two quarter, the order of most printing and dyeing enterprises in China began to decrease significantly, and the time nodes for reducing orders were far earlier than in previous years.

According to the China printing and dyeing Association's data, in 2019 1-5, the printing and dyeing fabrics of scale printing and dyeing enterprises increased 19 billion 668 million meters, an increase of 10.48% over the same period last year. The data of its rapid increase in output are more dazzling, which reflects that the printing and dyeing enterprises' scale and capacity are still dominant.

According to the China printing and dyeing Association statistics, in 2019 1-5, 1621 printing and dyeing enterprises above Designated Size realized main business income of 111 billion 241 million yuan, an increase of 0.84% over the same period last year. With the rapid increase in output, the operating income has not increased by an equal margin, which means that the price of finished products in the printing and dyeing industry has dropped considerably in the past year.

The operation data of the above scale printing and dyeing enterprises are commendable, which also reflects the embarrassment of small and medium-sized printing and dyeing enterprises below the scale. Under the situation that large dyeing factories still have better ability to receive orders and profit margins, small and medium-sized enterprises have begun to face various pressures. Problems such as rising price of dye chemicals, increased cost of environmental protection and safety, reduction of foreign trade orders caused by Sino US trade friction, and the slight profit of domestic trade processing are coming.

At the same time, the start up of the reduction led to a further increase in the financial expenses of the dyeing plant. The loss is becoming more serious. This is not limited to the printing and dyeing enterprises below the scale. According to the statistics of the China printing and dyeing Association, in 2019 1-5, there were 402 loss making enterprises in the above scale printing and dyeing enterprises, with a deficit of 24.80%, an increase of 2.04 percentage points over the same period in 2018.

The rapid decline of dye downstream printing and dyeing industry has led to the fact that in the first half of the year, the dye industry has been able to take the initiative to pull up the supply side through the favorable supply side, and the situation can not be maintained for a long time. Entering the middle of 2019, dyestuff manufacturers also began to face a problem. The weak demand for downstream resulted in a decline in the quantity of dyestuff purchases and a gradual increase in factory inventory pressure.

In the middle of the off-season, factory price increases can not effectively stimulate sales; however, if the price promotions or the price of dye market are gradually lowered, this will undoubtedly create huge performance pressure for dyestuff manufacturers. Therefore, at present, the dye production enterprises should maintain stable quotations, and release the sales strategy of the discount space, so as to promote sales and ease the pressure of production and marketing.

On the whole, in the first half of 2019, China's dyestuff market basic factors (upstream accidents) formed favorable support at the mid stage, which was hedged by demand, and the short-term market was hard to get better. But from the whole year, the resumption of demand peak in the second half of the year and the progress of Sino US trade consultation will become the main influencing factor of the dyestuff market in the year.