Chronicle Of Polyester Filament Industry In 2019: Internal And External Troubles Continue To Be Difficult For Enterprises.

In 2019, the production capacity of domestic polyester filament was further released, the competition pattern of homogenization became increasingly fierce, and the contradiction between supply and demand of domestic products was escalating. Leading enterprises continued to expand their concentration and increased their discourse power through continuous expansion. In order to ease domestic competition pressure, some domestic manufacturers expand overseas markets, and the export volume of polyester filament has increased sharply since the beginning of this year. However, trade friction is speeding up the transfer of textile and garment industry and order to Southeast Asia.

Moderate expansion of capacity, breaking 30 million tons

In recent years, unlike the polyester raw material PX and PTA capacity expansion, the production capacity of domestic direct spinning polyester filament industry has been in a mild expansion trend. In recent years, the overall new production capacity is mostly concentrated in the big factories of Tung Kun, Heng Yi and Xin Feng Ming. Under the situation of moderate expansion of capacity, the concentration of melt direct spinning polyester filament industry has been continuously improved.

Fig. 12015 capacity and output changes of domestic direct spinning polyester filament in -2019

 

Source: lung Chung

Domestic polyester filament industry has experienced 2015-2017 years of gradual decline in capacity growth. Since 2018, the capacity growth of domestic direct spinning polyester filament has returned to a high level. In 2018, the domestic polyester filament production capacity increased by 11.8%, and in 2019, under the severe global trade situation and the gradual decline of the domestic polyester industry, the production capacity of direct spinning filament remained at a higher level. This year, the capacity of domestic direct spinning polyester filament has successfully exceeded 30 million tons / year, and by the end of the year, it has increased to 30 million 690 thousand tons / year, which is 8.3% higher than that at the end of 2018.

From the point of view of output, in 2017, after the domestic polyester industry returned to the prosperity cycle, the domestic direct spinning filament production increased rapidly, reaching the highest level in recent years (11.7%) in 2018. Although the overall boom of the industry in 2019 was declining, the yield of direct spinning filament continued to grow at a high growth rate under the combined effect of obvious increase in exports and obvious increase in downstream weaving overall inventory. According to the information measured by long Chung, 2019 of domestic polyester filament production increased by 9.8%, and the total output will exceed 27 million tons in the year.

Table 12018-2019 new capacity of direct melt polyester filament in China

Unit: 10000 tons / year

Enterprise name	capacity	Commissioning time
Tung Kun Jiaxing petrochemical	Thirty	Two thousand and eighteen February 2013
Tong Kun Tongxiang	Twenty	Two thousand and eighteen March 2013
New Phoenix Ming Zhong stone	Thirty	Two thousand and eighteen March 2013
Haixin fiber	Twenty-five	Two thousand and eighteen March 2013
Tong Kun Heng Teng	Sixty	Two thousand and eighteen May 2013
New Phoenix Ming Zhong stone	Thirty	Two thousand and eighteen May 2013
Fujian mountain force	Twenty	Two thousand and eighteen June 2013
Xuzhou	Ten	Two thousand and eighteen July 2013
Fujian Bai Hong	Twenty	Two thousand and eighteen September 2013
Xin Feng Ming Zhong Xin	Thirty	Two thousand and eighteen November 2013
Jiangsu Sheng Hong	Twenty-five	Two thousand and eighteen December 2013
Fujian latitude and longitude	Twenty	Two thousand and nineteen March 2013
Lixin chemical fibre	Ten	Two thousand and nineteen March 2013
Jiaxing Yi Peng	Twenty-five	Two thousand and nineteen April 2013
New Feng Ming jump	Thirty	Two thousand and nineteen July 2013
Tong Kun Heng Bang	Thirty	Two thousand and nineteen August 2013
Tong Kun Heng you	Sixty	Two thousand and nineteen August 2013
Tong Kun Heng Teng	Thirty	Two thousand and nineteen September 2013
New Feng Ming jump	Thirty	Two thousand and nineteen October 2013
Weifang Warburg	Ten	Two thousand and nineteen November 2013

Source: lung Chung

Industry concentration continued to increase, CR4 increased to 54.9%

From the perspective of new capacity, in recent years, the production capacity of newly increased direct spinning filament is mainly based on the capacity expansion of the head factory. Up to now, the total capacity of direct spinning filament has increased by 5 million 450 thousand tons in the past 2018-2019 years, and the head factory, headed by Tong Kun, Heng Yi, Xin Fengming and Sheng Hong four, has increased 4 million 300 thousand tons of capacity, accounting for nearly 80%.

Table 22017-2019 concentration of polyester filament industry in China

Unit: 10000 tons / year

Particular year	Total production capacity of direct spinning filament	Tong Kun / Heng Yi / Xin Feng Ming / Sheng Hong	CR4
Two thousand and seventeen year	Two thousand five hundred and thirty-four	One thousand two hundred and fifty-nine	49.7%
Two thousand and eighteen year	Two thousand eight hundred and thirty-four	One thousand four hundred and eighty-four	52.4%
Two thousand and nineteen year	Three thousand and seventy-nine	One thousand six hundred and eighty-nine	54.9%

Source: lung Chung

From the industry concentration point of view, the concentration of polyester filament industry has been increasing in recent years. Up to now, the concentration of CR4 industry in polyester filament industry has increased from 49.7% in 2017 to 54.9% at present, and the industry concentration degree has further expanded.

Tax cuts to boost corporate confidence

At the beginning of the year, the Ministry of Finance and the State Administration of Taxation and the General Administration of Customs jointly issued the news on the value added tax reform. From April 1, 2019, the VAT rate was adjusted: the VAT general taxpayer (hereinafter referred to as the taxpayer) had the value added tax taxable sales activity or the imported goods, the original 16% tax rate was adjusted to 13%, the original 10% tax rate was adjusted to 9%, and the 3 supplementary measures of expanding the deduction, adding and reducing the tax rebate were the main course of this year's tax reduction and reduction. This is a great advantage for Chinese enterprises, and the new policy has brought great help to enterprises.

The change of daily production and sale data of polyester filament in 22019 years

Source: lung Chung

After the announcement of the tax reduction, the confidence of the polyester market was boosted, the enthusiasm of downstream enquiries increased, and sales and sales increased significantly. At the beginning of the year, the repair equipment of polyester filament enterprises was restarted, and the industry started to improve rapidly. However, the downstream looms were slow to work, the market inquiry atmosphere was not smooth, production and marketing remained near 3-5, and inventory was continuously accumulating. On the eve of the implementation of the tax reduction policy, the market atmosphere gradually increased, and the production and sale rate of polyester filament increased continuously. During the trading day, the higher production and sales were at 300%-400%, and the overall production and sales rate was above 150%. Admittedly, in addition to the policy aspect, the centralized maintenance of the PTA plant at the end of March has also boosted the rise of polyester filament yarn to a certain extent, and stimulated the purchasing enthusiasm of downstream weaving enterprises.

Offshore RMB exchange rate "strong break 7"

Since the three quarter of this year, the US dollar against the RMB exchange rate has broken 7 for the first time since 2009. The depreciation of the RMB was mainly due to the strength of the US dollar, and since the beginning of September, the RMB appreciated against the US dollar. During the period, it appreciated by 2.3% and returned to 6 in November 5th.

Figure 32009-2019 US dollar to RMB exchange rate trend

Source: lung Chung

The "breaking 7" of the RMB exchange rate is related to the increase in the downward pressure on the economy at that time. On the inside side, China's industrial production slowed down in August, and investment and consumption growth slowed down compared with the previous stage. On the external side, the global economic slowdown trend was obvious, the international economic environment was unstable and uncertain factors increased, which had an impact on China's foreign trade. Taking into account the internal and external factors, China's economy was at a low level of accelerated downward trend, and the RMB exchange rate began to depreciate and "break 7".

As we all know, most of the settlement in international trade is the US dollar valuation. The depreciation of RMB will help to increase the trade surplus and promote the development of export enterprises.

Export growth was obvious, an increase of 19.04% over the same period.

Figure 42015 monthly export data of polyester filament in -2019

Source: lung Chung

From the point of view of import and export, the export volume of domestic polyester filament increased significantly in 2019 than that of previous years. As of now, the export volume of polyester filament has exceeded 2 million 220 thousand tons in the 1-10 months, up 19.04% compared with the same period in 2018, and the net export volume has exceeded 2 million 100 thousand tons in the year. This explains to a certain extent that the output of polyester filament has maintained a certain high growth rate in the industry.

The main reason for the high growth rate of exports during the year is that China's polyester products have stronger overall competitiveness. Although Sino US trade friction has caused a slowdown in domestic export growth, it has further accelerated the upgrading and transformation of China's chemical fiber textile industry, and the overall competitiveness of the industry has become more powerful.

Trade negotiations have undergone many twists and turns.

Trade wars have been going through a series of twists and turns, and more than ten negotiations have taken place, and trade disputes have intensified. Under the background of economic globalization, trade friction is inevitable. China is a big developing country, the market economy system is not perfect, the political system, cultural tradition and the United States are quite different, and some trade friction is a normal phenomenon.

The dispute began in March 2018. The president of the United States signed the presidential memorandum. According to the results of the "301 investigation", it will impose a large scale of tariffs on the commodities imported from China and restrict Chinese enterprises from investing in the US. As early as the second half of 2017, the United States has begun to make many negative and negative evaluations against China. It has adopted economic and trade restrictive measures such as tariffs and investment restrictions on China, and launched economic and trade frictions, and launched 301 investigations. In March 8, 2018, the US president announced that the United States would impose heavy taxes of 25% and 10% on steel and aluminum imports for a long time. But then the exempted ally is likely to end up being "only China" with high tariffs. In the 2018 years, the two sides have been negotiating without end. The scope of Taxation has been extended to the polyester terminal areas such as shoes and hats and textiles, and plans to raise taxes on some commodities. In May 8, 2019, a spokesman for China's Ministry of Commerce said that the escalation of trade frictions was not in line with the interests of the peoples of the two countries and the world. China deeply regretted that if the US tariff measures were put into effect, China would have to take the necessary counter measures.

Scholars in the industry generally believe that the causes and types of trade friction between the two sides can be classified into five types: 1, micro economic frictions caused by a certain increase in imports or import restrictions; 2, macroeconomic frictions caused by trade imbalance between the two sides; 3, investment related to international investment; 4, frictions caused by different trade systems; 5, technical frictions caused by technical barriers to trade. Over the past 20 months, the economic and trade relations have affected the whole world, alleviating the trade conflicts between the two countries, which is beneficial to China, to the United States, and to the prosperity and peace of the world. In accordance with common sense and rules, even as the most radical means of promoting negotiations, the significance of this trade war has been exhausted, and then it is difficult to explain economically or politically. The consultations held in Washington in October have already achieved some results, easing the tension of trade wars between the two sides, and again ignited the hope of the two countries and the international community to finally reach an agreement between China and the United States.

Prior to that, in October 23rd, the office of the United States trade representative announced the product exclusion notice under the third batch of 200 billion dollars plus tariff products list. In December 12th, the United States Trade Representative Office (USTR) announced the product exclusion notice under the Sixth Batch of 200 billion dollars plus the list of tariff products. This exclude a total of 44 products, including 3 textile and clothing products tax numbers. Up to now, the United States has issued 6 batches of 200 billion product exclusion lists, of which first batches involve 2 textile and garment products tax numbers, second batches involving 3 textile and garment products tax labels, third batches of 7 textile and garment products tax labels, fourth batches of 3 textile and garment products tax numbers, and fifth products excluding textile and clothing products, and a total of 7 textile and clothing products tax numbers. The excluded products will no longer be subject to a 301 tariff when they export to the United States. Exclusion period can be traced back to the date of entry into force of the 200 billion list - September 24, 2018. The validity of the excluded products listed in this notice is from September 24, 2018 to August 7, 2020.

At present, the trade friction has limited impact on the export of domestic polyester filament enterprises. After the trade friction led to the shrinking export orders and the devaluation of the renminbi, as mentioned above, the actual export volume of polyester filament this year showed an increasing trend, but trade friction or accelerating the textile industry to move outward.

Structural adjustment of textile industry & industrial upgrading

In order to optimize the regional layout, promote the structural adjustment and industrial upgrading of textile industry, enhance the international competitiveness and sustainable development ability of the textile industry, the Ministry of industry and information technology has issued relevant documents to promote the transfer of textile industry.

There are three main directions for the transfer of textile industry: 1, the transfer of the province to achieve a "win-win" concept; 2, the transfer to the Midwest can take into account exports and domestic demand; 3, the transfer of industry to overseas is not yet mature, and some advantageous enterprises can consider it. From the current development stage, China's manufacturing industry has not yet developed to the stage of foreign transfer. In Japan, South Korea and Taiwan, the industry was hollowed out, and the large-scale transfer of manufacturing industry was after GDP per capita exceeded 10000 dollars. The per capita GDP in the eastern part of China is now close to 5000 US dollars, but only 2000 dollars in the central and western regions. In contrast, there is still much room for industrial transfer in the central and western regions.

Industrial transfer is not simply a transfer of equipment, but also a change of cultural environment. It needs a process of understanding and adaptation. Transfer to the central and western regions, because of the same cultural environment, the investment risk is very small. To transfer overseas, we should be familiar with the laws of other countries, especially avoid conflicts with local culture and have greater risks. Of course, there are also some advantages of textile and garment enterprises to transfer their production base to Southeast Asia. The main consideration of such transfer is to change the trade environment and consider some cost factors. Due to the change of international trade environment and the gradual loss of comparative advantage of domestic manufacturing industry, there are nearly 1000 Chinese textile enterprises investing in factories in Vietnam and Kampuchea, and more than 100 investment in Bangladesh. These enterprises avoid trade barriers and reduce production costs by accelerating international layout and transnational resource allocation. Because these countries are not subject to quota restrictions on exports to Europe and the United States, and can enjoy MFN treatment. At the same time, these countries have given considerable preferential space to foreign enterprises in terms of taxation policies, such as the 10 year income tax exemption for foreign textile enterprises in Bangladesh. For Chinese textile and garment enterprises, no matter which way of transfer is chosen, they are transferred to the province, or transferred to the central and western regions, and transferred to Southeast Asian countries. Enterprises should make clear the purpose of enterprise transfer according to their own current situation, effectively realize the rationalization of their own interests, find the fit point of the transfer of enterprises, rationally and orderly transfer, and achieve the healthy and sustainable development of enterprises.

At present, the domestic textile industry has gradually moved to the central and western regions. Since 2017, along with the promotion of environmental protection and supply side reform, traditional textile industrial clusters in Jiangsu, Zhejiang, Fujian and Guangdong provinces have concentrated on printing and dyeing and water looms. Printing and dyeing industry projects are mainly concentrated in backward production capacity and new capacity equivalent, reduction replacement, the overall printing and dyeing capacity gradually reduced.

Table 3 2017-2019 year plan for special implementation of water jet looms in Jiangsu and Zhejiang provinces

Unit: Taiwan

region	Two thousand and seventeen year	Two thousand and eighteen year	Two thousand and nineteen year
Xiuzhou District	Thirty thousand seven hundred and twenty-eight	--	--
Wujiang Development Zone (Tongli)	Nineteen	Fourteen	Fourteen
Wujiang hi tech Zone (Shengze)	Eighteen thousand and one hundred	Twelve thousand and two hundred	Eleven thousand and nine hundred
Taihu new town (Songling town)	Three thousand three hundred and eighty	Two thousand five hundred and thirty-five	Two thousand five hundred and thirty-six
FenHu hi tech Zone (Li Li Town)	Seven thousand five hundred and ninety-eight	Five thousand six hundred and ninety-nine	Five thousand six hundred and ninety-nine
Zhen Ze town	Seven hundred and ninety-two	Five hundred and ninety-four	Five hundred and ninety-four
Taoyuan town	Three thousand three hundred and eighty-seven	Two thousand five hundred and forty	Two thousand five hundred and forty
Ping Wang town	Eight thousand two hundred and fifty-seven	Six thousand one hundred and ninety-three	Six thousand one hundred and ninety-two
Seven towns	Eight hundred and ninety-seven	Six hundred and seventy-three	Six hundred and seventy-three
Total	Seventy-three thousand one hundred and fifty-eight	Thirty thousand four hundred and forty-eight	Thirty thousand one hundred and forty-eight

Source: lung Chung

It is estimated that in the next 5 years, the average annual growth rate of dyed polyester fibers will remain above 10%. At the same time, the weaving industry has gradually transferred to the central and western regions such as Henan, Anhui, Jiangxi and Hubei, causing the regional change of polyester filament consumption. According to incomplete statistics, nearly 120 thousand water jet looms have expanded and spread in the central and western regions.