Market Analysis: Analysis On The Operation Of Chemical Fiber Industry In The First Half Of 2021

In the first half of 2021, China's economy continued to recover steadily, the domestic demand market of textile and clothing was significantly improved, and the international market demand also recovered. The continuous rise of international oil price provided strong cost support for the chemical fiber industry. The overall situation of economic operation of chemical fiber industry remained good, and the main operating indicators rebounded rapidly. Looking forward to the whole year, the operation of chemical fiber industry will still face many tests. The industry needs to speed up the promotion of high-quality development and start a good start for the "14th five year plan".

　　 01 stable growth of production

In the first half of the year, the overall operating load of the chemical fiber industry has increased significantly compared with the same period in 2020. Although there is a low base in the same period in 2020, it is still at a high level compared with the same period in recent years. According to the data of the National Bureau of statistics, from January to June, the output of chemical fiber was 33.37 million tons, an increase of 17.12% year-on-year. In order to avoid misjudgment of high growth caused by low base in 2020 on the operation situation of the industry, we take the first half of 2019 as the base period and use the geometric average method to calculate (the same below). The average growth rate of chemical fiber output in two years is 9.10%.

On a monthly basis, with the rapid promotion of the industry's resumption of work and production after the Spring Festival last year, the chemical fiber production base increased rapidly, resulting in a month-on-year decrease in the year-on-year growth rate from January to June this year (Figure 1).

Figure 1 ? Year on year growth of chemical fiber output in 2021

　　 02 obvious cost support

Since 2021, in the context of demand recovery and inflation expectations, the commodity market continues to strengthen. Meanwhile, OPEC continued to reduce production and strictly control crude oil supply. Therefore, the international oil price continued to rise from January to June. WTI crude oil price rose from about $50 / barrel at the beginning of the year, and exceeded $70 / barrel in June, exceeding the oil price level before the outbreak of the new crown epidemic (Figure 2).

Figure 2 ? WTI oil price trend in 2020-2021

Affected by the high crude oil price, the cost of chemical fiber is rising, and the chemical fiber market price has increased significantly from January to June. According to the data of China National fiber network, the prices of main chemical fiber products increased to varying degrees at the end of June compared with that at the beginning of the year. However, comparing the price increases of various links in the industrial chain, it can be seen that the price increase of chemical fiber products is generally less than that of its main raw materials and crude oil (Table 1). Therefore, it can be judged that the chemical fiber market from January to June is a cost driven rise.

Table 1 ? Price changes of main chemical fiber products and raw materials in the first half of the year

In terms of products, the market of polyester, polyamide and viscose staple fiber was significantly different in the first and second quarters. In the first quarter, under the influence of various factors, such as the rise of crude oil, the release of liquidity and the increase of speculative demand, the market of polyester, nylon and viscose staple fiber increased significantly, and most products reached the highest point in the first half of the year at the end of February or early March; The second quarter continued to decline, the factory frequent promotion shipment. Take polyester filament POY as an example, compared with the fourth quarter of 2020 and the first quarter of this year, the inventory has increased in the second quarter, causing a certain pressure on the working capital.

The price of spandex products increased significantly. From the cost side, the main raw material of spandex PTMEG is BDO, but PTMEG is not the only downstream of BDO. The demand of PBAT (a degradable material) in another application field of BDO is increased under the favorable "plastic restriction order" policy, which leads to the soaring price of BDO. As the second largest downstream of BDO, PTMEG is supported by the cost side, And then drive the price of spandex up. From the perspective of product innovation, with the technical progress and product development diversification of spandex industry, the differentiation and high quality of spandex can fully meet the domestic and international market demand, and its application scenarios and consumption have increased significantly. Spandex has become a major raw material from "monosodium glutamate" in textile products.

　　 03 chemical fiber export increased significantly

With the gradual recovery of Global trade demand, the export volume of chemical fiber products increased significantly from January to June. On the one hand, due to the low base effect in the same period of last year, on the other hand, the international market demand has indeed increased. The epidemic situation in India, Vietnam, Myanmar and other Southeast Asian countries is out of control, and some orders have returned to China. According to the statistics of China Customs, from January to June, the export volume of main chemical fiber varieties such as polyester filament, polyester staple fiber, nylon filament, spandex and other products increased significantly year on year, and exceeded the data of the same period in 2019 before the epidemic situation (Table 2).

Table 2 ? Statistics of export volume of main chemical fiber products

　　 04 steady recovery of terminal market

Since 2021, China's national economy has been stable and good, driving the domestic demand market of textiles and clothing to recover steadily. According to the data of the National Bureau of statistics, from January to June, the sales volume of clothing, footwear, knitwear and textiles above the national quota increased by 33.7% year-on-year, with an average growth of 3.7% in two years; China's online clothing retail sales increased by 24.1% year-on-year, 27% higher than the same period in 2020, with an average growth of 9.8% in two years.

In terms of export, China Customs express data showed that the total export value of China's textiles and clothing was 140.9 billion US dollars from January to June, with a year-on-year increase of 12.1% and an average increase of 6.2% in the two years. Among them, the export situation of clothing continued to improve, with a cumulative export amount of 71.53 billion US dollars from January to June, a significant increase of 40.3% over the same period of last year, and an average increase of 4.4% in two years, The proportion of textile and clothing exports increased from 40.8% in the same period of 2020 to 51.1%; The export value of textiles decreased with the decrease of foreign demand for epidemic prevention materials. The cumulative export value from January to June was 68.56 billion US dollars, a year-on-year decrease of 7.4%, and an average increase of 8.1% in two years.

　　 05 economic benefits continued to grow

In the first half of the year, the overall economic benefits of the chemical fiber industry increased significantly compared with the same period in 2020, and decreased in the second quarter compared with the first quarter.

In recent years, the supply side structural reform of the chemical fiber industry has achieved remarkable results, backward production capacity has been gradually eliminated, new production capacity has also been effectively controlled, the growth rate of production capacity has been significantly slowed down, and the supply and demand pattern of the industry has been improved, which is also the fundamental reason for the rapid recovery of the chemical fiber industry and the substantial increase of benefits. In addition, the prices of raw materials and products continued to rise, inventory surplus also contributed to a certain amount of profits for enterprises.

According to the data of the National Bureau of statistics, from January to June, the chemical fiber industry achieved a revenue of 476.012 billion yuan, a year-on-year increase of 35.05%, and an average growth rate of 5.37% in two years; The total profit was 32.658 billion yuan, a year-on-year increase of 387.77%, with an average growth rate of 56.44% in two years; The profit margin of operating revenue was 6.86%, 4.96 percentage points higher than the same period in 2019, 3.75 percentage points higher than that in the same period in 2019; The loss of the industry was 22.00%, with a year-on-year decrease of 20.75 percentage points and a decrease of 4.52 percentage points compared with the same period in 2019; The loss of loss making enterprises was 2.711 billion yuan, a year-on-year decrease of 60.42%, and an average decrease of 12.77% in two years.

　　 06 fixed assets investment resumed growth

According to the data of the National Bureau of statistics, from January to June, the investment in fixed assets actually completed by the chemical fiber industry increased by 16.6% year-on-year. Most of the new capacity is still concentrated in leading enterprises, and its scale advantage has been further consolidated. With the gradual release of new production capacity, the contradiction between supply and demand of the industry will appear in stages, but the disorderly competition is obviously reversed, and the self-discipline behavior of the industry is greatly improved.

　　 expectation

Looking forward to the second half of the year, the volatility of the chemical fiber market may increase due to uncertain factors such as the trend of international oil price, repeated epidemic situation, the trend of monetary policy and the sustainability of backflow orders. Due to the production reduction under the high oil price and the worry about downstream demand, the oil price in July has been obviously fluctuated, and the subsequent upward pressure has increased, but it is expected that there is still support for the cost side of chemical fiber. Repeated outbreaks at home and abroad will still have a greater impact on terminal consumption and shipping market, and increase the uncertainty of terminal market recovery. With the commissioning of new chemical fiber plants in the second half of the year, the downstream market pressure will continue to increase. It is estimated that in the third quarter, under the expectation of the traditional peak season, the chemical fiber industry can still maintain a good operation situation, but the decline risk in the fourth quarter is large. It is estimated that the annual chemical fiber output, export, economic benefits and other operating indicators will still be significantly better than that in 2020. However, due to the low base in the first half of 2020 and the continuous recovery in the second half of 2020, the growth rate of various indicators of the industry in 2021 will show an obvious trend of high before and low after.

(source: China Chemical Fiber Industry Association)