Analysis Of China'S Textile Industry In The First Half Of The Year

Since 2022, the domestic and international situation is complex and changeable, and the expected triple pressure and two major shocks have caused great impact on the stable operation of the industrial textiles industry. In the first quarter, the industrial added value of the industry resumed positive growth, but the industry economy, production and demand recovered slowly; In the second quarter, driven by the steady growth policy, the industrial added value of the industry maintained growth, the decline of major economic indicators continued to narrow, production and demand gradually recovered, but the downward pressure of the industry still existed. In the first half of 2022, the prosperity index of industrial textiles industry is 46.9, which is in the contraction range.

　　 1、 Domestic demand needs to be warmed up and capacity utilization rate rebounded

According to the association's survey of member enterprises, 47.1% and 46.0% of the surveyed enterprises respectively said that the domestic and international market demand decreased to varying degrees in the first half of this year (Figure 1). The domestic and international market demand indexes were 38.8 and 35.1 respectively. Compared with January April (39.7 and 33.2), the domestic market demand decreased slightly and the international market demand rebounded. From the perspective of different fields, the domestic demand of textiles for structural reinforcement is strong, and the domestic market demand index of 68.8 is the highest in the industry; The international market demand for transport textiles, geotechnical and construction textiles is relatively high, the international market demand index of the two fields are 53.9 and 52.8 respectively.

　　 Source: China Industrial Textiles Association

Figure 1 domestic and international market demand of industrial textiles in the first half of 2022

In terms of manual orders, 26.4% of the surveyed enterprises have relatively stable and continuous order sources or orders in hand can support production for more than three months, while 34.4% of the surveyed enterprises can only support the production within one month. According to the scale of enterprises, the orders in hand of large and medium-sized enterprises are more stable and sufficient, which can support the production for a longer time; However, most of the orders in hand of small and micro enterprises can only support production within one month or even half a month (Figure 2).

　　 Source: China Industrial Textiles Association

Figure 2 orders in hand of industrial textiles industry in the first half of 2022 (by enterprise scale)

Although the market demand is weak, but with the effect of logistics policy, the delivery cycle of enterprises is gradually shortened, and the industry operating rate is generally improved. According to the survey conducted by the association, 10.5% of the enterprises said that they could produce at full capacity, 2.9% higher than that from January to April, and 42.4% of the enterprises said the capacity utilization rate was about 80%, which was 7.1 percentage points higher than that from January to April. According to the data of the National Bureau of statistics, the output of nonwovens of Enterprises above Designated Size will decrease by 1.9% from January to June of 2022, but the decline rate is narrowing month by month; Affected by the decline of automobile production and sales, the tire cord fabric production decreased by 4.8% year on year.

　　 2、 High operating cost under pressure

In the first half of 2022, the industrial added value of Enterprises above Designated Size in China's industrial textiles industry showed a steady upward trend (Fig. 3). According to the data of the National Bureau of statistics, the operating income of Enterprises above the industrial scale is basically the same as that in the same period in 2021. The total profit decreases by 16.8% year-on-year, the profit margin is 4.9%, and the year-on-year decrease is 0.9%.

　　 Source: National Bureau of statistics

Figure 3 Comparison of industrial added value growth

Compared with the same period in 2021, when the operating revenue almost recovered to the same period level, the rise of operating costs is the main reason for the decline of the total profits of the industry. According to the data of the National Bureau of statistics, the operating cost of the industry increased by 0.3% year-on-year, while the business income of the industrial textile industry decreased by 0.9% year-on-year, and the gross profit rate of the industry decreased by 1.0% year-on-year. According to the survey of the association, the raw material cost index and labor cost index of the industry in the first half of the year reached 82.4 and 78.3 respectively, which were higher than those in the same period of 2021 (79.3 and 76.3). Based on the pressure of competition, the increase of operating costs has put pressure on industry enterprises. In the first half of the year, the price index of industrial products was only 40.6, which was in the contraction range. More than 80% of the surveyed enterprises said that the prices of main products remained unchanged or even declined.

From January to June, the operating income and total profit of Nonwovens Enterprises above designated size decreased by 4.6% and 36.1% respectively year on year, and the profit margin was 4.2%, with a year-on-year decrease of 2.1 percentage points; The operating income and total profit of the enterprises above the scale of rope, cable and cable increased by 1.3% and 9.0% respectively year-on-year, and the profit margin was 5.1%, with a year-on-year increase of 0.4 percentage points; The operating income and total profit of Enterprises above the scale of textile belt and cord fabric decreased by 2.5% and 6.2% respectively, and the profit margin was 5.4%, with a year-on-year decrease of 0.2%; The awning and canvas industries have a good development momentum. The operating income and total profit of Enterprises above designated size increased by 11.4% and 23.9% respectively year on year. The profit margin was 6.1%, with a year-on-year increase of 0.6 percentage points; The business income and total profit of Enterprises above Designated Size of other industrial textiles in which filtration and geotechnical textiles are located recovered to positive growth, increasing by 1.6% and 0.8% respectively, with a profit margin of 5.3%, which is basically the same as that in the same period in 2021 (Table 1).

Table 1 main economic indicators of industry operation from January to June 2022 (Enterprises above Designated Size)

　　 Data source: according to the data of National Bureau of statistics

　　 3、 Foreign trade shows a trend of recovery, and the decline rate of export continues to narrow

According to the data of China Customs, from January to June of 2022, the export volume of China's industrial textiles industry (8-digit HS code statistics of Customs) was 23.25 billion US dollars, a year-on-year decrease of 13.6%; From January to June, the import volume of the industry (8-digit HS code statistics of the customs) was 3.25 billion US dollars, down 14.2% year-on-year. In terms of major export products, the booming overseas "camping economy" has made felt / tent the largest export product in the industry, with an export volume of 2.67 billion US dollars, a year-on-year increase of 17.3%; The export volume of traditional products such as industrial coated fabrics, rope (cable) textiles, canvas, leather base cloth and other traditional products increased by 28.0%, 16.2%, 31.7% and 17.9% respectively year-on-year. The export of nonwovens and related products showed different trends. The export of coiled materials was US $2.03 billion, a year-on-year decrease of 15.3%, and the export volume of 612000 tons decreased by 16.6%; Compared with the non-woven protective clothing (2.68%) and medical protective clothing (2.60%) decreased; The export of disposable sanitary products reached 1.37 billion US dollars, up 16.5% year on year; The export volume of wipes was 540 million US dollars, down 17.4% year on year (Table 2).

Table 2: export of industrial textiles and main products from January to June 2022

　　 Data source: according to the data of China Customs

　　 4、 Difficulties and challenges faced by the industry

According to the association's research on member enterprises, the decline in market demand and the increase in operating costs are the main difficulties faced by the interviewed enterprises in the process of operation. Difficulties in overseas market development, lack of professional talents and loss of customers are also the problems reflected by enterprises, as shown in Table 3.

Table 3: the main difficulties faced by the interviewed Enterprises

　　 Source: China Industrial Textiles Association

As for the main external challenges facing the industry, the problems reflected by the interviewed enterprises mainly focused on the sharp fluctuation of raw material prices and the excessive expansion of industrial capacity. In addition, the decline in demand for epidemic prevention materials, the obstruction of business activities and the high sea freight are also the problems reflected by enterprises (Table 4). The interviewed enterprises generally hold a relatively optimistic attitude towards the competition from low-cost countries. They have strong confidence in their own product quality, customer relationship and innovation ability, and have the confidence and ability to participate in global competition.

Table 4 main external challenges faced by the enterprises interviewed

　　 Source: China Industrial Textiles Association

　　 5、 Annual development forecast

At present, the domestic and international environment is becoming more and more severe and complex. The stable growth of the industry is facing many risks and challenges. Enterprises are generally cautious about the industry's annual operation. According to the survey conducted by the association, the confidence index of the interviewed enterprises is 54.8, which is in a relatively prosperous range. Among them, textile enterprises for structural reinforcement, textiles for sailing and textiles for transport vehicles have relatively optimistic expectations for the development of the whole year.

In the second half of 2022, with a series of policies and measures, such as tax reduction and fee reduction, strengthening financial support, continuous optimization of business environment, and increasing efforts to ensure the supply and price stability of energy and raw materials, it is expected that the industry's production will resume growth in the whole year; The operating income of the industry will return to the rising channel, and the decline of total profit will be further narrowed and is expected to return to the same period in 2021; The pace of industry investment slows down, and investment in new production capacity will become more rational; The foreign demand market will continue to repair, and the export of traditional products will continue to maintain a good momentum.

　　 Note: since January 1, 2022, the customs code of some commodities in the industrial textiles industry has been adjusted. Due to the lack of year-on-year data of the same caliber, the year-on-year growth rate data of industry import and export released in this period is only for reference.

(source: China Industrial Textiles Association)