National Bureau Of Statistics: Operation Briefing Of Chemical Fiber Industry In The First Quarter Of 2023

Since 2023, supported by the optimization of epidemic prevention and control policies and the emerging effect of economic stabilization policies, China's economic recovery has maintained a good momentum. After the Spring Festival, the textile and chemical fiber industry chain resumed production well, and the domestic sales of textiles and clothing began to recover. Enterprises had certain expectations for the traditional peak season, but the overall production and operation situation of the chemical fiber industry was still grim due to the high cost operation and insufficient domestic demand stamina. It is worth noting that due to the epidemic, many workers have not returned home for the Spring Festival in three years. After the optimization of the epidemic prevention and control policy this year, some enterprises returned home early and returned to work late due to the return of workers. Spring Festival factors have a greater impact on the operation of the industry than in previous years.

1、 Basic information of industry operation

（1） Production and sales

According to the data of the National Bureau of Statistics, the output of chemical fiber from January to February 2023 will be 9.61 million tons, a year-on-year decrease of 5.99%. After the Spring Festival, the resumption of production of the textile chemical fiber industry chain was gradually promoted. In March, the overall starting load of the chemical fiber industry increased month on month. For example, the average load of direct spinning polyester filament in March exceeded 80%.

Source: National Bureau of Statistics, China Chemical Fiber Industry Association

Figure 1 Change in year-on-year growth rate of chemical fiber output since 2022

Under the comprehensive superposition of seasonal rigid demand, backlog demand before the year, and intermediate link replenishment demand, domestic demand orders performed well. In March, the average operating rates of Jiangsu and Zhejiang texturing, Jiangsu and Zhejiang looms, and Jiangsu and Zhejiang round looms were 88%, 75%, and 56% respectively, all of which were higher than the same period in 2022. In March, the average daily turnover of the textile city was about 7.8 million meters, and in the same period of 2022, it was about 5.8 million meters. In the first quarter, the connection between production and sales of chemical fiber was basically smooth, and the inventory of main products was improved compared with 2022. The average inventory of polyester POY, FDY and DTY was about 15 days, 20 days and 25 days respectively.

Source: Huarui Information

Figure 2 Inventory of main chemical fiber products since 2022

（2） Market price

In the first quarter, the crude oil price basically remained in the range of 70-80 dollars/barrel. In March, the crude oil market was affected by the crisis in the banking industry, and demand expectations were significantly weakened. Oil prices fell sharply, hitting a new low in the year, about US $67/barrel. At present, the price of crude oil has rebounded to about $80/barrel. However, the chemical fiber market is limited by external events. In March, the trend correlation between chemical fiber product prices and crude oil has weakened, which is more a game within the industry.

Note: WTI futures (right axis, USD/barrel), PTA, polyester POY, polyester staple (left axis, yuan/ton)

Source: Huarui Information

Figure 3 Price trend of international oil price, PTA, polyester POY and polyester staple fiber since 2022

In the first quarter, the price of PTA in the polyester industry chain increased more than that of polyester, and the price increase was more obvious in March under the tight supply and demand pattern of PTA, and the benefits of polyester industry were compressed. The cost transmission of the nylon industry chain is slightly smooth, and after the Spring Festival, with the increase of downstream demand, the price difference between nylon fiber and raw materials has slightly expanded, but the overall nylon industry is still operating at a meager profit. In terms of the spandex industry chain, the raw material PTMEG is in a tight supply state due to less capacity expansion and high cost performance. The price increase is obvious, but the price increase of spandex products is far less than that of raw materials, and it is still in the stage of callback. In the first quarter, new capacity of spandex was put into production, the pressure on production and marketing increased, and the inventory increased.

Table 1 Price changes of main chemical fiber products and raw materials in the first quarter of 2023

Unit: USD, RMB

Source: Prepared by China Chemical Fiber Association

（3） Import and export

The export of chemical fiber products continued the trend of rapid growth. According to the statistics of China Customs, the total export volume of main chemical fiber products in January and February increased by 23.60% year on year, of which polyester filament, polyester staple and polyester bottle pieces continued the trend of high growth, and the export volume of viscose staple and spandex declined significantly year on year. In the same period, the import of chemical fiber decreased by 25.63% year on year, accounting for only 0.6% of the domestic demand.

Table 2 Import and export of main chemical fiber products from January to February 2023

Source: According to Chinese customs data

（4） End market

Since 2023, policies and measures to stabilize the economy have been further effective. With the addition of factors such as the disappearance of the impact of the epidemic, the domestic market has changed from decline to increase, and the market vitality has rebounded. According to the data of the National Bureau of Statistics, the retail sales of clothing, shoes and hats, knitwear and textiles of units above the designated size nationwide in January and February were 254.89 billion yuan, up 5.4% year on year, 0.6 percentage points faster than that of the same period of the previous year, and 11.9 percentage points higher than that of the whole year of 2022. The growth rate basically recovered to the pre epidemic level. The growth of online retail channels was relatively stable. In January and February, the national retail sales of online apparel goods increased by 4.0% year on year, a slight increase of 0.1 percentage point over the same period of the previous year, and a 0.5 percentage point increase over the whole year of 2022.

In terms of exports, in the context of the global economic downturn, the consumption capacity and consumer confidence of major developed markets have been suppressed. At this stage, the industry's foreign trade exports are still affected by factors such as weak demand and insufficient orders, and will continue to be under pressure for some time in the future. According to Chinese customs data, in January and February, China's textile and clothing exports amounted to US $43.31 billion, down 17.8% year on year. Among them, the textile export volume was 20.39 billion US dollars, down 21.7% year on year; The clothing export volume was US $22.92 billion, down 13.9% year on year.

（5） Economic benefits

According to the data of the National Bureau of Statistics, the operating revenue of the chemical fiber industry from January to February 2023 was 142.7 billion yuan, a year-on-year decrease of 4.98%; The total profit was 81 million yuan, a year-on-year decrease of 97.16%; The loss of loss making enterprises increased by 63.66% year on year, but decreased by 39.01 percentage points compared with that of 2022; The loss area reached 44.61%. From the data point of view, the economic benefits of the industry are worrying, but as previously analyzed, the impact of the Spring Festival factors on the industry's operation this year is greater than that of previous years. At the same time, the impact of the high base in the same period last year and the high level oscillation operation of crude oil and chemical fiber main raw materials are superimposed. Therefore, it is not appropriate to over interpret the decline in industry profitability only based on the data from January to February.

Table 3 Economic benefits of chemical fiber and related industries from January to February 2023

Source: National Bureau of Statistics

　　 （6） Investment in fixed assets

Affected by the Spring Festival, the industry's fixed asset investment showed negative growth in January and February, superimposed on the high base in 2022. According to the data of the National Bureau of Statistics, the fixed asset investment in the chemical fiber industry in January and February fell 5.7% year on year. However, it is understood that there are still many new capacity plans in 2023.

Source: National Bureau of Statistics

Figure 5 Change of fixed asset investment growth rate in chemical fiber industry since 2008

2、 Forecast and suggestions on industry operation trend

IMF predicts that the global economic growth will continue to slow down in 2023 under the influence of the long-term traumatic effect of the COVID-19 epidemic, the conflict between Russia and Ukraine, and the drag on economic activities caused by monetary policy tightening. According to the latest forecast on April 11, the world economic growth is expected to be 2.8% in 2023, while China's economic growth is expected to be 5.2%, The strong rebound of China's economy provides momentum for the recovery of the world economy. According to the data from the National Bureau of Statistics, the manufacturing purchasing managers' index (PMI), the non manufacturing business activity index and the comprehensive PMI output index in February were 51.9%, 58.2% and 57.0% respectively. The three indexes were in the expansion range for three consecutive months, and China's economic development is still stabilizing and recovering. However, it should also be noted that in the process of enterprise development, enterprises still face prominent problems such as insufficient market demand, tight funds and high operating costs. The foundation for China's economic recovery needs to be further consolidated.

Returning to the industry, the current seasonal weakening of terminal demand has been clear, and the high price raw materials may make new orders more cautious, thus leading to an accelerated weakening of demand. Looking forward to the whole year, although the export pressure of textile and clothing is relatively significant, domestic sales are expected to maintain a sustained recovery trend. At the same time, chemical fiber exports will still maintain a rapid growth rate. It is expected that the operating pressure of the chemical fiber industry will ease in the second half of the year.

China Chemical Fiber Association appeals to industry enterprises to strengthen confidence, actively respond, unite as one, share difficulties, and promote stable, healthy and orderly development of the industry, and puts forward the following suggestions.

1. Strengthen industry self-discipline

The imbalance between supply and demand in some areas of the chemical fiber industry has become a prominent contradiction. Before the effective growth of demand, industry enterprises should focus on controlling the release of new capacity to avoid further escalation of the contradiction between supply and demand, so as to maintain the sustainable and stable development of the chemical fiber industry. The industry will also study and issue investment warnings to further guide enterprises to invest cautiously and promote self-discipline and sustainable development of the industry.

2. Seize the opportunity of domestic demand

Influenced by the epidemic and other factors, the contribution rate of domestic consumption to economic growth will fluctuate in 2020 and 2022, and the recovery and expansion of consumption will affect the overall situation of development. The report of the 20th National Congress of the Communist Party of China pointed out that efforts should be made to expand domestic demand and strengthen the fundamental role of consumption in economic development; The Outline of the Strategic Plan for Expanding Domestic Demand (2022-2035) points out that we should comprehensively promote consumption and accelerate the upgrading of consumption quality; The 2023 government work report pointed out that we should focus on expanding domestic demand and give priority to restoring and expanding consumption; Previously, the Ministry of Commerce positioned 2023 as a "consumption boosting year", and will also introduce a series of measures to boost consumption. Enterprises in the chemical fiber industry should seize the opportunity to accelerate supply side reform, implement the "three products" strategy, strengthen technological innovation and product innovation, lead the consumption trend, and creatively meet the growing diversified and personalized market consumption.

3. Expand export market

With the adjustment of international division of labor, China's chemical fiber export has continued to increase rapidly in recent years. It is expected that the total export volume of chemical fiber is expected to exceed 9 million tons around 2030. While doing a good job in the domestic market, industrial enterprises should actively expand the international market, such as promoting cross-border e-commerce, setting up overseas sales agencies, participating in overseas related exhibitions, etc., to accelerate the cultivation of new growth points of product sales.