Industry Data: China'S Industrial Textile Industry Operation Analysis In The First Half Of The Year

In the first half of 2024, the complexity, severity and uncertainty of the external environment will rise significantly, and the domestic structural adjustment will continue to deepen, which will bring new challenges. However, the macro policy effect will continue to release, foreign demand will pick up, and new quality productivity will accelerate. The market demand of China's industrial textile industry has generally warmed up. The impact of the sharp fluctuations in demand caused by the COVID-19 epidemic has basically subsided. The growth rate of industrial added value of the industry has returned to the upward channel since the beginning of 2023. However, the uncertainty of demand in some application fields and various potential risks affect the current development of the industry and expectations for the future. According to the survey of the Association, the prosperity index of China's industrial textile industry in the first half of 2024 is 67.1, which is significantly higher than that in the same period of 2023 (51.7) (Figure 1).

Figure 1 Prosperity index of industrial textile industry

Data source: China Industrial Textile Industry Association

　　 Market demand and production

According to the association's research on member enterprises, the market demand of industrial textiles industry will recover significantly in the first half of 2024, and the order index at home and abroad will reach 57.5 and 69.4 respectively, which will rise sharply compared with the same period of 2023 (37.8 and 46.1) (Figure 2). In terms of different fields, the domestic demand market for medical and sanitary textiles, special textiles, thread and tape products has continued to recover, and the international market demand for filtration and separation textiles, non-woven fabrics, medical and sanitary textiles has shown signs of warming up.

Figure 2 Domestic and foreign market demand of industrial textile industry in the first half of 2024

Data source: China Industrial Textile Industry Association

The recovery of market demand drives the steady growth of industry production. According to the survey of the Association, the capacity utilization rate of industrial textile enterprises in the first half of 2024 is about 75%, of which the capacity utilization rate of spunbonded and spunlaced nonwovens enterprises is about 70%, both better than the same level in 2023. According to the data of the National Bureau of Statistics, from January to June 2024, the production of nonwovens of enterprises above designated size will increase by 11.4% year on year; The output of cord fabric increased by 4.6% year on year, but the growth slowed down (Figure 3).

Figure 3 Growth of nonwoven fabric and cord fabric production of enterprises above designated size in China

Data source: National Bureau of Statistics

economic performance

Affected by the high base of epidemic prevention materials, from 2022 to 2023, the operating income and total profit of China's industrial textile industry have been in a downward range. In the first half of 2024, due to the demand driven and epidemic factors receding, the industry's operating income and total profit increased by 6.4% and 24.7% year on year, respectively, and entered the growth channel again. According to the data of the National Bureau of Statistics, the operating profit margin of the industry in the first half of 2024 will be 3.9%, an increase of 0.6 percentage points year on year. The profitability of enterprises has improved, but there is still a big gap compared with that before the epidemic. According to the research of the Association, the orders of enterprises in the first half of 2024 are generally better than those in 2023, but due to the fierce competition in the middle and low end markets, the downward pressure on product prices is greater; Some enterprises focusing on market segments and high-end markets said that functional and differentiated products could still maintain a certain profitability.

From January to June, the operating income and total profit of nonwoven enterprises above designated size increased by 4% and 19.5% year on year respectively under the low base effect, but the operating profit margin was only 2.5%. Spunbonded and spunlaced nonwoven enterprises generally reflected that the price of general products had dropped to the edge of the break even point; The rope, cable and cable industries showed significant signs of recovery. The operating income and total profit of enterprises above designated size increased by 14.8% and 90.2% respectively year on year, and the operating profit margin was 3.5%, up 1.4 percentage points year on year; The operating income and total profit of enterprises above the designated size of textile belt and cord fabric increased by 8.7% and 21.6% year on year respectively, and the operating profit margin was 2.8%, up 0.3 percentage points year on year; The operating revenue of enterprises above the scale of awning and canvas increased by 0.2% year on year, the total profit decreased by 3.8% year on year, and the operating profit margin maintained a good level of 5.6%; The operating income and total profit of other industrial textile enterprises above designated size, where filtration, protection and geotechnical textiles are located, increased by 12% and 41.9% respectively year on year. The operating profit margin of 6.6% is the highest level in the industry. After significant fluctuations during the epidemic, it has now recovered to the pre epidemic level (Table 1).

Table 1 Major economic indicators of industry operation from January to June 2024 (enterprises above designated size)

Data source: National Bureau of Statistics, China Industrial Textile Industry Association

international trade

According to Chinese customs data, the export volume of China's industrial textile industry (customs 8-digit HS code statistics) from January to June 2024 was 20.59 billion US dollars, up 3.3% year on year, reversing the decline in industrial textile industry exports since 2021, but the growth momentum was weak; The import volume of the industry (statistical data of customs 8-digit HS code) was 2.46 billion US dollars, down 5.2% year on year, and the decline narrowed (Table 2).

In the first half of 2024, the export of key products of China's industrial textile industry (chapters 56 and 59) to major markets has maintained a high growth rate. For example, the export to Vietnam and the United States has increased by 24.4% and 11.8% respectively, and the export to Cambodia has increased by nearly 35%; However, exports to India and Russia declined by more than 10%. The share of developing countries in China's industrial textile export market is increasing.

From the perspective of main export products, the export volume of key export products such as industrial coated fabrics, felt/tents, non-woven fabrics, diapers sanitary napkins, rope and cable belts, canvas, industrial glass fiber products, etc., has maintained a certain growth in the first half of 2024; The export volume of wet wipes, textiles for structural reinforcement and other industrial textiles has maintained a high growth rate; Overseas demand for disposable sanitary products such as diapers and sanitary napkins has shrunk. Although the export volume continues to grow, the growth rate has decreased by 20 percentage points compared with the same period in 2023.

From the perspective of export prices, except for industrial coated fabrics, airbags, filtration and separation textiles and other industrial textiles, the prices of other products have declined to varying degrees.

Table 2 Exports of Industrial Textiles and Main Products from January to June 2024

Data source: China Customs, China Industrial Textiles Industry Association

Annual development forecast

At present, China's industrial textile industry is gradually stepping out of the downward period after the COVID-19 epidemic, and the main economic indicators are entering the growth channel. However, due to the structural contradiction between supply and demand, price has become the most direct means of competition. The price of the main products of the industry in the domestic and foreign markets continues to decline, and the profitability of enterprises declines, which is the main challenge facing the industry at present. Key enterprises in the industry should actively respond, on the one hand, speed up the renewal of old equipment, energy-saving transformation, and reduce operating costs; On the other hand, effectively formulate market strategy, avoid low price competition, focus on advantageous resources to create competitive products, and improve profitability. In the long run, the competitive advantage and market of China's industrial textile industry still exist. Enterprises maintain confidence in the future. Green, differentiated and high-end development has become the industry consensus.

Looking forward to the whole year, with the continuous accumulation of positive factors and favorable conditions in China's economic operation and the smooth recovery of international trade growth, it is expected that China's industrial textile industry will maintain a stable growth situation in the first half of the year, and the industry's profitability is expected to continue to improve.

(Source: China Industrial Textile Industry Association)