Industry Analysis: Focus On The Operation Data Of Chemical Fiber Industry In The First Three Quarters

In the first three quarters of 2024, the GDP grew by 4.8% year on year, and the economic operation was generally stable. On a month on month basis, GDP in the third quarter grew by 0.9% month on month, and the month on month growth rate was positive for nine consecutive quarters. The economy maintained a stable and positive trend. The chemical fiber industry is also showing a recovery growth trend. In the case of slowing down of new capacity, the construction started at a relatively high level, and the output increased by 9.53%; The inventory focus is higher than that of the same period last year, but the inventory pressure is dynamic and controllable; The market was relatively stable in the first half of the year, the cost support weakened in the third quarter, and the price center moved down; The economic benefits of the industry increased year on year, but the profit growth rate gradually narrowed. In terms of export, the export of polyester filament to India declined significantly, dragging down the overall export of chemical fiber.

Basic information of industry operation

（1） The load is relatively high, and the inventory pressure is controllable

In the first three quarters of 2024, the load of chemical fiber industry is relatively high, and the overall level is higher than that of the same period last year. From March to April, the downstream demand was better than expected, and the load of most chemical fiber sub industries was at a high level in the same period in recent years; However, the high start up resulted in the accumulation of inventory and the narrowing of benefits, and some polyester polyester enterprises even suffered losses. After the slack season, the demand weakened, and the polyester polyester start up load declined from June to August; In September, the downstream startup rate increased, driving the chemical fiber industry to slightly increase the starting load, and in October, it continued to maintain a high level of operation. At the end of October, the load of polyester filament has increased to 93%. The nylon industry has benefited from the lack of significant expansion of production capacity and the increase of application in some fields, and the load of nylon filament has always remained above 90%.

According to the data of the National Bureau of Statistics, the output of chemical fiber from January to September 2024 is 58.6 million tons, with a year-on-year growth of 9.53% (Figure 1). On a month on month basis, the growth rate showed a gradual decline: the output in the third quarter increased by 2.90% year on year; The output in the second quarter increased by 7.61% year on year; The output in the first quarter increased by 20.12% year on year.

Data source: National Bureau of Statistics, China Chemical Fiber Industry Association

Figure 1 Change in year-on-year growth rate of chemical fiber output since 2023

In terms of inventory, polyester filament inventory increased year on year. In the second and third quarters, POY reached a high level for nearly a month, and FDY reached a high level for about 22 days. At the end of September, the inventory was relatively low. In October, with the increase of factory load, the inventory began to rise. Spandex inventory continued to rise from January to September, reaching a peak of more than 60 days. However, since October, the inventory has gone: on the one hand, the price of spandex has dropped to the bottom, entering the consolidation period, and the market's attitude towards raw materials has improved; On the other hand, as the climate turns cold, the weaving industry and clothing industry begin to enter a rapid production cycle. In addition, the inventory pressure of polyester staple fiber and nylon in the first half of the year was not great, but the inventory increased in the third quarter; The overall inventory of viscose staple fiber is at a low level.

Data source: Huarui Information

Figure 2 Inventory of main chemical fiber varieties since 2023

（2） Cost support weakened in the third quarter, and the price center moved down

In the first half of the year, the crude oil price was higher than the same period last year, showing an overall upward trend, with an increase of about 19% in the middle of the year compared with the beginning of the year. Specifically, the price of crude oil rose significantly from January to March, reaching a high of $87/barrel at the beginning of April. The price fell from April to May, falling to a low of $73/barrel at the beginning of June, and then rebounded, reaching the second highest point of $83/barrel at the beginning of July. At this stage, the correlation between PTA and polyester prices and crude oil prices is slightly weak, the market volatility is relatively stable, and the prices are more affected by the supply and demand game (Figure 3). Since the third quarter, the crude oil price has shown an obvious downward trend. In the first ten days of September, the price fell to a year low of $66/barrel, and then rose and fell more steadily. In the first ten days of November, the price basically fell back to the level at the beginning of the year. At this stage, PTA and polyester prices have a strong correlation with crude oil prices, with PTA dropping by 21%, polyester POY dropping by 13%, and polyester staple fiber dropping by 10%. The PTA price fell sharply, resulting in the cost of inventory raw materials higher than the market price, which made the cost higher than the market level, thus compressing the profit space. In addition, the inventory depreciation at the fiber end also affects the overall profit level of the enterprise.

Source: Huarui Information

Figure 3 International oil price, PTA

Price trend of polyester POY and polyester staple fiber

By industry chain, polyester chain and nylon chain declined significantly in the third quarter; Spandex chain is basically in a downward trend; The viscose fiber industry chain performed well, showing a slight upward trend (Table 1).

Table 1 Price changes of main chemical fiber products and raw materials since 2024

（3） Significant changes in chemical fiber export market share

According to the statistics of China Customs, the total export volume of main chemical fiber products from January to September decreased by 5.08% year on year, which was deeper than that from January to June (Table 2). By product, the export of polyester filament fell 9.13% year on year, mainly due to the sharp decline in exports to India; The decline in exports to Turkey is second only to India, largely due to the reduced demand gap. At the beginning of this year, Turkey put into production a set of polyester plant with an annual output of 300000 tons, of which 250000 tons are used to produce polyester filament POY and DTY, and the remaining 50000 tons are used to produce polyester chips. 2、 The export performance of polyester staple fiber and nylon filament in the third quarter was good, with a year-on-year growth of 4.67% and 12.97% respectively from January to September; Acrylic fiber export maintained a growth trend, but the growth rate gradually narrowed; The export of viscose staple fiber decreased by 21.48% year on year, mainly because the international purchase price was lower than the domestic sales price, and enterprises tended to expand the domestic market.

Table 2 Import and export of main chemical fiber products from January to September 2024

In terms of export destinations, the share of chemical fiber export market has changed significantly. From January to September, export to Vietnam accounted for 11.6%, 2.2 percentage points higher than that of last year; Exports to India accounted for 4.9%, 5.9 percentage points lower than last year; Exports to Turkey accounted for 7.5%, 2.2 percentage points lower than last year (Figure 4). In addition, the export of polyester bottle tablets resumed its growth trend, with a year-on-year growth of 28.31%, accounting for about 37%. In the same period, the import volume of chemical fiber increased by 5.23% year on year, but the volume only accounted for 0.6% of the output of chemical fiber.

Source: According to Chinese customs data

Figure 4 Changes in China's chemical fiber export market share

（4） The growth of terminal domestic demand slows down, and the pressure on clothing export is relatively large

Since this year, the domestic market of textiles and clothing has maintained a growth trend, but the growth rate has slowed down, supported by factors such as the stability of China's residents' income and consumption confidence, and the gradual effectiveness of the national consumption promotion policy. According to the data of the National Bureau of Statistics, in the first three quarters, China's per capita expenditure on clothing consumption increased by 5.1% year on year, and the retail sales of clothing, shoes and hats, and knitwear and textiles above the designated size increased by 0.2% year on year, respectively 1.4 and 10.4 percentage points slower than the same period last year. New e-commerce models such as live video with goods and instant retail continued to stimulate online consumption potential. In the first three quarters, online clothing retail sales increased by 4.1% year on year, 5.5 percentage points slower than the same period last year.

In the first three quarters of this year, China's textile and clothing exports continued to grow, the competitiveness of the textile industry chain continued to release, and the overall export situation was better than expected. According to the data of China Customs Express, China's textile and clothing exports in the first three quarters totaled 222.41 billion US dollars, up 0.5% year on year. Among the main export products, the export volume of textile yarn, fabric and finished goods was US $104.3 billion, up 2.9% year on year; The pressure on clothing export is relatively large. The export volume in the first three quarters was US $118.11 billion, a year-on-year decrease of 1.6%. The export of China's textile industry to some markets is still outstanding. In the first three quarters, the export of textiles and clothing to the United States, the European Union, ASEAN, Canada, Ukraine and other trade partners achieved positive growth.

（5） The benefit increased year on year, but the profit growth gradually narrowed

According to the data of the National Bureau of Statistics, the operating revenue of the chemical fiber industry from January to September was 845.953 billion yuan, up 6.94% year on year; The total profit was 17.925 billion yuan, up 42.15% year on year (Table 3). Due to the base, the profit growth gradually narrowed. The profit rate of main business is 2.12%, which is still at a low level in recent years; The loss of loss making enterprises was 9.62 billion yuan, a year-on-year decrease of 6.02%; The industry suffered a loss of 29.58%. By industry, polyester, nylon and spandex respectively contributed 35%, 21% and 3% of the total profits.

Table 3 Economic benefits of chemical fiber and related industries from January to September 2024

（6） The growth rate of fixed asset investment rebounded, and the actual new capacity slowed down

According to the data of the National Bureau of Statistics, from January to September, the fixed asset investment in the chemical fiber industry increased by 4.7% year on year, compared with - 11.6% in the same period of 2023. The investment growth rate rebounded under the low base effect. From the perspective of new production capacity, 1.16 million tons/year of new investment in polyester fiber slowed down the growth of production capacity; Polyester bottle tablets are still in the expansion cycle, with 3.42 million tons/year newly put into production and 2.3 million tons/year to be put into production.

Data source: National Bureau of Statistics

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

Forecast of industry operation trend

Since 2024, the economic operation of the textile industry has shown a recovery growth trend, but the demand side has begun to gradually bear pressure, there is a problem of insufficient growth momentum, and the pressure on the industrial chain will gradually be transmitted from the bottom up. At the same time, in the case of high production capacity base, the high commencement of chemical fiber industry will also bring supply pressure. Under the situation of weak supply and demand margin, industry enterprises still need to strengthen industry self-discipline, prevent "internal" vicious competition, and actively promote the stable operation and healthy development of the industry.

It is expected that in 2025, the world economy is expected to achieve stable operation under the background of easing inflation pressure and easing liquidity. Domestic macro policies will continue to work to promote economic development and structural optimization. The economy is expected to be stable and good, which will support the chemical fiber industry to show a positive development trend.

Raw material end: the main raw materials of chemical fiber, such as PTA and CPL, are in sufficient supply, and the cost of raw materials is relatively loose, which will make a certain contribution to the profitability of the industry. At the same time, the progress of technologies related to coal based raw materials and bio based raw materials will also inject more vitality into the development of the industry.

Supply side: The capacity will keep growing, but the growth will slow down. At the same time, the synergy of the industrial chain will continue to strengthen, such as improving supply efficiency by establishing closer cooperation with the downstream.

Demand side: textile and clothing industry is still the main application field of chemical fiber, and consumption upgrading, green environmental protection, etc. will bring more development opportunities. At the same time, the demand of medical and health, automotive interior, aerospace, new energy and other industrial fields will become an important growth point.

However, the development of the industry will still face many challenges. For example, changes in the geographical situation will lead to substantial fluctuations in oil prices, which will affect the enterprise's grasp of raw materials and markets, and thus affect profitability; The uncertainty of the international trade environment, such as raising tariffs and setting trade barriers, will continue to affect the export of China's chemical fiber products.

Looking forward to 2025, the chemical fiber industry will be based on the development of new quality productivity, solidly promote the construction of a modern industrial system, achieve higher quality development through innovation driven, green development and industrial upgrading, and make greater contributions to the development of the textile industry and the national economy.

(Source: China Chemical Fiber Industry Association)