Weak Demand---The No.1 Killer of the Polyester Market
Author: Nov 18, 2011 15:20
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168tex News: Over the last one or two months, many chemical fiber enterprises have reflected operation difficulties, and commodity price goes down quickly. But from the data of 1~9 published by the State Statistics Bureau, the situation is optimistic. There is a contradiction between the macro data and micro feels. Does it mean the turning point is arrived? What’s the main reason that caused such changes? With so many difficulties, how can enterprises find a new way to develop? With these questions, the journalist hurries to Shanghai, tending to find the answers to these questions. The journalist has found that the weak demand is the No.1 killer to the market.
10th~11th Nov, sponsored by China Chemical Fiber Industry Association, CNCFC, and undertaken by CCFEI, Tecnon OrbiChem, the No.8 China International Poly Forum is opened in Shanghai. After years of accumulation, this forum is of high popularity. Through discussions and communications, people join the conference can always find out some new ideas on the future development, and also some changes through the platform.
The glorious time has gone since September.
During June and July, the journalist has gone to the key textile region, Jiangsu Wujiang city to learn about the situation. The local market sources said, the market in the first half of the year is even better than that in the same period of last year. But the good scene has not make people feel surprised, instead, market sources have worries about the market when it is in the second half of the year. And the cause for the worries is mainly due to the out demand is lowering down while inventories in fabric plants and garment plants are piling up. Moreover, for the influence of government policy, loan cost this year has increased, which makes financing even difficult. In addition with factors like feedstock, and labor cost increase, the market situation is difficult to sail plain.
But this is not the fact. If from January to September, chemical fiber industry is still indulged in the glorious period since last year, then days after September will be a little sad. In the current forum, many people have pointed out that during the past month after 24th Sept, poly filament yarn price has dropped by 2000CNY/t averagely, from 17000CNY/t to 15000CNY/t. Market sources believe, the decline of demand may lead a further dip of poly yarn price.
Chemical fiber demand is in close relation with the macro economy. According to secretary general of China Chemical Fiber Industry Association, Zheng Junlin, most enterprises think the current economic situation is much better than that during the economic crisis. Although causes of the two are quite different, but the result is similar that weakens the demand and the market confidences. According to him, the previous three quarters this year, the industrial added value above the national scale and the industrial export value above the national scale, fixed investments, and also some other indexes that the growth rates are in a downward trend. Social total retail sales of consumer goods, which played an important role to textile demand, reduced month by month recently. The August comparable growth rate, year on year, is increased by just 10%. Especially deducting the commodity price growth that is over doubled, quantity growth becomes very little.
Meanwhile, see from the regular operational pattern of chemical fiber industry, we can get a conclusion that is in accordance with the present market. Zheng Junlin pointed out, after a rapid develop of more than ten years, the operational cycle of chemical fiber industry has narrowed from 4~5 years to 2~3 years. After a two and a half years’ growth, since 2009, it seems normal to step into a decline stage now.
Slack demand is transmitted from downstream market to upstream market.
The journalist learned that, textile industry orders have sharply declined when it comes into the fourth quarter, which is mainly due to the influence of the downstream market, with garment and home textile plants orders reduced. The slack demand trend is transmitted from the downstream market to the upstream market.
Sales manager of Jiangsu Hengli chemical fiber, Meng Hongjun said, at the moment, stock levels among chemical fiber plants are at normal. But the end garment, an fabric enterprises have a high amount of stock. The downstream operation rate is low that will probably make some influence to the next years’ order of the fiber industry. According to data, operation rate of the downstream garment and fabric plants is just around 40%. Manufacturers universally reflected that orders are lack. Now except, Wujiang city, where the operation rate is still around 60%, other regions are mostly in low operation rate. For the lack of order and cash flow, some plants have already discounted workers’ wages by 70%. The slack demand in the downstream market has already been transmitted to the upstream polyester industry. Now some chemical fiber plants have accumulated a stock that is above 20 days, and the amount is still increasing.
The predicament from bottom to top of the textile industry, Meng Hongjun believes the primary reason is the imbalance of supply and demand. According to him, both production and consumption of chemical and fiber industry from January to September is thriving, which is mainly due to the rapid expansion of looms. But after September, for the dull sale, new looms have been forced to stop, and which further influenced the chemical feedstock acquisition price and procurement price. The reason for the upstream supply increase is not only due to a competition of enterprises among the new round of expansion, but also because the misconception of enterprises that caused by the intensive garment stock procurement last year. 2009, new added value of chemical fiber is around 1 million ton, and it reached 3.7 million in 2011, by 2012, the new added value is estimated to be over 7 million, and it has already take factors like equipment tension, new invested capacity delay or temporary stop and etc. But as for the end demand of consumers, for the restrain of purchasing power and some other objective condition, the actual amount of consumption grow steadily. What’s more, RMB appreciation has weakened the outer demand. Export orders have been shifted to Vietnam, India and some other places that costs are even lower.
Polyester chain changes from dumbbell shape to olive shape.
As for the present chemical fiber capacity increase, stand by polyester, there are different opinions among market sources. Some people think the situation is different from the previous demand decide supply situation. With the development of technology, influence of supply to demand is increasing day by day. In another words, the high increasing supply amount can stimulate market demand by expand application. As for this, the best example to illustrate is that, previously Hengli Group invested 200 thousand ton polyester industry yarn, which taking up 30% of the whole industry capacity, and was taken as a colossus by the market sources. But finally, the 200 thousand ton production was finally absorbed by the market for its expanded application and amount, and even the later 300 thousand ton produced by other enterprises was also absorbed by the market. There is another phenomenon that can prove the point that is previously, polyester plants used to please the downstream customer by dinner, but now, on the contrary, many downstream customers please polyester manufacturers by dinner. It means that even the supply is greatly increasing, the influence of suppliers to the market is also increasing.
Innovation drive take the leading role on future develop mode.
Currently, the slack macro economy makes the field filled with negative emotions. But although the bad situation to enterprises may be a bad thing while to the industry, it may be a good thing. The point is based on the reversed forcing function of the bad situation. When the market is good, enterprises can easily make money by making conventional products, and need not much mind on production creation. But when the market is slack, kinds of pressure will reversed force enterprises pay more attention of product development and creation. That’s why great many product creations will emerge after a crisis. And enterprises’ consciousness of energy conservation and emission reduction will be enhanced markedly.
8th Nov, Australia has passed the carbon tax bill that proposed by the Gillard government. By now, the controversial bill became a law officially. Australia is the country that discharged the most greenhouse gas per capita among the developed countries. The implementation of the carbon tax will make Australia impose the most restriction country outside Europe. When carbon tax bill may become a new option for countries to reduce carbon emission, and which may also become a new trade protection measure, China chemical fiber industry, taking up 60% of the global capacity, must review the relation with development and environment protection, seeking a coordinated development solution.
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Editor: Candy From: 168Tex.com
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