Data | In The First Half of 2024, The Chemical Fiber Industry Showed A Recovery Growth Trend

In the first half of 2024, factors such as the continuous release of macro policy effects, the recovery of external demand, and the accelerated development of new quality productivity supported the continued recovery of the national economy, achieving a year-on-year GDP growth of 5.0%. In this context, the operation of chemical fiber industry shows a recovery growth trend. Specifically, production on the basis of a low base of rapid year-on-year growth, the growth rate gradually fell; The on-load was generally at a high level, and downstream demand was better than the same period; Economic benefits increased significantly year-on-year, and operation quality improved; The growth rate of fixed asset investment picked up, and the actual new production capacity slowed down. However, due to the impact of trade barriers and geopolitical conflicts, the export volume of chemical fiber has declined.

01  Basic information about the operation of the industry

(1) the start of construction is at a high level, and the inventory performance is mixed

In the first half of the year, the overall load of the chemical fiber industry was at a high level. From the main industries, the average load of direct spinning polyester filament is more than 90% in March to April, and 85% to 90% in June to July; The average load of direct spinning polyester staple fiber was 80%~90%, which decreased in June and July; Nylon filament load has been maintained at more than 90%. According to the data of the National Bureau of Statistics, the output of chemical fiber from January to June 2024 was 38.85 million tons, an increase of 13.24% year-on-year, but the growth rate narrowed by 6.86 percentage points compared with the first quarter (Figure 1). From a monthly point of view, chemical fiber production basically remained stable, the change in growth rate is largely due to the same period in 2023, the base is low and then high, it is expected that with the increase of the base, the production growth rate may further fall.

FIG. 1 Year-on-year growth rate of chemical fiber production since 2023

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

Since 2024, the inventory pressure of polyester filament and spandex industries is greater; Polyester staple fiber, nylon stock is relatively low, but from June to July showed a high trend; Viscose staple fiber stocks are low. Specifically (Figure 2), polyester POY inventory first gradually increased, and after late March, the shock was maintained; The highest inventory in the first half of the year is 29 days, the average inventory in the second quarter is 25 days, and the current inventory is 25 days. Nylon inventory gradually increased first, gradually removed from the inventory in April to May, and then the inventory increased again; The highest inventory in the first half is 21 days, the average inventory in the second quarter is 12 days, and the current inventory is 15 days. Spandex inventory continued to increase, with an average inventory of 48 days in the second quarter, 10 days higher than the first quarter, and the current highest inventory of 57 days.

Figure 2 Stocks of major chemical fiber varieties since 2023

Data source: Huarui Information

(2) The fluctuation of the chemical fiber market is generally stable

In the first half of the year, crude oil prices rose and fell significantly, but the correlation between PTA and polyester products and crude oil prices was slightly weak (Figure 3), the market fluctuations were relatively stable, and the price was more affected by the supply and demand game. In terms of stages, in the first quarter, crude oil prices fluctuated higher, exceeding $80 / barrel by the end of March, an increase of 18.2%. For the chemical fiber industry chain, the oil price provides a strong cost support, but the supply of PTA and polyester are loose, so the rising power is insufficient, and the overall performance shows a strong resilience under the cost support, and the fluctuation is relatively stable compared with the same period in 2023. From April to May, crude oil prices fell, falling to $75 / barrel at the end of May, a decline of about 14.3%, but PTA, polyester staple fiber fell only 1%, polyester POY rose 2%. In June, crude oil prices bottomed out and rebounded at the end of June, basically rising back to $80 / barrel, an increase of about 13.2%, while PTA, polyester POY, polyester staple fiber rose 3.1%, 1.3%, 6.7%, respectively.

Figure 3 Since 2023 International oil price, PTA, polyester POY, polyester staple fiber price trend

Note: WTI futures (right axis, USD/barrel), PTA, Polyester POY and polyester short (left axis, Yuan/ton) Source: Huarui Information

Overall, by the end of June, the price of polyester and viscose fiber industry chain showed a rise; The industrial chain prices of nylon and spandex showed a downward trend (Table 1).

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

(3) The export of chemical fiber has declined

According to the statistics of China Customs, the total export volume of chemical fiber main products from January to June fell by 4.09% year-on-year, but the decline was 3.97 percentage points narrower than that in January to March. By product, polyester filament exports decreased by 7.25% year-on-year, a reduction of 151,000 tons, mainly because India in October 2023 to implement BIS certification of polyester filament, enterprises in the previous export, export volume increased, and after the implementation of export volume decreased; From January to June 2024, the export of polyester filament to India decreased by 238,000 tons, so excluding India, the export of polyester filament to other countries and regions still maintained growth. Thanks to the contribution of export growth in the second quarter, the export of polyester staple fiber and nylon filament filament increased year-on-year; Viscose filament, acrylic fiber, spandex exports to maintain growth. In addition, polyester bottle sheet exports resumed growth, with a growth rate of 20.16 percentage points higher than the same period in 2023. In the same period, chemical fiber imports increased by 19.56% year-on-year, but the number only accounted for 0.6% of chemical fiber production.

Table 2 Import and export of major chemical fiber products from January to June 2024

(4) The growth of terminal domestic demand was stable, and foreign trade was better than expected

In the first half of the year, domestic demand for textile and garment goods grew steadily. According to the data of the National Bureau of Statistics, from January to June, the per capita clothing consumption expenditure of national residents increased by 8.1% year-on-year, which is better than the same period in 2023; The retail sales of clothing, shoes, hats and textiles of units above the quota increased by 1.3% year-on-year, and the retail sales of online clothing goods increased by 7% year-on-year, the growth rate has slowed down compared with the same period in 2023. In the medium and long term, China's domestic demand market has fully entered the stage of consumption upgrading, and the incremental slowdown and structural upgrading have become an important stage feature of textile and garment commodity consumption. Strengthening product design and development and actively exploring the hot spots of consumption are important innovative development directions under the new situation.

According to the Chinese Customs website data, in the first half of 2024, China exported a total of 143.18 billion US dollars of textiles and clothing, an increase of 1.5%. Among them, textile exports were 69.35 billion US dollars, up 3.3% year on year; Apparel exports amounted to $73.83 billion, unchanged from the same period in 2023. The developed countries represented by the United States have achieved a "soft landing", and the retail market of clothing and apparel commodities is basically stable, which not only stimulates the direct export of textiles and apparel in China, but also indirectly drives the export of supporting products in the upstream industrial chain. In addition, cross-border e-commerce presents a new dynamic, in the first half of 2024, China's cross-border e-commerce imports and exports reached 1.22 trillion yuan, an increase of 10.5%, the growth rate is 4.4 percentage points higher than the growth rate of China's trade in goods in the same period.

(5) The efficiency increased year-on-year and the quality of operation improved

According to the data of the National Bureau of Statistics, the operating income of the chemical fiber industry from January to June was 570.986 billion yuan, an increase of 14.51% year-on-year (Table 3); The total profit of 12.652 billion yuan, an increase of 7.102 billion yuan year-on-year, due to the base reason, the year-on-year increase is obvious; The profit margin of main business was 2.22%; The loss of loss-making enterprises was 5.817 billion yuan, down 29.78% year-on-year; Industry loss 31.26%. In terms of industry, polyester and nylon are still the main contributors, respectively contributing 60.2% and 12.3% of the profit increment of the chemical fiber industry, and the profitability of the spandex industry has declined.

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

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

According to the National Bureau of Statistics, from January to June, the investment in fixed assets in the chemical fiber industry increased by 6.4% year-on-year, while the same period in 2023 was -7.0%, and the investment growth rate rebounded under the low base effect. From the new capacity point of view, polyester fiber new investment of 800,000 tons/year, capacity growth slowed down; Polyester bottle sheet is still in the expansion cycle, the new production of 2.7 million tons/year, there are still 3.5 million tons/year to be invested.

Figure 4 Change of fixed asset investment growth rate in chemical fiber industry since 2008

Source: National Bureau of Statistics

02  Forecast of industry operation trend in 2024

At present, China's economy still faces many challenges, such as rising uncertainties in the complexity of the external environment and deepening domestic structural adjustment. In the second half of the year, the implementation of national macro policies will be further increased, and with the gradual implementation of various policies, the policy effect will gradually appear, which will play a positive role in promoting the stable operation of the economy and guiding industrial transformation and upgrading. For example, with the focus on boosting consumption to expand domestic demand, economic policies should focus more on improving people's lives and promoting consumption, increase people's income through multiple channels, and enhance the consumption capacity and willingness of low - and middle-income groups. In the industrial sector, we will continue to deepen the strategy of innovation-driven development, encourage enterprises to research and develop new technologies and products, raise industrial added value, and accelerate the transformation of scientific and technological achievements. Strengthen the guidance of expectations, enhance business confidence, and stabilize the market order; Expand demand, especially seize the opportunity of "going to sea", help enterprises expand the global market, and further enhance the profitability of enterprises and international competitiveness.

Under the expectation that the overall economic situation in China will maintain steady growth, the chemical fiber industry has the basis for maintaining stable operation. Raw material side: the driving force of crude oil price trend on chemical fiber price has weakened, and raw material cost will still be relatively loose; Supply side: The growth rate of new production capacity has slowed down, but in the case of a high base of production capacity, if continued high construction will also bring supply pressure; Demand side: The domestic market is expected to maintain medium-low growth, export sales are still under pressure. Looking forward to the future, industry enterprises should deeply understand the spirit of the Third Plenary Session of the 20th Central Committee of the Party, and lead high-quality development with new quality and new strength. For example: strengthen product development and innovation, take the initiative to stimulate market vitality; Continue to promote the application of advanced manufacturing technology to improve labor productivity; Cultivate and develop new quality productivity and raise total factor productivity.

Source/China Chemical Fiber Industry Association