Promoted by environmental protection upgrades and terminals, the polyester industry has entered a boom cycle since 2017 and production capacity expansion has accelerated, and industry concentration has been greatly improved. The original planned new polyester production capacity in 2019 was 5.3 million tons. The new production capacity was mostly concentrated in large enterprises such as Tongkun, Xinfengming and Hengyi to expand market share and increase industry concentration. However, due to the gradual decline in upstream raw material prices and the downturn in the terminal weaving gray fabric market, the prices of various polyester products have shown a downward trend throughout the year.
Due to the slow pace of industrial chain expansion, At the same time, with the expansion of production capacity, polyester competition intensifies, and the relative strength of raw materials in stages has compressed the profitability of polyester factories. Except for the more profitable polyester filament DTY, which can still maintain positive cash flow, other types of polyester Products are all in negative cash flow status. Judging from the annual average, the average daily cash flow of various polyester products this year has dropped significantly compared with last year. In particular, the average daily cash flow of polyester chips has dropped significantly by 460 yuan/ton compared with last year.
With the expansion of production capacity, polyester competition has intensified, and polyester profitability has declined significantly. In the future, polyester production capacity will be put into operation Become more rational. Especially since the second half of this year, the market has been sluggish and cash flow has fallen into losses, which has discouraged the launch of new production capacity. This year, the launch of new polyester production capacity has actually been completed at 3.45 million tons per year.
It is expected that by the end of 2019, the total domestic polyester production capacity will reach 55.57 million tons/year, with a production capacity growth rate of 6.6%, a decrease of 1.2 percentage points from the previous year. The peak period of polyester production capacity is coming to an end, and new production capacity will stabilize in the future. The polyester production capacity planned to be put into operation in 2020 is about 5.3 million tons/year. Considering that some devices may be delayed in production, the actual new production capacity is expected to be about 4 million tons/year.
It is expected that by the end of 2020, domestic polyester production capacity will reach 59.57 million tons/year, and the production capacity growth rate will be 7.2%. In the future, the industrial concentration of the polyester industry will continue to increase.
The weak performance of terminal weaving and textile and clothing consumption has caused a significant drag on the entire polyester industry chain. In terms of external demand, starting from September 1, the United States officially began to impose a 15% tariff on US$300 billion of Chinese goods, including most clothing and home textiles. my country’s exports to the United States fell across the board in September, with clothing and home textiles falling by 21.8% and 8.5% respectively. As of the end of October, the United States has excluded a total of 12 tax codes for yarns and fabrics involved in my country’s $200 billion in products.
According to U.S. import statistics, from January to September, the U.S. imported 12 tax code products from China totaling US$188 million, accounting for only 0.5% of total textile and apparel imports from China during the same period. , it will not play a substantial role in helping exports resume growth. At present, China and the United States have reached a first-phase agreement, and the trade situation has eased compared with the previous period. However, there is still a high degree of uncertainty in the future, and external demand may continue to be affected.
In terms of domestic demand, domestic textile and apparel retail sales from January to October totaled 1.06237 billion yuan, a year-on-year increase of 2.8%, and a decrease of 5.6 percentage points from last year’s growth rate.
Looking forward to 2020, against the backdrop of a major cycle of slowing global economic growth, it will be difficult for the textile and apparel market to make a significant improvement next year. As consumer confidence improves, With the continuous decline, the growth rate of clothing retail sales may continue to decline.
It can be said that the weaving boom cycle has passed, but the industry is still affected by three mountains:
1. Domestic demand remains tight
More than 70% of polyester terminals are related to textiles and clothing, so the strength of polyester demand needs to be judged based on the sales of textiles and clothing. . Since textiles and clothing are daily consumer goods, their general trends are highly correlated with my country’s overall economic status, GDP. Judging from historical data, my country’s economic cycle lasts about four years. This round of polyester boom cycle started in the second half of 2016. At present, profits have entered a state of loss. Clothing sales have peaked compared with the same period in early 2018. The current growth rate remains at a low level of around 3%. The current GDP growth is low. Therefore, textile and clothing Domestic demand is likely to remain weak until at least the first half of 2020.
2. Terminal investment slows down
Judging from the amount of fixed asset investment in the terminal textile industry, it has a certain correlation with the profits of the textile industry. In 2017, downstream textile profits began to improve (there are terminal water-jet looms and other factors that have been eliminated due to environmental protection) ), we also saw that downstream fixed asset investment began to rebound, and profits began to peak and fall in 2019 (although some looms in Jiangsu and Zhejiang were eliminated, more production capacity was transferred to the mainland, and the production capacity was doubled. Weaving production capacity transferred from other places was gradually put into operation) , terminal fixed asset investment has also slowed down, and no stabilization trend has been seen.
This can also be confirmed by the new number of terminal texturing machines. In 2016, there were still few new texturing machines, but from 2017 to 2018, the number of texturing machines increased explosively. However, entering 2019-2020, the growth rate of texturing machines is expected to decline significantly.
3. The growth rate of terminal exports slowed down vs. the direct export of polyester increased slightly
China’s exports of textile yarns, fabrics and products, as well as clothing and clothing accessories from January to November 2019 The cumulative year-on-year decrease is 3.09%. The overall growth rate this year has dropped significantly compared with previous years and entered a stage of negative growth. And with the uncertainty in Sino-US relations and the expected decline in the global economy, it is expected that the export situation will still be difficult to improve significantly in the short term.
In addition, in recent years, domestic end-use textile and apparel companies have also increased their capacity transfer to Southeast Asia and other regions, as well as the rapid development of the textile industry in Turkey, Brazil and other places, resulting in domestic textile and apparel Decrease in direct exports of finished products. However, exports of polyester, especially filament, are increasing.
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