At present, the printing and dyeing industry has entered the traditional peak production season of “Golden Nine and Silver Ten”. Driven by rising raw material prices and strong downstream demand, disperse dye prices ushered in a second round of increases in September following an increase in early August.
Reporters recently obtained information from Zhejiang Longsheng (600352.SH) and Runtu Shares (002440. SZ) two companies respectively learned that the current quotation of the main varieties of disperse dyes is around 32,000 yuan/ton. Although it is still in the middle range compared with the historical prices in the past three years, it is higher than the lowest price of 22,000 yuan in the first half of this year. In terms of actual transaction price, the increase has been relatively large.
As to whether this round of price increases can restore operating performance, many listed companies have stated that it will depend on the volume-price relationship and support conditions. However, Zhang Guoliang, a dye industry analyst at Zhuochuang Information, told a reporter from the Associated Press that although the dye market demand in the fourth quarter of this year is not as good as in previous years, it is expected to improve significantly compared with the first three quarters. The recovery of orders from downstream printing and dyeing factories will increase their raw material consumption growth, which will in turn prompt the printing and dyeing factories to passively restock their inventories. Therefore, although prices are rising, rigid demand still exists.
01 Price returns to historical median
Zhuochuang Information data display , as of the close of trading on September 4, the mainstream quotation in the scattered black ECT 300% market in Zhejiang and Jiangsu is around 32 yuan/kg, and actual orders are negotiated at 27-28 yuan/kg; in Guangdong and Fujian, the price is around 32 yuan/kg.
Staff from the Zhejiang Longsheng Secretary’s Office told reporters that the current quotation for the main varieties of disperse dyes is 32,000 yuan/ton, but the transaction price has not yet been reached because some old orders have not yet been reached. It must be executed according to the previous price. Although there are some price adjustments currently, compared with the historical cycle, since the price from the beginning of the year to the first half of the year is at a low level in the past two or three years, after several rounds of price increases, it can only be said to be at a medium level now.
In addition, staff from the securities department of Runtu Co., Ltd. told reporters that the price of disperse dyes has been increased in August, with the main varieties quoted at 32,000 yuan/ton, while this year’s prices are low At that time, the transaction price per ton was between 22,000 and 23,000.
The reason for the low price of disperse dyes in the first half of the year is mainly related to the sluggish downstream demand. Zhang Guoliang, a dye industry analyst at Zhuochuang Information, told reporters that in the first half of the year, not only the demand for dyes, but also the entire clothing and textile industry was not good. The operating rate and order volume of downstream printing and dyeing plants were relatively low. The drop in demand caused the market price of disperse dyes to fall. , eventually reaching a low of more than 20 yuan (per kilogram).
According to Zhang Guoliang, judging from this year’s situation, it is already at a high point. However, compared with historical prices, the price of disperse dyes is still at a mid-to-lower level. In previous years, prices were high. When I clicked, the actual unit price reached more than 45 yuan.
Whether the current price adjustment can be stabilized, and whether subsequent price increases will continue to rise, mainly depends on the acceptance of downstream printing and dyeing factories. However, a staff member of the Zhejiang Longsheng Securities Department told reporters that the domestic epidemic has been effectively controlled, and foreign countries are also emphasizing the resumption of work and production, promoting consumption, etc. Therefore, it is judged that market demand will increase, and the price adjustment policies of upstream companies may cause dealers to Replenish inventory or stock up in advance.
02 The peak season for downstream replenishment is coming
The chemical industry has “gold and nine silvers” The same is true for the printing and dyeing industry in the “Ten” peak season. After the downturn in the first half of the year, a new round of inventory replenishment cycle is expected to make the disperse dye market re-enter the upward channel.
According to a staff member of the Securities Department of Runtu Co., Ltd., downstream demand is an important aspect of this round of price increases. The fourth quarter of the traditional peak season is approaching, and downstream inventory is currently in stock. Insufficient.
In addition, staff from Zhejiang Longsheng Securities also told reporters that July and August are off-season for dyeing factories. After entering September and the fourth quarter, the operating rate will decrease. With the increase, the market’s expectations for the production of autumn and winter clothing will also increase. Prices have been at a low level this year, especially against the background of the epidemic. Whether it is an intermediate link or a terminal link, “cash is king” in the industry, so there will not be too much inventory reserve.
It is worth noting that the increase in the price of the upstream raw material m-phenylenediamine is also an important reason for the recent price increase of disperse dyes. It is understood that the only domestic manufacturers that currently produce m-phenylenediamine are Zhejiang Longsheng and Sichuan Hongguang. Sichuan Hongguang was required to stop production in an orderly manner in July due to safety management and other issues. The rectification and acceptance must be completed before October 9. Follow-up Production will resume after approval is obtained.
At present, only Zhejiang Longsheng produces the dye intermediate m-phenylenediamine, occupying more than 99% of the market share. Stimulated by tight supply and performance needs, m-phenylenediamine Prices began to rise: in mid-July, the price of m-phenylenediamine was 60,000 yuan/ton, and by the end of July it had risen to 70,000 yuan/ton, an increase of more than 15%. In history, the price of m-phenylenediamine per ton has hit a high of 150,000 yuan.
Therefore, while the risk of price increases still exists, downstream printing and dyeing factories are also prompted to place orders in advance to lock in the supply of raw materials. Zhuochuang Information Dye Industry Analyst�Guoliang told reporters from the Financial Associated Press that orders from downstream printing and dyeing factories have been restored, so their raw material consumption is also increasing, prompting them to passively replenish their inventories. Moreover, after the two price adjustments in August and September, downstream customers will also be worried that prices will continue to rise in the future, so during this period they will lock in part of the supply of raw materials for the later period, resulting in increased buying intentions recently.
03 Rising volume and price are expected to restore performance
Domestic disperse dyes The market has formed an oligopoly market competition situation. According to the China Business Industry Research Institute, my country’s dye companies are mainly concentrated in the three major provinces and cities of Zhejiang, Jiangsu and Shanghai. The dye production and export volume of these three provinces account for the country’s total. More than 90%. Among them, the main production companies are Zhejiang Longsheng, Runtu Co., Ltd., Yabang Co., Ltd., Jihua Group, Annoqi, etc. The leading companies have extremely high industry pricing power.
According to a staff member of Zhejiang Longsheng Securities Department, its market share in disperse dyes is about 30% to 35%. A reporter from the Associated Press noted that in 2019, Zhejiang Longsheng had a total annual dye production capacity of 300,000 tons and an annual auxiliary production capacity of approximately 100,000 tons, ranking first in the global market; in addition, Runtu Co., Ltd.’s total annual dye production capacity Nearly 210,000 tons, including 110,000 tons of disperse dyes, 80,000 tons of reactive dyes, and nearly 20,000 tons of other dyes. It ranks among the top two in the domestic dye market.
It is worth noting that the chemical industry is the industry that has been greatly affected by the epidemic, and the performance of dye companies has also suffered across the board in the first half of the year. Taking the previous two as an example, Zhejiang Longsheng achieved operating income of 7.595 billion yuan in the first half of the year, a year-on-year decrease of 21.29%, and the net profit attributable to shareholders of listed companies was 2.269 billion yuan, a year-on-year decrease of 10.36%; Runtu Co., Ltd. achieved operating income of 2.265 billion yuan in the first half of the year. Yuan, a year-on-year decrease of 30.69%; net profit attributable to shareholders of listed companies was 375 million yuan, a year-on-year decrease of 54.64%.
As for the impact of price increases on performance, listed companies have stated that it depends on overall volume support. Staff from the Zhejiang Longsheng Securities Department told reporters from the Financial Associated Press that the impact of price increases depends on sales volume after the price increase. If both volume and price increase, there will be positive feedback on the company’s revenue; Runtu The company also said that the price increase will definitely be beneficial to the company’s operations. Sales revenue will increase after the price increase. The specific impact depends on the relationship between volume and price.
Zhuochuang Information analyst Zhang Guoliang told reporters that with the immediate improvement in downstream demand, it is currently expected that the implementation of price increases will be relatively good. However, whether the price of disperse dyes will continue to increase depends on the industry performance before the end of the year, including the impact of the epidemic, downstream demand, terminal clothing retail conditions and other factors.
Note: The above content is for reference only and does not constitute investment advice. </p
