Last year, the chain reaction of the explosion in Xiangshui, Jiangsu Province shocked the market. The prices of various chemical products, including dyes, skyrocketed, and nearly a thousand companies suspended production and restricted production. Nine months later, another fire accident occurred in a chemical enterprise in Jiangsu and Zhejiang regions. A few days ago, a fire broke out in the factory building of Hangzhou Dikai Co., Ltd. located in the sixth construction section of Qiantang New District, Hangzhou, Zhejiang Province.
According to the reporter’s understanding, the company where the accident occurred produces more than 40,000 tons of disperse dyes annually and is one of the major manufacturers in my country’s dye industry. What impact will this accident have on the textile market? Will it trigger a new round of rectification and production shutdown? What will be the trend of dye prices in early 2020?
Will it trigger a new round of discontinuation?
Public information shows that Hangzhou Dikai Chemical Co., Ltd. is a Sino-US joint venture located on the Qiantang River in Xiaoshan, Zhejiang. The company was founded in 1994 with a registered capital of 24.82 million yuan. Its business scope is the production of organic chemical dyes and intermediates. The company now has assets of more than 100 million yuan, a factory area of 7 hectares, and more than 550 employees. Its dye production capacity accounts for about 7% of the total production capacity of the national dye industry. The 2017 annual report shows that during the period, the company’s sales exceeded 160 million yuan, net profit was nearly 24 million yuan, and total assets were 130 million yuan. Compared with 2016, the company’s total sales in 2017 dropped slightly by 10 million yuan, but its net profit increased by more than 13 million yuan, a growth rate of more than 100%. The company’s annual report did not disclose specific financial information for the past two years.
Official sources said that the cause of the accident was a fire in a semi-finished dispersant warehouse of the company. Fortunately, there were not a large number of workers in the factory, and only four workers of the company were slightly injured.
“Safety comes first in chemical companies. If an explosion occurs and the impact is large, it may cause companies in the local industrial cluster to suspend production for safety inspections. This accident is expected to have a certain impact on the dye industry , but there will be no centralized production suspension, and it will be difficult to affect the operations of other dye factories.” said Ye Lewei, an analyst at Guotai Junan Futures.
Yide Futures analyst Xing Binbin also believes that the scope of the accident alone is not large. Xing Binbin said that recently, the Qiantang New District Emergency Management Bureau, the Public Security Bureau, and the Fire Brigade have jointly carried out accident investigations, drawn inferences from one example, and carried out hidden danger inspections for relevant enterprises in the new district. However, judging from the strictness of environmental protection and production restriction policies in recent years, there is a high probability that there will be a new round of inspections and production restrictions in 2020.
“The Xiangshui incident caused serious casualties, and there are indeed major safety risks in the local area. The integration of the chemical market is imperative. The company involved in the incident has the same nature as the company involved in the Xiangshui incident. The products produced are similar. However, there were no casualties in the Hangzhou incident, and as the Spring Festival is approaching, some companies have already gone on holiday, so the short-term production shutdown is not effective,” said Yu Pengsen, an analyst at Zhaojin Futures.
What will be the trend of dye prices?
There is no doubt that in recent years, the key words in the dye and printing and dyeing industry are safety, environmental protection and price. Judging from the current situation, the possibility of large-scale production suspension and production restrictions is not high, but the subsequent increase in dye prices still affects the attention of industry insiders.
Data show that in the first quarter of 2019, the average international transaction price of dispersed black ECT 300% was around 35 yuan/kg. At that time, market participants were not optimistic about the price trend of dyes and intermediates. However, with the explosion accident in Xiangshui, Jiangsu, the price of disperse dyes soared. In April 2019, the transaction price of dispersed black ECT 300% exceeded 50 yuan/kg, and the price of some orders reached 55 yuan/kg, or even rose to 60 yuan/kg, setting a new high in recent years.
After this accident, what will be the trend of dye prices in 2020?
Yu Pengsen said that Jiangsu and Zhejiang are important printing, dyeing and textile bases in my country. This accident is bound to have a greater subsequent impact on my country’s printing and dyeing industry. The price of its downstream raw materials will rise, while its upstream products will face more severe tests. Now, the industry itself is in the off-season, and the short-term impact may not be obvious, but the impact will gradually become apparent after the Spring Festival. He said: “After experiencing the downturn from the end of 2018 to the whole year of 2019, the price of the dye industry has basically bottomed out, and there is limited room for continued sharp decline. At present, most products are on the verge of loss or entering the loss. After experiencing this round of losses After the reshuffle, some companies have withdrawn. Entering the first quarter of 2020, the market will improve, but the room for dye price increases is still relatively limited.”
“The increase in disperse dye prices in the first quarter of 2020 is Inevitable, but the impact of safety accidents and environmental pressure is relatively small. The price of dyes is mainly determined by supply and demand.” Jun Fang, director of Qicaiyun Information Department, pointed out that at present, major disperse dye manufacturers such as Zhejiang Longsheng and Runtu, Inventory levels are low. As the price of disperse dyes fell to a historical low in the fourth quarter of 2019, many traders and printing and dyeing companies increased their inventory, resulting in insufficient inventory of disperse dye manufacturers. “As a manufacturing company, when production and sales are balanced or even goods are in short supply, companies generally use price means to adjust demand and balance production and sales.”
Junfang also said that the current cost of disperse dyes is higher than in 2019 The beginning of the year. “The price of disperse dye intermediates is at a high level compared with the beginning of 2019. For example, the price of m-phenylenediamine at the beginning of last year was 45,000 yuan/ton, and the current price is 70,000 yuan/ton.”The price of reduced products at the beginning of last year was 40,000 yuan/ton, and the current price is 45,000 yuan/ton. The prices of other disperse dye intermediates are also mostly higher than the prices at the beginning of 2019. Enterprises are increasing their investment in safety, environmental protection and other aspects, and their expenses in energy, labor and other aspects are increasing. “
In addition, Junfang also pointed out that many large disperse dye companies are listed companies, and most medium-sized disperse dye companies are also applying for listing. Listed companies and quasi-listed companies have greater profit demands. She predicts : “Based on the current prices of disperse dyes, the profits of dye companies will decline significantly in 2020, and listed companies and quasi-listed companies will face greater pressure from declining performance. Due to the very high concentration of the disperse dye industry, the combined market share of Longsheng and Runtu is about 60%. Industries with high concentration, especially large leading companies, have greater market pricing power. When faced with downward pressure on performance, raising prices to increase profits is also a common decision-making behavior. It is recommended that printing and dyeing enterprises properly stock up before the Spring Festival. ”
However, Junfang also said that after the Spring Festival, once all disperse dye manufacturers in northern Jiangsu start production, they will contribute 100,000 tons/year of production capacity. By then, disperse dye prices are likely to peak Falling back.</p
