Chemical Fiber Industry: Basic Operation Situation In 2023 And Prospect In 2024

The year 2023 is the first year to fully implement the spirit of the 20th National Congress of the Communist Party of China and promote the new journey of Chinese style modernization. It is also the year when the international geopolitical situation changes and the global economy moves forward difficultly. In 2023, China's economy will recover and develop, showing a rising trend, and supply and demand will steadily improve, providing important basic conditions and active support for the smooth operation and development of the textile chemical fiber industry chain. Under this background, the annual economic operation of the chemical fiber industry shows a positive trend: first, the industry production and marketing are basically stable, and the market is relatively stable; Second, the export of chemical fiber has maintained a growth trend, and the export volume has reached a record high; Third, the operation of the industry has gradually improved month on month, especially in the second half of the year, the benefits have improved significantly; Fourth, the industry of high-performance fibers and bio based fibers has continued to develop steadily.

　　 01 Basic situation of chemical fiber industry operation in 2023

　　 （1） Increase in production growth and normal inventory level

In 2023, the growth rate of chemical fiber output will be higher than that in 2022. On the one hand, due to market conditions, some of the devices originally planned to be put into production in 2022 in the industry will be postponed to 2023, which will enable the centralized production in 2023. On the other hand, the overall starting load of the industry was higher than that of the same period last year. Taking direct spinning polyester filament as an example, the first quarter was greatly affected by the Spring Festival, with an average starting load of about 67%; The average starting load in the second quarter is about 84%; 3、 The average starting load in the fourth quarter is about 90%; The annual average starting load is about 10 percentage points higher than that in 2022.

According to the statistics of China Chemical Fiber Association, the output of chemical fiber in 2023 will be 68.72 million tons, with a year-on-year growth of 8.5% (Table 1). Among them, Lyocell fiber output was 336000 tons, a significant increase of 138.3% year on year; The output of spandex is 960000 tons, up 11.6% year on year; The output of polyester fiber was 57.02 million tons, up 8.7% year on year.

Table 1 Completion of China's Chemical Fiber Output in 2023

In the case of high production and start-up in the industry, the overall inventory of chemical fiber is still at a normal level. Taking polyester POY as an example, the annual average inventory is about 15 days, down 11 days from 2022, especially from June to September, the average inventory is less than 15 days.

　　 （2） The domestic demand is gradually warming up, and the external demand pressure of the terminal is obvious

The high growth of the supply side cannot be separated from the support of the demand side. Benefiting from the recovery of the social scene, the domestic market demand of the textile industry will be more resilient in 2023, and the domestic textile and clothing retail will be significantly restored. According to the data of the National Bureau of Statistics, from January to December, the retail sales of clothing, shoes and hats, knitwear and textiles of units above the designated size increased by 12.9% year on year, a sharp increase of 19.4 percentage points over 2022. The overall retail scale exceeded the level of 2019, and was significantly better than the overall level of retail sales of consumer goods. At the same time, the growth rate of online retail achieved a good recovery. In 2023, the retail sales of online apparel goods nationwide increased by 10.8% year on year, 7.3 percentage points higher than that in 2022.

Influenced by factors such as shrinking overseas demand and rising trade environment risks, the export pressure of China's textile industry will increase significantly in 2023, but the industry's development resilience will continue to show in the field of foreign trade. Exports to some markets of the "Belt and Road" will achieve good growth, driving the decline of total exports of textiles and clothing to gradually narrow. According to the data of China Customs Express, China's textile and clothing exports in 2023 totaled US $293.64 billion, a year-on-year decrease of 8.1%, and the growth rate dropped 10.6 percentage points from 2022, but the cumulative decline has gradually narrowed since September. Among the main export products, the export volume of textiles (textile yarns, fabrics and finished products) was US $134.5 billion, a year-on-year decrease of 8.3%; The clothing export volume was US $159.14 billion, a year-on-year decrease of 7.8%. Among the major export markets, China's textile and clothing exports to the United States, the European Union, Japan and other markets have decreased compared with the previous year, while its exports to Turkey, Russia and other countries along the "Belt and Road" have increased steadily.

On the whole, the terminal demand has improved compared with 2022, driving the direct downstream demand of chemical fiber better than the same period in 2022. From the perspective of the operating rate of major downstream chemical fiber industries (texturing, weaving machines, polyester yarn), they are all at a relatively high level in recent years. From the perspective of light textile city turnover, it is also slightly better than the same period in 2022, especially after September, the turnover has significantly increased.

　　 （3） The export keeps growing and the export volume reaches a record high

In recent years, the division of labor in the global textile industry has continued to deepen, and the front end of the industrial chain and intermediate product trade have become more active, reflecting the deepening integration of the industrial chain supply chain. China's chemical fiber industry is the core participant in the international textile supply chain. According to the statistics of China Customs, the export volume of chemical fiber in 2023 will be 6.5073 million tons, with a year-on-year increase of 15.08% (Table 2), 6.32 percentage points higher than that in 2022; The export accounted for 9.47%, an increase of 0.76 percentage points over 2022. Among them, polyester filament and polyester staple fiber drive the export growth of chemical fiber, with year-on-year growth of more than 20%. For example, the monthly average export of polyester staple fiber is 100000 tons, far higher than the level of the same period in previous years. In terms of export destinations, India, Turkey, Vietnam, Pakistan, Egypt and Brazil rank in the top six, and the export market is concentrated in emerging markets with rapid development of the textile industry. Among them, 702600 tons were exported to India, up 45.49% year on year, accounting for more than 10% of exports; 628000 tons were exported to Turkey, up 30.54% year on year, accounting for 9.65%; 609500 tons were exported to Vietnam, up 12.73% year on year, accounting for 9.37%.

Table 2 Import and export of main chemical fiber products in 2023

　　 （4） The price fluctuation is weakened and the market is relatively stable

In 2023, the price center of crude oil is lower than that in 2022, and the fluctuation is relatively stable (Figure 1). On the whole, the crude oil price in the first half of the year basically remained at 70~80 US dollars/barrel, which was affected by the US and Europe banking crisis, OPEC+production reduction, the US Federal Reserve raising interest rates, Europe and the United States travel demand peak season and other factors; In the third quarter, affected by the delay of macro interest rate increase and Saudi Arabia's production reduction, the crude oil price started to rise, with an increase of 32.62%, and exceeded 90 dollars/barrel in the middle and late September; After October, the price of crude oil fluctuated and fell to about US $70/barrel at the end of the year.

　　 Source: China Fiber Network

Figure 1 WTI Oil Price Trend from 2022 to February 2024

PTA and chemical fiber prices basically follow the trend of crude oil prices, but the rise and fall is slower than that of crude oil (Figure 2). Especially in the third quarter, crude oil prices rose significantly. PTA and chemical fiber prices rose only by about 10%, with limited increases. On the whole, the price of chemical fiber fluctuated steadily. Take polyester as an example, the annual price difference does not exceed 1000 yuan/ton. The POY price at the end of the year was about 7580 yuan/ton, up about 390 yuan/ton from the beginning of the year, or 5.4%.

　　 Source: China Fiber Network

Figure 2 Price Trend of Polyester and Its Raw Materials from 2022 to February 2024

　　 （5） Revenue keeps growing and benefit improves month on month

In 2023, the economic benefit indicators of the chemical fiber industry will show a positive trend. According to the National Bureau of Statistics, the operating income of the chemical fiber industry was 1097.526 billion yuan, up 6.75% year on year; Since August, the cumulative year-on-year growth rate has become positive. The total profit was 27.073 billion yuan, up 43.74% year on year. Since October, the cumulative year-on-year growth rate has become positive; On the one hand, the industry's economic operation has greatly improved in the second half of the year, and on the other hand, it is largely due to the low base in the fourth quarter of 2022. The chemical fiber industry contributed about 15.7% of the profits to the whole textile industry, an increase of 4 percentage points over 2022; The industry's loss area was 25.52%, 6.41 percentage points lower than that in 2022, and the loss amount of loss making enterprises decreased 35.38% year on year (Table 3).

In terms of industries, the polyester, nylon, acrylic and spandex industries respectively contributed about 39%, 19%, 1% and 5% of the total profits of chemical fibers, of which the total profits of the polyester industry increased significantly. In terms of products, the profits of polyester filaments showed a trend of gradual repair, and the poor processing of polyester staple fibers maintained horizontally, which was less beneficial than that of polyester filaments; The gross profit of the acrylic fiber industry declined significantly, mainly because the price of raw acrylonitrile rose in the second half of the year.

Table 3 Economic benefits of chemical fiber and related industries in 2023

　　 （6） Investment in fixed assets declined and production capacity grew inertia

According to the data of the National Bureau of Statistics, the fixed asset investment in the chemical fiber industry will decline 9.80% year on year in 2023 (Figure 3). However, from the perspective of the actual new capacity, 2023 is still a period of concentrated investment, and the chemical fiber industry's capacity will grow inertia. The decrease in fixed asset investment means that the current production expansion cycle of the chemical fiber industry is over. In the future, the pressure on the industry's new capacity will be eased.

　　 Source: National Bureau of Statistics

Figure 3 Change of fixed asset investment growth in chemical fiber industry from 2008 to 2023

　 　 02 Prospect of chemical fiber industry in 2024

In 2023, in the face of multiple difficult challenges such as the increase of adverse factors in the international political and economic environment, and the superposition of domestic cyclical and structural contradictions, China's macro-control policy "combination boxing" is effective, the economy continues to recover and improve, and high-quality development is solidly promoted. The Central Economic Work Conference requires that in 2024, we should adhere to the principle of seeking progress while maintaining stability, promoting stability through progress, building up first and breaking down later, and develop more policies that are conducive to stabilizing expectations, stabilizing growth, and stabilizing employment. We should actively make progress in transforming the mode, adjusting the structure, improving quality, and increasing benefits, and constantly consolidate the foundation for stability and improvement. It is expected that with the continuous recovery of China's economy, the continuous improvement of the employment situation, the steady improvement and optimization of market supply, and the effective promotion of consumption policies, the foundation for the recovery and expansion of consumption will continue to be consolidated, which will support the continuous recovery of China's chemical fiber industry.

Since the Spring Festival, various chemical fiber varieties have accumulated stocks to varying degrees. The superposition of rainy and snowy weather after the festival has led to a slow recovery pace of the terminal. The sales of spring clothing have also been delayed, and the market rhythm is expected to be adjusted. However, in 2024, in terms of domestic sales, China's textile and clothing consumption demand is still resilient. At the same time, the rich consumption circles, the continuous expansion of industrial textile applications, and the endless emergence of new online retail formats will also continue to generate new consumption demand; In terms of export, with the change of international division of labor in China's textile industry, the foreign trade structure of various major products in the industrial chain is being adjusted and optimized. It is expected that the export share of chemical fiber and its products will still show a good growth trend; In terms of supply, the pressure on new capacity will be eased, which will help avoid further escalation of the supply and demand contradiction. However, the release of new capacity accumulated in the past two years still needs to be digested by the market. It is suggested that enterprises should continue to do a good job of self-discipline in the industry.

In addition, the uncertainty of crude oil price will still have an important impact on the economic operation of chemical fiber. In the context of weak global economic growth momentum, crude oil demand will remain under pressure, while the supply side is still relatively abundant, but OPEC+probably will continue to control output to maintain oil prices. From the financial perspective, the Federal Reserve is more likely to cut interest rates, which is conducive to supporting oil prices. In general, the global energy market is seeking a balance in the process of deep adjustment. In 2024, we still need to pay attention to the changes in the geographical situation, the process of the Federal Reserve's interest rate reduction, the US presidential election and other factors that may cause significant fluctuations in international oil prices.

2024 is a key year to achieve the goals and tasks of the 14th Five Year Plan. The Central Economic Work Conference listed "leading the construction of a modern industrial system with scientific and technological innovation" as the top of the nine key tasks in 2024, and proposed to promote industrial innovation with scientific and technological innovation, especially with disruptive technologies and cutting-edge technologies to promote new industries, new models, new drivers, and develop new quality productivity. The industry should unify its understanding and action to the decisions and deployment of the Party Central Committee, accelerate the development of new quality productivity, and build a modern textile and chemical fiber industrial system with high quality. For example, focusing on cutting-edge technology, functionality, general health, intelligent wear, biological sources, high-performance fibers, key equipment, etc., strengthen technological innovation, product innovation, and expand market demand; Accelerate the application of digital technology, gradually build enterprise intelligent workshop and intelligent factory system, and accelerate the construction of new industrial structure through industrial Internet; Focusing on energy conservation and emission reduction, green energy, recycling, degradability, low-carbon technology, etc., actively explore the sustainable development model, promote the construction of green manufacturing system, guide green consumption, and help the "dual carbon" strategy.

(Source: China Chemical Fiber Industry Association)