The first quarter of 2023 chemical fiber industry operation analysis

In terms of exports, in the context of the global economic downturn, consumption power and consumer confidence in major developed markets have been depressed. At this stage, the industry's foreign trade exports are still affected by factors such as weak demand and insufficient orders, and will continue to be under pressure for some time to come. According to Chinese customs data, in January-February, China's textile and garment exports were 43.31 billion US dollars, down 17.8 percent year-on-year. Among them, textile exports were 20.39 billion US dollars, down 21.7% year on year; Apparel exports were $22.92 billion, down 13.9 percent year on year.

(5) Economic benefits

According to the data of the National Bureau of Statistics, the operating income of the chemical fiber industry in January-February 2023 was 142.7 billion yuan, a decrease of 4.98% compared with the same period last year; The total profit was 81 million yuan, a decrease of 97.16% year-on-year; The loss of loss-making enterprises increased by 63.66% year-on-year, but decreased by 39.01 percentage points compared with the whole year of 2022; The loss was 44.61%. From the data point of view, the economic benefits of the industry is worrying, but as the previous analysis, the impact of the Spring Festival factors on the operation of the industry is larger than in previous years, and the impact of the high base and the high oscillation operation of the main raw materials of crude oil and chemical fiber in the same period last year, therefore, it is not necessary to over-interpret the decline in industry profitability based on the data of January-February.

(6) Fixed assets investment

Affected by the Spring Festival factor, superimposed on the high base of 2022, the industry fixed asset investment showed negative growth in January and February. According to the National Bureau of Statistics, the investment in fixed assets in the chemical fiber industry fell 5.7% year-on-year in January-February. However, it is understood that there are still more new capacity plans in 2023.

Figure 5 Change of fixed asset investment growth rate in chemical fiber industry since 2008

Second, the industry operation trend forecast and suggestions

The IMF expects that global economic growth will continue to slow in 2023 due to the long-term traumatic effects of the COVID-19 pandemic, the Russia-Ukraine conflict, and the drag on economic activity caused by monetary policy tightening. According to the latest forecast on April 11, the world economy is expected to grow 2.8% in 2023, while China's economy will grow 5.2%. The strong rebound of the Chinese economy has provided impetus to the world economic recovery. Data from the National Bureau of Statistics show that in February, the manufacturing purchasing managers' index (PMI), non-manufacturing business activity index and composite PMI output index were 51.9%, 58.2% and 57.0%, respectively, and the three major indexes were located in the expansion range for three consecutive months, and China's economic development is still stabilizing and recovering. However, it should also be noted that in the process of development, enterprises still face the outstanding problems of insufficient market demand, tight funds and high operating costs, and the foundation of China's economic recovery needs to be further consolidated.

Back to the industry, the current seasonal weakening of terminal demand has been clear, and high-priced raw materials are likely to make new orders more cautious, leading to an acceleration of weaker demand. Looking forward to the whole year, although the textile and garment export pressure is more significant, but domestic sales are expected to maintain a sustained recovery trend, at the same time, chemical fiber exports will still maintain a rapid growth rate, it is expected that the chemical fiber industry operating pressure in the second half of the year will be eased.

China Chemical Fiber Association calls on the industry enterprises to strengthen confidence, actively respond, unite, tide over the difficulties, promote the stable, healthy and orderly development of the industry, and put forward the following suggestions.

1. Strengthen industry self-discipline

The imbalance between supply and demand in some areas of the chemical fiber industry has become a prominent contradiction, before the effective growth of demand, industry enterprises should focus on controlling new production capacity, avoid further escalation of the contradiction between supply and demand, in order to maintain the sustainable and stable development of the chemical fiber industry. The industry will also study and issue investment warnings to further guide enterprises to invest prudently and promote the sustainable development of the industry.

2. Seize opportunities in domestic demand

Affected by the epidemic and other factors, the contribution rate of domestic consumption to economic growth in 2020 and 2022 will fluctuate, and restoring and expanding consumption bears on the overall situation of development. The report to the 20th National Congress of the Communist Party of China pointed out that efforts should be made to expand domestic demand and enhance the basic role of consumption in economic development. According to the Outline of the Strategic Plan for Expanding Domestic Demand (2022-2035), we will comprehensively promote consumption and accelerate the upgrading of consumption. According to the 2023 government Work report, we will focus on expanding domestic demand and give priority to restoring and expanding consumption. Previously, the Ministry of Commerce positioned 2023 as a "consumption boost year" and will also introduce a series of measures to boost consumption. Chemical fiber industry enterprises should seize the favorable opportunity to accelerate the supply side reform, implement the "three products" strategy, strengthen technological innovation and product innovation, lead the consumption trend, and creatively meet the increasing diversification and personalized market consumption.