Downstream demand recovery, chemical fiber industry ushered in a cycle reversal

Chemical fiber industry: domestic and foreign demand picks up, replenishment cycle continues, and the industry ushered in a cyclical boom reversal

With the industry's production expansion cycle nearing an end, the supply side has been building a bottom stage. In 2020, the epidemic has led to a substantial increase in downstream textile and garment export demand, and inventories have fallen to historic lows, and the industry has entered the replenishment cycle. The profitability of the main products has rebounded, the market attention of the chemical fiber industry has increased, the valuation has entered the repair stage, and the chemical fiber industry has recovered.

Polyester filament: downstream demand to drive industry prosperity continued to rebound

As the epidemic prevention and control has become normalized, the demand for the downstream textile and clothing industry has risen, the inventory has fallen to a historical low, the price spread has ushered in an upward inflection point in the "gold nine silver ten", and the profitability of the filament has continued to improve. It is expected that the growth rate of polyester filament production capacity will remain stable, the industry concentration is expected to continue to increase, and the improvement of supply and demand pattern is expected to drive the industry prosperity to continue to rise.

Spandex: supply and demand pattern ushered in improvement, low-cost leading ushered in development opportunities

Affected by the demand for epidemic prevention materials and the transfer of overseas demand to the country, the demand for spandex in 2020 has steadily increased, the inventory has continued to decline to a low level, and the price spread has risen to a historic high. With the spandex production cycle coming to an end, leading enterprises with low-cost advantages to complete capacity renewal and market grab, small and medium-sized capacity is gradually eliminated, and industry concentration continues to improve.

Viscose staple fiber: downstream demand continues to recover, capacity expansion is coming to an end, and the substitution effect is helping the industry pick up

The recovery of downstream order demand has led to the improvement of the profitability of the viscose industry, the industry destocking trend is obvious, and the price spread cycle has ushered in an inflection point. Considering the gap between domestic cotton supply and demand and low cotton inventory, the substitution effect is expected to promote the viscose price upward. In 2020, the downturn in the market led to the withdrawal of some small and medium-sized production capacity, and the industry concentration was further strengthened.

1, the downstream demand boom recovery, chemical fiber industry ushered in a cyclical boom reversal

After the supply-side reform in 2016, the effect of destocking was obvious, and the chemical fiber industry entered the stage of capital expenditure growth in the big cycle. At the end of 2019, the capital expenditure of the chemical fiber industry slowed down, the new production capacity was basically ended, and the industry supply bottomed out. Affected by the epidemic at home and abroad, at the beginning of 2020, the demand of the chemical fiber industry has dropped significantly, the inventory of chemical fiber finished products has accumulated, the profitability of main products has declined, and the valuation of the chemical fiber industry is at a historical low; In the second quarter, the domestic epidemic situation was gradually controlled, the epidemic situation abroad worsened, a large number of foreign orders were transferred into the country, the export demand of chemical fiber downstream textile and clothing increased significantly, the operating rate of domestic downstream enterprises increased, and the inventory continued to decline; 2020Q4 so far, with the gradual recovery of overseas demand, the demand of the chemical fiber industry continues to pick up, downstream enterprises take the initiative to replenish the stock, the profitability of the main products has rebounded, the market attention of the chemical fiber industry has increased, the valuation has entered the repair stage, and the cycle has continued to rise.

1.1, the production cycle of the chemical fiber industry is coming to an end, and the replenishment cycle is ushered in in 21 years

The cumulative fixed asset investment completed in the chemical industry is basically synchronized with the trend of the chemical product price index CCPI, and the prosperity of the chemical industry has gradually recovered since the second quarter of 20 years. Looking back at the trend of fixed capital investment and CCPI in the chemical industry in the past 8 years, it can be found that the capital expenditure of China's chemical industry is basically synchronized with the trend of CCPI. In July 2016, CCPI continued to decline and then rebounded. The cumulative amount of fixed asset investment completed in the chemical industry in August 2016 ushered in an upward inflection point. The sudden outbreak of COVID-19 in January 2020 dealt a major blow to the chemical industry, and the cumulative fixed investment completed in the chemical industry and CCPI fell to historic lows respectively. In the second quarter, the domestic economy entered a normal channel, the demand picked up significantly, and the fixed asset investment in the chemical industry and CCPI recovered steadily. The cumulative amount of fixed investment completed in the chemical industry in 2020 rebounded from -33% in February to -1.2% in December.