Analysis of economic operation of China's chemical fiber industry in 2020

The quality and efficiency of industry operation decreased significantly year-on-year

In 2020, the economic operation of China's chemical fiber industry has decreased significantly year-on-year. Data from the National Bureau of Statistics show that from January to December, the chemical fiber industry achieved a operating income of 798.42 billion yuan, down 10.41% year-on-year; The total profit was 26.348 billion yuan, down 15.06% year on year; The loss of the industry was 28.72%, and the loss of loss-making enterprises increased by 22.99% year-on-year. However, the economic operation situation improved quarter by quarter, among which, the year-on-year decline in total profits gradually narrowed, and the loss increase of loss-making enterprises fell significantly in the second half of the year.

However, from the perspective of market performance, during the year, the benefits of spandex, polyester staple fiber, polyester bottle chips and other products related to epidemic prevention materials were relatively good, and even short-term shortages occurred.

It is also worth noting that enterprises that implement the development model of "refining and chemical integration" have relatively bright business performance in 2020. Hengli Petrochemical, Rongsheng Petrochemical, Hengyi Petrochemical and other earlier to achieve upstream and downstream integration of the development of enterprises, in the process of coping with the current round of severe market situation, have shown a good competitive advantage and strong anti-risk ability.

For example, in 2020, Hengli Group's 20 million tons/year refining and chemical integration project achieved the first full year of operation, and maintained a low inventory, flexible operation, and smooth production and marketing trend during the year. Financial data show that in 2020, Hengli Petrochemical achieved operating income of 152.373 billion yuan, an increase of 51.19%; Net profit attributable to shareholders of listed companies was 13.462 billion yuan, up 34.28% year on year. The main reason why its operating performance can still achieve contrary growth under the impact of the epidemic includes that the refining and chemical integration project increased production by 5 months compared with 2019.

However, this part of the refining profits of listed companies may not be counted in the chemical fiber industry.

In 2020, the chemical fiber industry has a large operating pressure, and the main operating quality indicators have declined significantly compared with 2019, but they are gradually improving. Profitability declined, with an operating income margin of 3.3%, down 0.18 percentage points year-on-year. The development capacity was affected, and the growth rate of operating income fell by 14.41 percentage points year-on-year. Operating capacity was lower than in the same period of 2019, and the turnover of accounts receivable, finished goods, current assets, and total assets all declined year over year. The proportion of three expenses increased by 0.26 percentage points year-on-year.

Investment in fixed assets fell 19.4 per cent year-on-year

The new coronavirus epidemic combined with the downturn in industry prosperity, the willingness of enterprises to invest has declined, the scale of investment has been reduced, and the production capacity of some projects has been delayed. According to the National Bureau of Statistics, in 2020, the fixed asset investment in China's chemical fiber industry decreased by 19.4% year-on-year.

Industry operation outlook in 2021

The operating indicators will be significantly improved in 2021

The most difficult year 2020 is behind us. In 2021, the accelerated recovery of China's economy will provide a guarantee for the sustained recovery and steady development of the chemical fiber industry.

From the demand side, China and the global textile industry production will continue to consolidate the recovery of growth trend, China's textile and garment exports will continue to maintain growth momentum, the domestic consumer market will continue to pick up, which will provide growth momentum for the chemical fiber industry.

From the perspective of raw materials, with the gradual recovery of the world economy, it is expected that the price center of international oil prices in 2021 will be significantly higher than that in 2020, and China's chemical fiber market price will have certain support at the cost end. However, as oil prices continue to rise, global crude oil production is likely to increase, which will limit the upward height of international oil prices. In addition, in 2021, China's PX, PTA, ethylene glycol (MEG) is still in a high production expansion cycle, the contradiction of PX and MEG supply shortage in the domestic market will be alleviated, PTA supply will remain loose, which will hedge the cost support brought about by high oil prices to a certain extent, and the profits of the industrial chain will be transferred from the raw material end to the backward channel.

From the perspective of new production capacity in the industry, 2021 is still the production capacity of China's chemical fiber industry, especially the polyester polyester industry, and the contradiction between supply and demand will be highlighted in stages. It remains to be seen whether the increase in demand can effectively absorb the increase in capacity. Moreover, most of the new production capacity is concentrated in chemical fiber leading enterprises, which will cause the large-scale cost advantage of leading enterprises to further consolidate, and will intensify the formation of "crowding out effect" on other enterprises to a certain extent.