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

In 2020, due to the serious impact of the new coronavirus pneumonia epidemic, the operation of China's chemical fiber industry faces increased risks and tests, and the economic benefits and operation quality of the industry have dropped significantly year-on-year.

During the year, the collapse of international crude oil prices coupled with low market demand made the overall price of China's chemical fiber market run at a low level. The overseas epidemic situation is grim, and the number of China's import and export of chemical fiber products has decreased significantly.

However, with the improvement of the epidemic situation in China, the whole industrial chain has accelerated the resumption of work and production, the textile terminal demand has gradually picked up, the economic operation of the chemical fiber industry has also shown a rebound, the production growth rate has risen steadily, and the decline of the main economic operation indicators has continued to narrow.

However, on the whole, we still have to realize that the pressure on the production and operation of industry enterprises has not been completely alleviated, the development confidence is still insufficient, and the efficiency and investment have not reversed the negative growth trend.

Operation of the industry in 2020

The total production of chemical fiber increased by 3.4% year-on-year

From the perspective of the whole year of 2020, affected by the new coronavirus pneumonia epidemic, the load rate of China's chemical fiber industry fell sharply in the first quarter, and then gradually recovered, and the second half of the year was basically unchanged from the same period of last year.

By product, the operating rate of polyester staple fiber industry gradually recovered from the minimum operating rate of 52% on February 7, 2020; From late April to November, the operating rate has remained above 86%; Starting in December, the operating rate has fallen slightly, but it is still above 85%.

The operating rate of the polyester filament industry gradually recovered from the minimum operating rate of 58% on February 14, 2020; From May to December, the operating rate has remained at around 80%.

The operating rate of the viscose staple fiber industry dropped to 64% on February 14, 2020; It has remained at around 60% since then; An upward trend appeared at the end of September; It rose to 72% at the end of October; The operating rate in the fourth quarter was basically maintained at about 75%.

From the total output point of view, in 2020, China's chemical fiber production is 60.251,200 tons, an increase of 3.4%.

Among them, the output of polyester, nylon, vinylon and spandex all achieved positive growth, increasing by 3.89%, 3.87%, 11.06% and 14.44% respectively. The output of viscose fiber and acrylic fiber showed negative growth, decreasing by 4.11% and 5.12% respectively.

Within the year, in terms of months, the year-on-year growth rate of China's chemical fiber production showed a rebound trend. Especially in the second half of the year, the production situation of chemical fiber enterprises continued to improve. From January to September, the year-on-year growth rate of chemical fiber production changed from negative to positive, and the year-on-year growth rate of 3.4% was achieved throughout the year.

Both imports and exports fell

In 2020, the number of chemical fiber imported by China is 759,000 tons, a decrease of 17.3%. In all chemical fiber product categories, except for the import of spandex increased by 5.16% year-on-year, the import of other major chemical fiber products declined year-on-year.

In 2020, the total export volume of China's chemical fiber products was 4.660,600 tons, down 7.92% year-on-year, but the export volume of polyester filament, viscotic staple fiber, spandex and acrylic fiber all achieved positive growth year-on-year.

The market price center of gravity is generally low

From the raw material side, in the first quarter of 2020, the decline in demand caused by the crude oil "price war" combined with the epidemic has caused a slump in international oil prices. Oil prices fell below zero in April for the first time in history. Then it begins to shake upwards to repair; It was basically stable in the third quarter. In early November, it gradually began to rise, OPEC+ crude oil production reduction policy and additional Saudi crude oil production reduction, the new US government implemented a large-scale economic stimulus plan and demand improvement and other multiple factors, favorable international oil prices continued to rise. But for the whole year, in 2020, international oil prices are much lower than in 2019.

Affected by the decline in raw material prices and lack of demand, throughout the year, the overall price center of gravity of China's chemical fiber market is significantly lower than in 2019. In the first quarter, with the collapse of international crude oil prices, China's chemical fiber products lost cost support. After that, with the repair of crude oil prices, China's chemical fiber market gradually stabilized, but the lack of demand is still the biggest problem facing the industry. In the third quarter, China's chemical fiber market performance was basically stable. Since mid-September, due to China's economic recovery, the "La Nina" phenomenon led to an increase in cold winter demand, the "double 11" order demand was started in advance, and textile orders in India and other places were significantly transferred to the Chinese market, China's chemical fiber market appeared "gold nine silver ten". After that, the market experienced a brief correction. At the end of the fourth quarter, the market has pushed up costs, good demand, low inventory, etc., coupled with the price of chemical fiber products throughout the year at a low level, corporate efficiency is poor, and even losses, the market has a strong rebound demand, the price of China's chemical fiber products began to rebound.

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.

Overall, in 2021, China's chemical fiber industry will continue to be in the recovery cycle, but the process will not be smooth, and market volatility may increase. In 2021, China's chemical fiber production, industry economic benefits and other operating indicators are expected to be significantly better than in 2020. However, due to the low base in the first half of 2020 and the continued recovery in the second half of the year, it is expected that the growth rate of various indicators in the industry will show a significant trend of high and low in 2021. In terms of exports, due to the risk of the epidemic in the global pandemic is reducing, the international textile and apparel market demand is recovering, international logistics is recovering rapidly, it is expected that the export volume of China's chemical fiber products will return to growth.

In the long run, the epidemic has accelerated the structural adjustment of China's chemical fiber industry, further promoted the supply-side structural reform of the industry, and also prompted enterprises to think more about how to layout and development in the future.

In the post-epidemic era, "innovation, safety and environmental protection" will become the focus of China's chemical fiber industry. Industries and enterprises should continue to strengthen independent innovation, integrate new materials and new technologies, grasp the trend of domestic consumption upgrading, constantly improve product quality and added value of science and technology, and explore new demand. To improve the level of intelligent manufacturing, through the implementation of intelligent manufacturing, integration of industrial chain data resources, to achieve the "Internet of everything." At the same time, industrial safety can not be ignored. At present, the raw materials of chemical fibers in China are highly dependent on petroleum resources, and the raw materials of recycled cellulose fibers are highly dependent on imports, which have certain industrial safety risks. In the field of environmental protection, China has put forward the goal of "reaching the peak of carbon emissions before 2030 and striving for carbon neutrality before 2060", which will further promote and accelerate the pace of green transformation and upgrading of the chemical fiber industry.