Chemical Fibers: Good Development in H1, Operation Stabilization in H2

China Chemical Fibers Association

In the first half of this year, the chemical fiber industry maintained its good momentum. With the textile market warming up, demand for chemical fiber has improved, and the overall operating rate of the industry has increased YoY. In addition, driven by crude oil prices, the average price of chemical fiber products is higher than in the same period of last year.

Table 1   Chemical fiber output, Jan-Jun 2017 (kt)

    Jan.-Jun.    The same period of last year    YoY growth (%)
Chemical fiber    25 592.7    24 415.8    4.82
Artificial fiber    2 249.1    2 034.9    10.53
Viscose staple fiber    1 853.0    1 660.8    11.57
Viscose filament    89.0    84.1    5.80
Acetate filament    181.0    178.0    1.70
Synthetic fiber    23 311.0    22 352.1    4.29
Polyester fiber    20 357.6    19 652.1    3.59
Polyamide fiber    1 796.2    1 612.2    11.41
Acrylic fiber    393.0    380.6    3.27
Polyvinyl alcohol fiber    46.1    42.4    8.93
Polypropylene fiber    145.3    132.6    9.56
Spandex    296.9    256.2    15.88



Prices will rise

According to the National Bureau of Statistics, from January. to June, chemical fiber output was 25 592 700 tons, up 4.82% YoY. Production of polyester fiber was 20 357 600 tons, the year on year growth of 3.59%; the production of polyamide fiber was 1 796 200 tons, up 11.41% YoY; production of artificial fiber was 2 249 100 tons, up 10.53% YoY. See Table 1 for details.
In the first half of the year, the overall operating rate of chemical fiber industry was higher than in the same period of last year, and a high load was still maintained during months that are usually slower (May and June), showing that demand was not low in slack seasons. It is especially noteworthy that the average load of polyester filament makers was maintained at a high level of nearly 80%, inventories were low, and production and marketing went better. The load in direct spinning and slice spinning enterprises was up somewhat YoY; the average load of direct spinning firms exceeded 85% during June and July.
By the transmission effect of bulk commodity prices, the average price of the main chemical fiber products in the first half year rose by 20%~40% compared to the same period of last year. Affected by fluctuations in crude oil prices, PTA futures long and short game, changes in supply and demand, and other factors, the price of polyester products showed two significant ups and downs. The prices of polyamide fiber rose and fell, almost following the prices of the raw material CPL – the average price in the first half of this year was 40% higher than the same period of last year. The price of viscose staple fiber was affected by the overall trend of chemical fiber and raw materials, also rose first and then fell. During June and July, due to a recovery of demand, environmental pressure led to a decline in effective production capacity, supply and demand reversal.
Although the prices of chemical fiber rose significantly since the second half of last year, the prices of downstream products have declined steadily since 2010, falling even more than oil prices. The rise since the second half of last year was partly because of rising costs caused by rising bulk commodity prices. On the other hand, it was also corrected the continue decline of prices of chemical fiber and returned to the value of chemical fiber, and now the price of chemical fiber is still relatively low.

Investment growth or rebound

During January to June, China imported 437 800 tons of chemical fiber, an increase of 6.56% YoY, indicating that a certain rigid demand for imported products was maintained in China. Imports of acrylic fiber and spandex declined slightly and other products imports increased in different degrees. Viscose staple fiber was still the largest variety of imports, and imported products are mainly modal fiber; the largest increase in imports was polyester filament, up 10.36%. See Table 2 for details.
With the geographic redistribution of the global textile industry speeding up, demand for chemical fiber products has increased. In the first half of this year, China directly exported 2 090 kt of chemical fibers, an increase of 5.49% YoY, and the total for this year is expected to exceed 4 000 kt. The top five export destinations were Turkey, the United States, Pakistan, Vietnam and Egypt. Among these, the export of polyester filament to Egypt increased rapidly.
With the terminal demand picking up, the operating rate of major downstream chemical fiber industries such as texturing, weaving, knitting, increased over the first half of last year –  especially texturing – while circular knitting slowed down. In recent years, the amount of weaving of draw textured yarn (DTY) production is about 65%. In particular, more than 75% of DTY is used in producing warp knitted and weft knitted fabrics.
In the first half of this year, China’s chemical fiber industry completed actual fixed asset investment of RMB63.064 billion, an increase of 20.3% YoY – the growth rate rebounded. The polyester industry increased by 45.11%, the artificial fiber industry increased by 27.7%, and the growth rate of polyamide fiber industry fell slightly from the previous few years.

Industry development

Raw materials

Purified terephthalic acid (PTA): In 2017, industry players should pay close attention to 900 kt/a restarted by Peng Wei Petrochemical in February. In addition, there are plans to restart Xianglu (the production capacity of 4 500 kt/a) and Far East (the production capacity of 1 400 kt/a). Therefore, the supply of PTA is expected to increase.
Ethylene glycol (MEG): Some polyester enterprises have begun to gradually accept the products of coal-to-ethylene glycol (EG), and the blending ratio has improved. In 2017, the start-up load of ethylene glycol increased significantly, and the output increased significantly compared to that of last year, which alleviated the shortage of ethylene glycol in the polyester industry to some extent.
Caprolactam (CPL): the peak of capacity expansion of CPL is in 2017, and the new capacity will reach 1 million t/a, adding more than 33% to the existing capacity, so CPL prices are expected to decline.

New capacity

In 2017, the pressure of expanding capacity to make chemical fiber still exists. New polyester capacity is 3 800 kt/a, mainly bottle and polyester filament. New viscose fiber capacity is 300 to 500 kt/a, and most is expected to be put into production at the end of this year, which will have little impact on market figures for this year. New capacity is arriving more slowly in the polyamide sector, and that sector’s operations will improve.
With the pace of industry mergers and acquisitions accelerating, concentration is greater. In the last three years, the polyester capacity purchased and restructured has been up to 2 380 kt/a. With the improvement of the market, restart of this capacity is accelerating, which will put some pressure on the market.


Table 2   Import & export of chemical fiber products, Jan-Jun 2017 (tons)

    Import    YoY (%)    Export    YoY (%)
Chemical fiber    437 797.7    6.56    2 090 909.1    5.49
Polyester filament    63 357.7    10.36    1 057 189.5    2.48
Polyester staple fiber    59 603.6    7.63    526 499.2    10.57
Polyamide filament    55 248.6    2.23    104 120.0    10.65
Acrylic fiber    89 164.7    -0.97    25 676.4    128.24
Viscose filament    2 305.9    5.19    40 608.8    9.36
Viscose staple fiber    97 825.9    1.39    173 795.4    -0.29
Spandex    13 019.4    -0.74    28 377.4    -2.56



Environmental protection

In 2017, when the environmental protection was carried out, the relevant laws and regulations of the state were continually improved and implemented, and the textile industry suffered a lot of tests. For the recycled fiber industry, in 2017, the ban on waste orders issued will have a huge impact on the recycled fiber industry.
In the second half of the year, the price of crude oil will fluctuate at a low level of US$50 per barrel; the supply of PTA, EG, CPL and other major raw materials is expected to increase; new capacity and restarted capacity will cause greater pressure on the market; environmental rectification will affect demand in downstream sectors. Domestic demand for textiles will increase steadily, and external demand will continue to pick up, especially in the Belt and Road and African markets. The chemical fiber market is expected to be stable in the second half year compared to the first half year, but the price range and profitability of the main products are lower than in the first half. The quality and efficiency of chemical fiber industry are better than last year.