Ups & Downs for China’s Dye Industry While Protecting the Environment
Year:2018 ISSUE:7
COLUMN:FINE & SPECIALTY
Click:337    DateTime:Apr.09,2018


By Han Yongqi, Penglai Municipal Bureau of Economy and Information Technology

In 2017, the dye industry faced a number of difficulties in its development as environmental protection regulations became more stringent. However, the industry overcame various challenges to maintain smooth operation and rising prosperity.

Tighter environmental policies and rising prices

   The tightening of domestic environmental protection policies impacts the dye industry greatly. The prices of dyes kept rising in the year of 2017. Taking disperse dyestuffs as an example, the 2017 price increases were as high as 25%-37%, and the prices of disperse black dye ECT even hiked by 300%, reaching RMB40 000.
   In 2016, China’s total dyestuff capacity was 1.33 million t/a after a YoY increase of 5.6%, and there was basically no capacity added in 2017. Wastewater from traditional dyestuff plants was voluminous, and plants failing to meet the discharge standards were forced to shut down. Such care for the environment increases market prices, and benefits of this can be seen in some listed companies’ performance reports covering January to September 2017. Such a report from Zhejiang Longsheng shows that the company achieved operating income of RMB11.217 billion, a year-on-year increase of 23.16%, its net profit attributable to shareholders rose by 31.43% year-on-year to RMB1.872 billion, and the basic earnings per share was RMB0.5755. Zhejiang Runtu’s operating income grew 47.23% to RMB4.495 billion, and its net profit totaled RMB640 million, up 45.39%. Anoky Group’s operating revenue reached RMB1.048 billion, an increase of 50.78%, and net profit increased 10.59% to RMB72.63 million.

Robust demand and coexistence of opportunities and risks

   At present, China’s economy is still confronted with risks such as excess manufacturing capacity and a real estate market bubble, which are bound to affect the development of the dye industry and demand for dye. The unfavorable factors for the development of the dye industry in 2018 are as follows: rising costs have weakened the international competitiveness; a lack of innovative talent for green industrial development and low investment in innovation inhibit improvement of comprehensive innovation capabilities; and supply-side problems have led to shortages of high-end products.
   However, in 2018, given domestic and international economic conditions and other factors, the prosperity of China’s dyestuff industry will be sustained, and surges in both prices and trading volumes will be seen.

   Textiles

   The textile industry is the largest consumer of dyes. According to data from the National Bureau of Statistics, in the whole year of 2017, the added value of sizable textile enterprises increased by 4.0% year-on-year. China’s current development calls for accelerated urbanization. The growing numbers of consumers in cities and towns and continual upgrading of consumption structures will stimulate demand for textiles and clothing as well as window curtains and engineering fabrics. This is good news for the dyestuff industry.

   Printing and dyeing

   The printing and dyeing industry is a direct derivative of the dye industry, and its business conditions shape the development of the dye industry. At present, the overall status of the printing and dyeing industry is stable, with continuous growth, and export volumes to ASEAN and India are increasing, which is certainly favorable for the dye industry.

   Automobile decoration

   In 2017, the overall economic performance of the automobile industry was stable, and the major economic indicators grew rapidly. Main-business revenues and total profits were significantly higher than in the previous year. Under such circumstances, the market for automotive decorative fabrics will keep expanding. With the increasing number of car owners, demand for the automotive fabrics will keep growing and the market will prosper.

   Home textiles

   From January to October of 2017, the total main-business income of China’s 1 918 sizable home textile enterprises, calculated by the National Bureau of Statistics, was RMB240.39 billion, an increase of 7.93% year-on-year; of that, the domestic sales value was RMB185.75 billion, an increase of 8.76% year-on-year. The growth rates of main-business income and domestic sales increased by 4.47 and 4.56 percentage points YoY, respectively. Based on the experience of 2017, experts forecast the 2018 demand for dyestuffs in the home textile sector to be large, at least at the level of 2017. As the standard of living increases, sales of bags and suitcases increase significantly, promoting growing consumption of luggage fabrics.
   Stimulated by the development of downstream industries, demand for dyestuff will continue to rise in 2018, driving up market prices. However, negative factors also exist. For instance, declining real estate sales will impact the decoration and curtain fabrics industry, which might influence the dye industry. As the decline in the real estate market is likely to continue, growth of the textile production for decoration and curtains is expected to be affected, and the dye industry will not be spared.

Stay alert to both favorable prospects and problems

   In 2018, especially in the second half, the steady development of China’s textile printing and dyeing industry will ensure stable growth of demand for dyes. There are still many opportunities for the dye industry. There is room for demand growth; price drivers include environmental protection and other cost increases. Meanwhile, although the reduction of capacity has been effective, persistent problems such as overcapacity, cost-benefit issues and environmental protection are still prominent.
   At the same time, eliminating small-capacity plants did improve the supply structure. Industry leaders like Zhejiang Longsheng, Zhejiang Runtu and Jihua Group have controlled about 70% of the market of disperse dyes. In 2018, the supply of dyes will remain relatively tight due to increased costs and stringent environmental protection. With the arrival of spring, the usual peak season for dyes, the dye market will suffer from short supply. Prices will rise steadily.