China Chemical Fibers Association

Driven by supply-side structural reform, the chemical fiber industry ran steadily and well in 2017. The chemical fiber industry accelerated the elimination of backwardness as well as merger and reorganization. The industry increasingly concentrated; the overall capital construction rate of the industry is further promoted, inventories are kept low, product prices fluctuate in response to raw material cost, the quality of the industry is obviously improved and profits are greatly increased.

Production

   In 2017, the output of chemical fiber was 49.1955 million tons, an increase of 4.97% YoY (Table 1).

 Table 1   China’s output of chemical fiber in 2017   (kt)

   In 2017, the overall construction rate of the chemical fiber industry was better than in the previous year, especially in the polyester industry. Now, the construction rate of polyamide industry continued to increase, and the average operating rate of the year was about 70%. Viscose staple fiber production is significantly affected by environmental policy, so operating rate slightly declined. Viscose filament makers averaged a high operating rate of 95%. Due to factors such as supply and demand changes, and environmental protection enforcement, the operating rate of spandex makers fluctuates greatly. The acrylic fiber industry has lost lot of money due to the high price of raw acrylonitrile, so industry operations have been greatly reduced.

Price

   In 2017, the global economic recovery and the steady growth of China's economy have led to growing demand for chemical fiber products. Supply side reform has improved upon structural flaws in the industry. Rising international oil prices have supported product prices in the chemical fiber industry. The prices of chemical fiber market are higher than in 2016. Prices of the main products have been rising in varying degrees.

Stock

   In 2017, main-product inventories of chemical fibers first increased and then decreased. At the beginning of the year, the price of chemical fiber products continued the rise of the fourth quarter of 2016, leading to a gradual accumulation of stock. After April, sales improved, and inventories gradually dropped; at the same time, prices continued to rise, motivating enterprises to run at high load, and inventories increased in the fourth quarter.

Foreign trade

   In 2017, 916.8 kt of chemical fiber was imported, an increase of 100 kt or 13.11% over 2016. The import volume of viscose staple was largest, growing to 207.4 kt, an increase of 5.68% YoY, compensating for low domestic production of Lyocell fiber. Polyester staple fiber volume increased most, up by 29%. This was related to reduced import of solid waste and the consequent decline of domestic regenerated textile production. Imports of other fibers also increased to varying degrees over the same period of last year.
   In 2017, China exported 4 million tons of chemical fiber products, or 8.13% of its output. Export products are still dominated by polyester filament and polyester staple fiber, accounting for 50.47% and 25.15% of the total export volume respectively. The export of acrylic fiber increased 51.83%. In 2017, the export value of chemical fibers increased by 13.51%, which was 10.48 percentage points higher than the volume increase, and the growth of export volume slowed.

Investment

   In 2017, the chemical fiber industry actually completed the investment of RMB133 billion for fixed assets, an increase of 19.2% YoY, 18.86 percentage points higher than in 2016; especially in the polyester industry and man-made fiber industry, where the investment growth rate was as high as 54.49% and 27.79%.

Qualitative effect

   In 2017 the main business income in the chemical fiber industry was RMB790.582 billion, a year-on-year increase of 15.69%, and a total profit of RMB44.495 billion had been achieved, a year-on-year increase of 38.30%. The profit growth rate increased by 18.44 percentage points over 2016. The industry lost 13.02%, down 3.25 percentage points compared to the same period last year, and the deficit of unprofitable companies also decreased by 41.29%.
   The chemical fiber industry entered an adjustment cycle in 2012, when the profit rate fell to a low level. The industry continued to promote structural adjustment and industrial upgrading as well as to build core competitiveness. The profit rate has gradually increased since 2012. However, the recovery of the profit margin will promote the enthusiasm of the industry to invest in fixed assets, which emerged in 2017. Controlling the rational and orderly growth of production capacity and continuing to adjust the industrial structure will be the keys to the future development of the industry.

Forecast for 2018

   In 2018, China’s environmental protection enforcement is more severe, and it impacts the chemical fiber industry. On one hand, it will accelerate elimination of backward production capacity; on the other hand, it may lead to the price rise of some auxiliary materials and raw materials, resulting in increased cost; the prohibition of foreign waste imports may continue to increase the raw material gap in the regeneration industry.
   Demand is believed to be growing steadily in 2018. Crude oil may be the most important factor in the pricing of chemical fibers in the future. Environmental protection is a potential factor affecting the viscose fiber market. The crude oil market in 2018 is unlikely to increase steadily as it did in 2017. It is expected that volatility will increase, and the possibility of turbulence will not be ruled out. In addition, new capacity for making polyester and viscose staple fiber will weaken the supply and demand structure. With the restart of shut-down capacity and the release of new capacity, the PTA supply is looser than it was in 2017. With the increase of investment, how long can we maintain the present good business conditions of China’s chemical fiber industry? It is forecast that in 2018, the growth rate of chemical fiber production is going to turn out to be about 5%, the export volume is further expanded and profitability continues to grow, but the growth rate will fall sharply due to a high base number and market forces.