In the first half of this year, affected by the global spread of the new crown pneumonia epidemic, terminal demand has shrunk sharply, resulting in weak domestic and foreign dyestuff markets, falling prices, and continuous corporate losses. In the post-epidemic era, where will the dye industry go? Industry insiders suggest that while actively exploring market opportunities, dye companies should carefully maintain low-speed operations and strengthen their internal skills to smoothly pass difficult times.
Outbreak demand shrinks
“The outbreak of the new crown pneumonia epidemic this year has a greater impact on the global dye industry, and the demand for dyes at home and abroad is seriously insufficient. From the current point of view, there is no obvious sign of improvement on the dye demand side.” said Cheng Jintao, deputy secretary general of the Asian Dyestuff Industry Federation.
It is understood that textile chemicals account for more than 80% of the total consumption of dyes and are the main application areas of dyes. After the outbreak, clothing products have become the object of consumers to reduce expenditure. The results of the recent ITU’s fourth global impact survey of the epidemic indicated that clothing orders worldwide have fallen by more than 40% on average. Among them, the proportion of cancellations and delays in Southeast Asia is about 30%, and the proportion in South America is as high as 55%.
“Although domestic economic activities are gradually recovering, it will take time for the consumer demand for textiles and clothing to recover. At the same time, the export situation of printing and dyeing products is still grim because the foreign epidemic situation has not shown any signs of improvement.” Vice President and Secretary-General of China Printing and Dyeing Industry Association Lin Lin said.
According to statistics from China Customs, from January to June this year, my country’s exports of eight major categories of printing and dyeing products were 9.695 billion meters, a year-on-year decrease of 25.45%; the export value was US$9.493 billion, a year-on-year decrease of 28.91%; the average export unit price was US$0.98/meter, a year-on-year decrease of 4.64 %.
Lin Lin believes that the epidemic is expected to continue for a long time, and the dye market is still facing the problem of insufficient demand, which will directly or indirectly affect more than 1/3 of the industry’s output.
Declining prices, business losses
The direct consequence of insufficient demand is the decline in product prices and the decline in corporate efficiency.
Take the reactive dyes market as an example. Since March, prices have continued to decline. Among them, reactive black WNN dropped from an average price of 22,000 to 23,000 yuan in March (ton price, the same below) to an average price of 18,000 to 18,500 yuan in July, a decrease of 18.2% to 19.6%. The current price has hit a 10-year low, and the volume of transactions has declined, and the phenomenon of traders’ rejection of goods has increased.
“At present, most of the reactive dye companies are losing money, and there is an internal demand for appropriate increases to reduce losses. However, affected by sluggish demand and overcapacity, it is expected that the price of reactive dyes in the short-term will remain in the low-to-mid range.” Xu, chairman of the colorful cloud e-commerce platform Changjin said.
Cheng Jintao said that the scale of my country’s dye exports is relatively large, and there are obvious differences in domestic and foreign products. The weak international market and insufficient growth momentum for domestic demand have further increased the difficulty for export companies to resell to the domestic market. As a result, there have been problems of insufficient orders, overstocking, and shortage of funds. Recently, many dyestuff companies have made low-price shipments in order to recover funds, further squeezing corporate revenue.
Different regional trends
Regarding the later industry trends, Cheng Jintao predicts that in the absence of a substantial increase in the total international demand, the production of the dye industry will maintain the current level, but the performance will be different in different countries and regions. Specifically, the output in areas with mature industrial development will drop slightly and continue to develop towards high-end products; areas with rapid industrial development will continue to maintain a growth trend and cause relatively greater pressure on other areas.
It is worth noting that the export situation of my country’s eight major categories of printing and dyeing products has improved recently, which may bring certain support to the dye market. From January to June, the export volume and export value of my country’s eight major categories of printing and dyeing products to countries along the “Belt and Road” fell by more than 20% year-on-year, but the declines were 0.9 and 0.64 percentage points lower than those from January to May, respectively; The export volume of serious countries such as the United States and the European Union both fell by more than 30% year-on-year, but the decline was narrowed by 2.27 and 1.08 percentage points from January to May.
In addition, the country has introduced policies to promote economic development during the epidemic, such as reducing restrictions on the industry, lowering corporate taxes and fees, and encouraging the expansion of export markets to promote the release of domestic demand; foreign countries, especially India, where production is gradually increasing, The production capacity of dyestuffs has also been greatly affected during the epidemic, and the supply of production capacity may be tightened. This will create a short-term vacuum zone in some foreign markets, which is also a short-term positive factor for domestic companies.
“While actively exploring market opportunities, companies in the dye industry should be cautious to maintain low-speed operations and smoothly pass through this relatively difficult period. In terms of policies, dye companies should pay more attention to various policies issued by the central and local governments and make full use of them. Companies in the northern region that have stopped production due to environmental safety reasons must actively strive for resumption of production. In terms of production, dye companies must do a good job in technical transformation and training during the shutdown period, and qualified companies should appropriately reserve raw materials and products, and pay attention to the operating conditions of customers , To prevent risks and pay attention to the safety of funds.” Cheng Jintao said. China Chemical Industry News
Post time: Aug-31-2020