This year or will significantly drag down the entire polyester industry chain!

Driven by the upgrading of environmental protection and terminal, since 2017, the polyester industry has stepped into the boom cycle, and the capacity expansion has accelerated, and the industry concentration has been greatly improved. In 2019, the original planned new polyester production capacity is 5.3 million tons, and the new production capacity is mainly concentrated in Tongkun, xinfengming, Hengyi and other large enterprises to expand market share and enhance industry concentration. However, in the upstream raw material prices gradually lower, as well as the terminal weaving grey market downturn drag, this year all kinds of polyester products prices are showing a downward trend throughout the year. Due to the unsynchronized pace of industrial chain expansion and the intensified polyester competition along with capacity expansion, the raw materials are relatively strong at different stages, which has reduced the profit level of polyester factory. In addition to the polyester filament DTY with better efficiency, which still maintains a positive cash flow at present, other types of polyester products are in a negative cash flow state.

In terms of annual average, the daily average cash flow of polyester products in this year is significantly lower than that of last year, especially the average cash flow of glass bottle chips is significantly lower than that of last year by more than 400 CNY/ton. With the expansion of production capacity and the intensification of polyester competition, the profitability of polyester has declined significantly. In the future, polyester production capacity tends to be rational. In particular, since the second half of this year, the market has been in a downturn, and the cash flow has fallen into a loss, which has discouraged the enthusiasm of new production capacity. This year, 3.45 million tons / year of polyester new production capacity has been put in place. It is expected that by the end of 2019, the total capacity of domestic polyester will reach 55.57 million tons / year, with a growth rate of 6.6%, 1.2 percentage points lower than the previous year. The peak period of polyester production capacity is coming to an end, and the new production capacity in the future will tend to be stable. The polyester production capacity planned to be put into operation in 2020 is about 5.3 million tons / year.

Considering the possibility of delaying the production of some units, it is estimated that the actual new production capacity will be about 4 million tons / year. It is expected that by the end of 2020, the domestic polyester capacity will reach 59.57 million tons / year, and the capacity growth rate will be 7.2%. In the future, the industrial concentration of polyester industry will continue to increase. The consumption of terminal weaving and textile clothing is weak, which has a significant drag on the whole polyester industry chain. In terms of foreign demand, from September 1, the United States formally began to impose 15% tariff on China's $300 billion goods, including most clothing and home textiles. In September, China's exports to the United States declined in an all-round way, with clothing and home textiles down 21.8% and 8.5% respectively. By the end of October, the United States had ruled out 12 tax codes for yarns and fabrics involved in China's $200 billion products. According to the US import statistics, from January to September, the 12 tax products imported by the us from China totaled 188 million US dollars, accounting for only 0.5% of the total imports of textile and clothing from China in the same period, which did not play a substantive role in helping the export to recover growth.

At present, China and the United States have reached the first stage agreement, and the trade situation has eased compared with the previous stage. However, there is still high uncertainty in the future, which may continue to affect foreign demand. In terms of domestic demand, from January to October, the retail sales of domestic textiles and clothing totaled 1062.37 billion yuan, up 2.8% year on year, down 5.6 percentage points from last year. Looking forward to 2020, under the background of the global economic slowdown, the textile and clothing market will hardly improve in the next year. With the continuous decline of consumer confidence, the growth rate of clothing retail may continue to decline. It can be said that the weaving boom cycle has passed, and the industry is still affected by three mountains: More than 70% of the internal demand for polyester terminals is related to textile and clothing, so it is necessary to judge the strength of polyester demand according to the sales situation of textile and clothing. As textile and clothing belong to daily consumer goods, its general trend has a high correlation with China's overall economic situation GDP. From the perspective of historical data, China's economic cycle lasts for about four years.

The polyester boom cycle starts in the second half of 2016. At present, the profit has entered the state of loss. The clothing sales have peaked compared with the beginning of 2018. At present, the growth rate remains at a low level of 3%, and the GDP is currently low. Therefore, domestic demand for textile and clothing will remain weak at least before the first half of 2020. The terminal investment slows down. From the perspective of the fixed assets investment in the terminal textile industry, it has a certain correlation with the profits of the textile industry. In 2017, the downstream textile profits began to improve (due to the elimination of environmental protection factors such as terminal water jet looms). We also saw that the investment in the downstream fixed assets began to rebound. In 2019, the profits began to peak and fall back (although some looms in Jiangsu and Zhejiang were eliminated, they were transferred to the mainland The production capacity is large and multiplied. The investment in terminal fixed assets has also slowed down, and there is no trend of stabilization at present. This can also be confirmed by the number of terminal ammunition dispensers added. In 2016, the number of newly added ammunition dispensers is still small, but the explosive growth of ammunition dispensers in 2017-2018, but in 2019-2020, the growth rate of ammunition dispensers is expected to decline significantly.

The growth rate of terminal export slowed down vs that of polyester direct export increased slightly. From January to November 2019, China's export of textile yarn, fabric and products, clothing and accessories decreased by 3.09% year on year. This year's overall growth rate has declined by a large step compared with the previous years and entered a negative growth stage. And with the uncertainty of Sino US relations and the expectation of global economic downturn, it is expected that the export situation will not improve significantly in the short term. In addition, in recent years, domestic end textile and garment enterprises have also increased capacity transfer to Southeast Asia and other regions, as well as the rapid development of the textile industry in Turkey, Brazil and other places, resulting in the decrease of direct export of domestic textile and garment products. However, polyester, especially filament exports have increased.