China Chemical Fiber Industry Association: Release Of Industry Investment Sensitivity Analysis

In order to adapt to the new situation and new requirements, the China Chemical Fiber Industry Association has organized the revision of the Investment Sensitivity Analysis of China's Chemical Fiber Industry (2020 Version) to form the 2023 version. It is hereby released:

　　 1、 Preparation background

In March 2020, China Chemical Fiber Industry Association (hereinafter referred to as "China Chemical Fiber Association") released the Investment Sensitivity Analysis of China Chemical Fiber Industry (2020 Edition) (hereinafter referred to as "Investment Sensitivity Analysis"), which aims to guide enterprises and social capital to invest steadily and promote high-quality development of the industry.

Since 2020, the internal and external environment for the development of China's chemical fiber industry has changed greatly. Especially since 2022, the operation pressure of China's chemical fiber industry has become prominent, the industry's starting load has decreased significantly compared with previous years, and the profit has decreased significantly.

At present, there are still many adverse factors facing global economic growth. The problems and risks existing in the operation and development of China's chemical fiber industry need to be resolved urgently. Among them, the rapid growth of production capacity in some industries is one of the key issues affecting the sustainable and stable operation and development of the industry.

In order to adapt to the new situation and new requirements, the China Chemical Fiber Association has organized the revision of the Investment Sensitivity Analysis (2020 version) to form the 2023 version. This version is prepared in accordance with the national industrial policies such as the Catalogue for the Guidance of Industrial Restructuring (2019), the Catalogue of Industries Encouraging Foreign Investment (2022), the relevant regulatory conditions of the chemical fiber industry, and the actual situation of the current industry operation and development. The China Chemical Fiber Association will adjust and revise the Investment Sensitivity Analysis in due time according to relevant national industrial policies, industrial scientific and technological progress, market development and other factors.

The Investment Sensitivity Analysis indicates the investment barriers or risks that exist or may exist in the main fields of the chemical fiber industry. When enterprises launch new projects, they should carry out full scientific demonstration, comprehensively consider the upstream and downstream supply and demand relationship, market competition, environmental protection requirements, international trade situation, market entry barriers, technical progress space and other factors The product scheme design and the supporting layout of the industrial chain should be more reasonable to prevent blind investment and low-level repeated construction.

　　 2、 Analysis angle

The investment sensitivity is analyzed according to the following four levels and twelve conditions. The more conditions that are met or the conditions that are met are distributed at different levels, indicating the higher the investment sensitivity of the product. On the contrary, the lower.

　　 （1） Market level

1. Phased surplus has occurred or may occur in the short term.

2. Large conventional mainstream products.

3. The market capacity is limited, and the rapid increase of production capacity in the short term may lead to market imbalance.

4. There are alternative products or competitive products.

5. It is greatly affected by the international trade environment.

　　 （2） Environmental protection

6. Environmental protection requirements and energy consumption are greatly affected by relevant policies.

　　 （3） Technical level

7. There are raw material bottlenecks, which restrict the industrial development.

8. There are technical barriers, key technical equipment is monopolized, and there is no reliable source.

9. The industry is in the early stage of development, and there is a large space for technological progress.

10. Insufficient development of application technology; Or there are market barriers in high-end areas, which makes it difficult to enter.

11. Fibers for national defense, military industry and aerospace.

　　 （4） Fund level

12. There are capital barriers, high investment density and asset intensive heavy asset industries.

Analysis on Investment Sensitivity of China's Chemical Fiber Industry

(2023 version)

In order to facilitate enterprises to better understand the main points of Investment Sensitivity Analysis of China's Chemical Fiber Industry (2023 Edition) (hereinafter referred to as Investment Sensitivity Analysis), the following description is made.

　　 1、 Background of this revision

China's chemical fiber output has ranked first in the world since 1998, and its production capacity has continued to grow. With the continuous advancement of industry transformation and upgrading and structural adjustment, the growth rate of chemical fiber industry scale has slowed down. During the "13th Five Year Plan" period, the average annual growth rate of chemical fiber output was 4.51%, 4.84 percentage points lower than the average annual growth rate of the "12th Five Year Plan". However, from the perspective of capacity increment, since the "14th Five Year Plan", the capacity of the chemical fiber industry has still maintained an inertial growth. Some industries have experienced rapid capacity growth after breaking through the bottleneck of raw materials or major breakthroughs in technical equipment, or due to the phased growth of demand in a certain field. According to the data of the National Bureau of Statistics, in the past two years, the fixed asset investment in the chemical fiber industry has maintained a rapid growth, with a year-on-year growth of 31.8% in 2021 and an increase of 21.4% in 2022. Although the investment in transformation and upgrading is included in the statistics, this group of data also reflects the rapid growth of production to a certain extent. From the demand side, the growth rate did not match the supply side of the chemical fiber industry. Since 2020, the world economic recovery has faced strong risks and challenges under the influence of repeated epidemic situations, geopolitical conflicts, high inflation and other multiple and complex factors. Although China's textile industry has benefited from the growth of global demand for epidemic prevention materials, backflow of overseas orders and other factors, the export volume has repeatedly hit new highs, but the growth of domestic demand is weak. After the short-term recovery growth in 2021, the domestic market will be significantly under pressure in 2022, and most industries in the textile industry chain will show insufficient construction and declining profits. In 2022, the starting load of the chemical fiber industry will decrease significantly compared with previous years, the chemical fiber output will show the first negative growth in nearly 40 years, and the product inventory will remain high.

At present, the unbalanced development between supply and demand has become a prominent contradiction in the chemical fiber industry. The world economic recovery is still facing many adverse factors, and the growth of demand for textiles and clothing is still facing many tests. With the development of a series of national policies of "expanding domestic demand and stabilizing growth", the recovery of textile and clothing consumption has positive support, but it is undeniable that we have passed the stage of "food and clothing", and quality consumption has become the mainstream of the market instead of quantity consumption. Therefore, if the chemical fiber production capacity continues to maintain a rapid growth, the contradiction with the terminal market imbalance will become more prominent.

　　 2、 Purpose and significance

Structural overcapacity in some areas of the chemical fiber industry has become an unavoidable problem at the current stage. In recent years, on the basis of continuously tracking the operation and development of the industry, the China Chemical Fiber Association has studied and issued the Analysis of Investment Sensitivity in the Chemical Fiber Industry. This revision is intended to prompt new investment risks and changes, provide reference for chemical fiber enterprises and investment institutions, and guide enterprises to make rational investment and avoid blind expansion, We will deepen the supply side structural reform of the chemical fiber industry and promote high-quality development of the industry.

　　 3、 Focus on content

Compared with the 2020 version, the analysis level of the 2023 version remains unchanged, the description of some risk conditions is improved, and the risk condition tips for some industries are added.

This revision mainly focuses on risks from the market level. In recent years, with the progress of technical equipment in the chemical fiber industry and the improvement of automation and intelligence, the production capacity of a single project is large, so the launch of new projects has a greater impact on the market. Focus on the following industries:

　　 PTA： With the development of refining chemical integration project and the upward extension of industrial chain support for some polyester enterprises, since the "14th Five Year Plan", the PTA industry has ushered in a new round of capacity launch cycle. The rapidly increasing PTA capacity has led to increased market supply pressure and decreased capacity utilization. According to the existing public data, nearly 20 million tons of PTA new devices are planned to be put into operation in 2023. If the new devices are put into operation as scheduled, the contradiction between supply and demand will be further exacerbated.

　　 Polyester filament: Polyester filament is an industry with large quantity and wide range. Although this revision does not increase the risk conditions for polyester filament, the risk of overcapacity is rising rapidly. In 2022, in addition to epidemic prevention and control, oil price fluctuations and other impacts, supply and demand mismatch is the main contradiction facing the industry. In terms of civil filament, the new capacity will exceed 3 million tons in 2020 and 2021, and there will still be more than 2 million tons of new capacity in 2022 when many projects are put into production late; In terms of industrial silk, during the "13th Five Year Plan" period, the production capacity basically maintained a steady annual growth of 7%. However, since 2020, several projects with a capacity of 200000 tons/year have been put into production, and the total scale of the industry is only more than 2 million tons. The market competition has intensified rapidly. In addition, in the middle and later period of the "14th Five Year Plan", there are still many devices planned to be put into production in the field of civil filament and industrial filament, but it is difficult for the demand side to see the hope of matching growth, and it is not suitable to continue to rapidly increase production capacity.

　　 Polyester staple: Before the middle of the "13th Five Year Plan", the production capacity of polyester staple fiber was basically stable at about 7 million tons, and the industry was running smoothly. However, since the middle and later period of the "13th Five Year Plan", with some filament enterprises starting to lay out the field of staple fiber, the production capacity of polyester staple fiber has increased significantly. Compared with polyester filament, the market capacity of staple fiber is relatively small and stable, and most of the new projects are large in scale, which has a great impact on the staple fiber market.

　　 High performance fibers and bio based fibers: The high performance fiber and bio based fiber industry is an important part of China's emerging strategic material field, and has always attracted the attention of investors inside and outside the industry. However, some industries are still in the initial stage of development, and there is still much room for technological progress, which means that there is a risk that investment will soon become backward technology and backward production capacity. At the same time, due to the insufficient development of downstream application technology, the terminal market of many varieties has not yet been fully opened. At this time, there is a great risk of blindly increasing capacity.

　　 Carbon fiber: With the implementation of the "double carbon" strategy, the market demand for carbon fiber has been further stimulated. At the same time, the improvement of the level of domestic carbon fiber technology and equipment and product quality has promoted the realization of domestic substitution in many fields, and carbon fiber enterprises have finally made profits through years of continuous investment. It is worth noting that with the improvement of the prosperity of carbon fiber industry, many places across the country began to layout carbon fiber and upstream and downstream industrial chains, and some low-level repeated construction has occurred, which is not conducive to the improvement of the overall level of the industry. According to public information, in the next few years, leading enterprises in the industry will still accelerate production expansion, and there are also some new investors eager to try outside the industry. The periodic excess risk of the carbon fiber industry is rapidly accumulating. When enterprises start new projects, they should carry out full scientific demonstration to avoid blind investment and low-level repeated construction.

　　 Lyocell: As one of the new fiber materials, Lyocell fiber has become a hot investment spot in the chemical fiber industry in recent years due to its green environmental protection properties and excellent product performance, resulting in rapid growth of its capacity. However, the downstream still needs time to accept the emerging Lyocell fiber, so the utilization rate of Lyocell fiber capacity is seriously insufficient in the past two years. In 2021, the overall operating rate of Lyocell fiber industry will be less than 50%. In 2022, although some new projects are delayed due to the impact of benefits, the overall operating rate of the industry will still be at a low level of 50-55%. In the long run, Lyocell fiber is promising, but from the current point of view, whether from the fiber technology, application technology, or market cultivation, Lyocell fiber industry is still in the initial stage of development. In a short period of time, excessive capacity growth will lead to intensified competition in the industry, resulting in insufficient operation or even long-term shutdown of enterprises, It is not conducive to the healthy development of the industry.

　　 4、 Recommendations and initiatives

　　 （1） Avoid blind expansion and maintain reasonable growth

The capacity growth should not be too fast in either the traditional fields with large quantities and wide range, or the fields of new fiber materials such as high-performance and bio based materials. It is suggested that enterprise investment projects should focus on upgrading existing capacity, and new capacity projects should fully consider resource endowments, market capacity, environmental capacity, and industrial foundation, to avoid blind expansion, and to avoid low-level repeated construction. In particular, high-performance fibers and bio based fibers, we do not deny their broad development prospects, but the market still needs a long time to cultivate and expand. Therefore, we need to invest rationally and develop in an orderly manner. New capacity should be reasonably scheduled and implemented in stages, so that we will not miss the dividends brought by technological progress.

　　 （2） Strengthen technological innovation and expand market demand

The supply side structural reform of the chemical fiber industry will be further dominated by technological innovation and market driven. The chemical fiber market is a fully competitive market. The competitiveness of enterprises should be improved from technology, products, brands, talents and other aspects. The growth of the scale of simple production can not create huge profits for enterprises, but may also make the industry fall into a passive situation of vicious competition. It is suggested that enterprises should actively promote the upgrading and transformation of chemical fiber technology and equipment, increase R&D investment, improve their independent innovation ability, and lead and create demand with high-quality supply.

　　 （3） Strengthen research and development of applied technology

In addition to strengthening their own technology research and product development, chemical fiber enterprises should also strengthen the research and development of application technology, especially in the fields of small varieties, high-performance fibers and bio based fibers. The lack of application development is one of the bottlenecks that need to be solved urgently to restrict the development of the industry. It is suggested that fiber enterprises should take the initiative, actively cooperate with downstream enterprises in the industrial chain, strengthen research and development of applied technology, and expand market demand.

2023 is the first year to comprehensively implement the spirit of the 20th National Congress of the Communist Party of China and the key year to implement the 14th Five Year Plan. Chemical fiber industry enterprise business must remember "With high-quality development as the theme, deepening the supply side structural reform as the main line, scientific and technological innovation as the driving force, and meeting the needs of the textile industry and strategic emerging industries as the purpose, we should coordinate the economy and safety of the industrial chain supply chain, accelerate the key technology and equipment research, promote the high-end, intelligent, green transformation of the industry, and achieve high-quality development."

(Source: China Chemical Fiber Industry Association)