The man-made fiber industry in China ran favorably in the first half of 2003. Production and imports increased slightly compared to the corresponding period of the previous year. The rate of sales compared to production rose, and inventory dropped in this term. Although sales prices climbed every month in the first quarter, they began to fall in the second quarter. The prices for the whole term were higher than the previous term.
The sales of MMF were concentrated on the Jiangsu, and Zhenjiang regions. The total net profits in the first half 2003 increased 30.89% from the corresponding period of the previous year although there was a temporary slowdown due to the SARS outbreak in April and May.
According to the National Bureau of Statistics, China's MMF production amounted to 5,234,200 tons in the first half, up 14.39% from the corresponding period of the previous year. Among fibers, synthetic fiber production increased by 14.08% to 4,789,700 tons. June end stocks were 35.52% compared to production, 21.01 points lower than the level at May-end.
The prices rose from a downward tendency to an upward one. The average price level was higher than the level in the previous term. In June, the price of polyester staple fiber was up 2.76%, viscose rayon up 6.81%, while, that of acrylic fiber was down 0.50-3.53%, that of vinylon down 3.18%, and that of polyester chips down 5.48%.
Jiangsu Province is the largest consumer of MMF, occupying 28.06% of total supply. Its consumption rose 1.71% from the previous term. The second largest consumer is Zhejiang Province, occupying 27.14%. The third region is Guandong, whose share was 10.36%. Exports shared 2.14% of total production.
Polyester fiber industry
China's production of polyester fiber in the first half 2003 amounted to 4,055,800 million tons, up 14.97% compared to the corresponding period of the previous year. In contrast, imports decreased slightly. There was a 15.51% decrease of imports in staple. The rate of sales against production by 22 makers including Yizheng Chemical and Shanghai Petrochemical increased by 3.65% from the first half 2002 to 102.13% in the same term this year. The market prices were strong in the first quarter, but became soft in the second quarter. The average price in June rose by 2.76% (220 yuan/ton), but dropped by 5.01% (440 yuan/ton) from January.
On the other hand, the rate of large and medium makers' sales against production was 98.44%, down 0.36 point from the corresponding period of the previous year. Stocks increased in the first quarter, but decreased in the second quarter. Markets fluctuated quickly. 167-dtex DTY rose slightly in March. In june, it increased 2.91% compared to January, which was up 0.95% compared to the same month of the previous year. 85.33% of products were consumed in the three provinces of Jiangsu, Zhejian and Guandong. There was a 1.97 point increase compared to last year.
Prospects for second half
The Chinese textile industry is expected to continue growing steadily in the second half of this year thanks to growing demand in the domestic market. Textiles and apparel exports are forecast to grow although there will be fluctuations.
The influence of the SARS outbreak on the textile industry is likely to appear in the second half, particularly in the third quarter, but its influence will be minimal. New demands will come in the second half, analysts pointed out. According to their research, the consumption structure will be changed, and demands for industrial use and interior products are expected to grow sharply, despite a slowdown in the demands for apparel use.
Worsening export environment
The export environment is worsening, but the demands for textiles are expected to increase in the second half of 2003. But the export environment is likely to worsen further. More than 60% of exports go to the four major markets of Hong Kong, Japan, the U.S. and EU. Hong Kong, as a world transit trade center, was seriously hurt by the SARS outbreak. Japan has been in a slump, and there is no hope for a recovery in the second half. The U.S. and EU plan to impose import restriction measures on China's exports.
Bullish cotton market
Cotton prices in the domestic market remain at a high level, higher than the international standard. The authorities predict that because the cotton fields increased about 20% from the previous year, crops are expected to be 5.6-5.7 million tons. As a result, the shortage of cotton will be solved next year. The shortage of supply, however, is expected to remain unchanged, which may boost the prices of cotton to a high level.
On the other hand, world cotton crops are estimated to amount to 20.49 million tons (up 7.05% from the previous year), while, the demands are expected to be 21.23 million tons, up 270,000 tons. China's production will share 5.74 million tons of total production. The year-end stock of the world is expected to be 8.82 million tons, which will be the lowest level for the past several years. The average price is estimated to be 61 cent/lb. for the year, up 5 cents compared to the level in the previous year.
MMF Production Exceeds 1M Tons in July
Increasing by 36,300 tons from June, China's production of man-made fibers amounted to 1,004,300 tons in July, up 30.46% against the same 2002 month's 769,800 tons.
Making up about 60% of the total, Zhejiang and Jiangsu Provinces, the country's MMF giants, manufactured 349,500 tons and 276,100 tons of MMF respectively, rising by 47.78% and 31.85% compared to the year before.
Undoubtedly, all of this indicates that the Chinese MMG industry is now working with all its might to make up for losses sustained in the spring when the SARS broke out in almost the whole mainland.
Acrylic Fiber Production Up 6.87% in First 5 Months
Statistics released by the National Bureau of Statistics indicate that China's acrylic fiber production amounted to 244,200 tons between January and May of this year, an increase of 6.87% over the same 2002 period. However, the output in May declined by 9.92% from April to 47,200 tons.
The ratio of sales to production for acrylic staple fiber and top during January-May decreased by 10.95% and 11.6% to 92.67% and 94.55% respectively. However, that in May dropped by 17.89% compared to the year before.
Spandex Production Likely to Increase to 80,000 T/Year
The production capacity of spandex in China is expected to increase to 80,000 ton/year by the end of this year. China's production capacity of spandex was around 15,000 tons at the end of 2000. Demand for spandex in 2003 is forecast to increase to 65,000-70,000 tons from 54,000 tons in 2002 and 37,000 tons in 2001. Analysts expect the supply-demand balance of spandex will soften due to excessive production capacity. "There will be serious price competition on the market," said analysts.
