How will the textile and chemical fiber industry break in 2023 under the dual pressure of high cost and low demand?

Release time:

2023-02-06

With the improvement of market expectations, the enthusiasm of terminal stocking before the festival has increased, and the inventory of finished products of many large polyester factories has decreased significantly before the festival. After the Spring Festival in 2023, polyester prices have "started to get off to a good start" and polyester cash flow has also stabilized and improved. This phenomenon has released a signal to the market that the downstream is gradually warming up. With the recovery of terminal textile and clothing consumption, weaving operating rate rebounded, raw material procurement enthusiasm increased, inventory pressure eased, the upstream and downstream of the industrial chain conduction smoothly, 2023 polyester industry chain enterprises production and operation or will be more robust, business efficiency is expected to improve.

As of the evening of January 31, 2023, a total of 45 A- share textile and chemical fiber listed companies disclosed their 2022 annual report performance forecasts, of which 4 companies pre-increased, 13 companies pre-lost, and 19 companies pre-reduced.
Judging from the announcements that have been issued, leading companies in the industry such as Hengli Petrochemical, Tongkun Group, and Dongfang Shenghong are expected to achieve net profits attributable to shareholders of listed companies for the whole year of 2022, which will generally drop by 80% to 90% compared with the same period last year.
High cost and low demand coexist
Regarding the decline in performance, listed textile and chemical fiber companies generally stated that the main reasons are the intertwined driving and influence of domestic and foreign macro factors such as the international situation, the energy crisis and repeated epidemics, and the long closure and control time in the first half of last year caused logistics to be blocked., Customer communication is not smooth, third, industry competition is intensified, terminal demand is weak, and fourth, the energy crisis in the international environment has led to a sharp rise in commodity raw material prices.
According to preliminary calculations by the financial department of Tongkun Group Co., Ltd., it is expected that the net profit attributable to shareholders of listed companies will be 300 million to 420 million yuan in 2022, a decrease of 6912.1996 million to 7032.1996 million yuan compared with the same period last year, a decrease of 94.27 to 95.91.%.
Different from Tongkun Group, Hengyi Petrochemical's announcement showed that during the reporting period, the net profit loss attributable to shareholders of listed companies was 900 million yuan to 1200 million yuan, a decrease of 126-135 percent over the same period last year.
Crude oil is an important product raw material of Hengyi Petrochemical and the main reference benchmark for the pricing of upstream and downstream products in the industrial chain. In the case of sharp price fluctuations and weak downstream demand, the price transmission of upstream and downstream products is not smooth, which further increases the company's raw materials and The difficulty in the operation and management of finished products and other inventories has caused the gross profit margin of the company's products to decline further year-on-year.
Polyester industry profits are expected to be repaired in the new year
In 2022, the domestic chemical fiber industry experienced a double squeeze of high cost and low consumption, the overall capacity utilization rate of the industry declined, the output also fell sharply, and the overall profit deviation of the industry.

"For the textile and chemical fiber industry, the market situation in 2023 will be significantly different from that in 2022." On the one hand, energy prices fell after rising in 2022, and are currently stable, which means a stabilization of costs for the industry. On the other hand, the impact of the new crown infection has been significantly weakened, although from the foreign situation, there may be new infections, but the overall impact is declining, it is expected that the life of residents in the new year will gradually become normal. Some listed companies also expressed their expectations for the new year 2023 in their performance forecasts.
Hengyi Petrochemical said, as of the disclosure date of this report, the company and downstream product inventory is at a historically low level; at the same time, with the adjustment and optimization of domestic epidemic prevention and control measures, downstream demand gradually recovered and warmed up, the main product spreads in January have improved month-on-month, laying a solid foundation for 2023 production and operation and efficiency improvement.
With the improvement of market expectations, the enthusiasm of terminal stocking before the festival has increased, and the inventory of finished products of many large polyester factories has decreased significantly before the festival. After the Spring Festival in 2023, polyester prices have "started to get off to a good start" and polyester cash flow has also stabilized and improved. This phenomenon has released a signal to the market that the downstream is gradually warming up. With the recovery of terminal textile and clothing consumption, weaving operating rate rebounded, raw material procurement enthusiasm increased, inventory pressure eased, the upstream and downstream of the industrial chain conduction smoothly, 2023 polyester industry chain enterprises production and operation or will be more robust, business efficiency is expected to improve.

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