China Chemical Fiber Association: Chemical Fiber Enterprises Do Not Panic Selling

A period of time, influenced by many factors, China

Demand drives a good market.

Before November 12, 2010, the market prices of China's main chemical fiber products rose rapidly. Is the rise of cotton prices affected by the sharp rise in cotton prices, or driven by the rising price of crude oil raw materials or the demand of downstream markets? Zheng Zhi, President and President of the China Chemical Fiber Industry Association, analyzed this problem. Duan Xiaoping

Zheng Zhiyi introduced that the chemical fiber market was very hot some time ago. Since the beginning of September, the prices of major chemical fiber varieties have increased rapidly.

Among them, the fastest rising is polyester staple fiber, as of November 10th, has doubled, viscose staple fiber also rose 12000 yuan / ton, or up to 67%.

Prices of other varieties also rose to varying degrees, but the increase was much less than that of viscose staple and polyester staple fibers.

The price increase in this round (from the beginning of September to November 10th) is very similar to that in 2008 2~7 months. Chemical fiber products, raw materials and chemical excipients are also rising at the same time. The surface causes of the rise are basically the same, mainly due to demand pull, and domestic and foreign demand for textiles has increased rapidly, especially domestic sales growth.

Prices of various raw materials have been adjusted in 2009, and in 2010, they are facing greater rebound pressure.

Xiaoping added that 2010 is the tenth cycle of the chemical fiber industry, which is the overall judgement of the chemical fiber Association's operation this year.

So far, this prediction is correct, no matter from the market supply and demand change, enterprise management, or from the industry data and operation quality and so on can explain this point, and the traditional sense of the two market of spring and autumn seasonal rebound still exists, performance is also not obvious.

Cotton prices greatly affect chemical fiber needs attention

In response to this rally, Zheng Zhiyi put forward two deep reasons, or two different reasons for the rise in 2~7 months in 2008, and reminded enterprises to attract high attention and vigilance.

There are two main reasons for these two reasons.

First, the price rise is dominated by staple fibers, especially polyester staple fibres. The main reason for the rise of staple fiber is that cotton prices have seen a rapid rise in 15 years, which has more than doubled from the beginning of November 10th to the beginning of the year.

However, the amount of chemical fiber directly related to cotton spinning accounts for only 40% of the total chemical fiber. Cotton prices can play such a role. This is worth the attention of the industry and enterprises.

Two, the price rise of this chemical fiber is driven by market demand. The relationship between chemical fiber (mainly staple fiber) and cotton is a substitution relationship of market demand. The rise of cotton price has caused rapid increase in demand for chemical fiber and caused rapid price rise.

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Zheng Zhiyi explained that cotton prices have seriously deviated from the fundamentals of supply and demand, and this bubble is largely manufactured.

Although the rising price of cotton is beneficial to the chemical fiber industry, it is a double profit. On the one hand, it will push up the price of textiles in a moderate range. On the other hand, it will increase the demand for chemical fiber products, but the market still has enormous risks.

In the past, cotton inflation has happened once in 1995, which is due to the accumulation effect of severe inflation. Another reason is that the relevant statistics of domestic cotton are not true, resulting in a wrong judgement of the market, especially stocks.

This time, supply and demand change is the basic reason for the rise in cotton prices.

According to the International Cotton Advisory Committee (ICAC) reported in October 1st this year, international cotton prices have risen almost since April 2009, and the price increase has been particularly high since August this year.

The CotlookA index hit 115.60 cents / pound in September 29, 2010, an increase of 80% over the same period last year, the highest price since May 23, 1995.

By November 9th, it had climbed rapidly to 166 cents / pound.

A large amount of capital speculation is an important factor in driving the surge in cotton prices.

Due to the loose funds this year, there has been a large influx of funds into Zhengzhou's cotton futures market recently. For example, in September 21st, the 1105 main contract volume reached 1588808 hands, a record high.

In November 9th, the volume of 1105 main contracts reached 1694108 hands, creating a new high, and the turnover was more than 437 billion 900 million yuan.

According to the volume of this day, the actual volume of the day involved 8 million 471 thousand tons of cotton, accounting for 79.9% of the total amount of domestic cotton consumption in 2009, 263.7 times the actual daily processing volume of domestic industry (according to 330 days), which has seriously deviated from the basic function of the financial leverage of futures.

According to the monthly market report of the Zhengzhou Mercantile Exchange, cotton futures rose strongly in the month of October, and the fluctuation range of the main contract CF105 was 22000~27980 yuan / ton, the biggest gain was 5980 yuan / ton, and at the end of the month, it was closed at 27245 yuan / ton, up 5605 yuan / ton, or 25.9% higher than the end of last month.

The total turnover of the month was 26 million 477 thousand hands, an increase of 31.78 times compared with that of the previous month, with an average turnover of 1 million 557 thousand hands.

However, the total delivery volume in 1~10 months was only 30452 hands, a substantial increase of 2.45 times compared to the same period, and the actual turnover was 152260 tons, accounting for 1.57% of the actual cotton consumption in the same period.

At the same time, in November 9th, the US ICE's cotton rose 5 cents or a daily limit of 1.5123 dollars per pound in December, at a low of 1.4727 US dollars.

Preliminary data show that the 1945GMT cotton turnover is 33958 hands, higher than the 29171 hand 30 day moving average 15% higher.

This is the 8 consecutive trading day of ICE cotton futures. Cotton is the best performing CRB commodity index. It has risen nearly 95% from the beginning of November 9th to the end of the year.

This shows that there are a lot of hot money around the world for speculation in the cotton futures market.

Before the financial crisis, the bulk of raw materials other than cotton had seen a sharp rise. In the past two years, all countries in the world have intensified their supervision over the speculation of oil and other derivatives, and the idle funds have turned to cotton and other agricultural and sideline products.

Xiaoping said that in the main varieties of chemical fiber, polyester staple fiber, viscose staple fiber and cotton have a strong substitution relationship, the three prices have a certain linkage trend, that is, the rise of cotton prices will increase the price of viscose staple fiber and polyester staple fiber, and vice versa.

This is mainly due to the rise of cotton prices, which will lead to the increase of production costs of downstream spinning and weaving enterprises. Enterprises will turn to chemical fiber staple fibers with some price advantages, mainly polyester staple fiber and viscose staple fiber, thus driving the growth of short fiber market demand, and then driving their prices up.

Moreover, judging from the actual development of the industry in recent years, the technical progress of polyester staple fiber and viscose staple fiber industry is obvious, which is manifested in the obvious improvement of product quality, the increase of differentiation and functional varieties. Many varieties are not only replacing cotton, but are able to better meet the diversified needs of downstream industry market.

As Zheng Zhiyi predicted, this round of cotton speculation is coming to an end. On November 11~12, cotton futures fell sharply, and there were two consecutive down limits.

In view of this situation, the end Xiaoping analysis, first of all, the decline in cotton futures and chemical fiber prices in recent days is the normal return after the excessive speculation in the pre market, which is basically consistent with our prediction.

Secondly, in November 12th, the global stock market and futures market showed a sharp decline.

In November 12th, the NASDAQ index fell 1.46%, the S & P 500 fell 1.18%, and the Chinese stock market plunged by more than 5%, which had a major blow to investor confidence.

Third, the impact of national macroeconomic regulation and control measures.

One is to continuously raise the deposit reserve ratio and raise interest rates, forming a strong expectation of shrinking liquidity. Two, in November 8th, the seven departments of the national development and Reform Commission issued urgent notices and put forward six measures to maintain the order of the cotton market and stabilize the market price of cotton.

In addition, the dollar rebounded after the US's easing of the quantitative easing policy, which is one of the reasons for the decline in the current round of {page_break}.

Enterprises should be cautious.

The price of chemical fiber products fluctuates greatly. How should the chemical fiber industry deal with this severe situation? How can enterprises avoid market risks?

Zheng Zhiyi believes that, first of all, the sharp rise in prices of chemical fiber products is, on the surface, a strong demand driven by the market, but it is obvious that cotton speculation causes a vicious factor of its high price.

According to the operation rules of international agricultural futures and the characteristics of the hot money speculation, Zheng Zhiyi judged that under the influence of a large number of idle funds to escape, it may cause a sharp decline in the latter market, which will cause the prices of chemical fiber upstream and downstream products to drop sharply. It is possible that there will be a serious market disorder in the textile and chemical fibers that had occurred in the 2008 9~10 financial crisis.

Xiaoping said that the world's cotton market is not a completely market economy. There are high seed cotton subsidies in countries such as the US and Europe, and China's cotton import quota, sliding tax and national cotton storage mechanism.

Under such circumstances, the market has seen dramatic changes in the price increase that has not happened for 15 years, which is worthy of careful consideration and in-depth study by our macro field workers.

In this case, Xiaoping reminded enterprises that in the face of this grim situation, the most important thing for enterprises is to adjust their mindset and not panic. As opposed to the vicious speculation before us, we also oppose irrational competition such as panic selling.

If necessary, enterprises can also stabilize the market and restore the balance between supply and demand by appropriately increasing product inventories and lowering operating rates.

Xiaoping put forward three measures:

First, the state's pformation of development mode and the determination and measures to continuously expand domestic demand growth have not changed. The momentum of domestic demand continues to grow, and the basic driving force behind the development of the chemical fiber industry still exists.

Second, judging from the market situation, in recent days, the prices of chemical fiber products are weak, but they are still mixed with each other. The enterprises basically keep the balance of production and marketing, and the pressure of inventory is not large. Besides, the strength of middlemen in the chemical fiber market is not strong, the stock is not large, and the pressure of hoarding and selling is not very big.

Third, judging from the current price of chemical fiber, chemical fiber and cotton still have strong price advantage.

In addition, in view of the sharp fluctuations in cotton prices, Xiaoping added that cotton is a subsidiary agricultural product. According to the general market rules, the market will be gradually returned to the market next year, and the chemical fiber industry should also make preparations for this.

In his view, first of all, we must make preparations for the sharp decline in the market prices of chemical fibers.

First, we must control the stock mainly by reducing the stock of raw materials and products. Two, we should get enough cash flow, for example, if the profit is good, the enterprises can make some reserve for loss. Three, the chemical fiber industry will try to increase the operating rate, increase the supply and ease the contradiction between supply and demand.

At present, the sliced spinning enterprises that have stopped production in the early stage are accelerating the resumption of production. The recycled polyester enterprises also buy raw chips to improve the utilization ratio of the devices, so the market supply of polyester filament is gradually increasing, which is conducive to stabilizing prices, stabilizing the market and accelerating the rational return of the market.

Seize the opportunity to enhance competitiveness

It is understood that the current investment in chemical fiber industry has increased rapidly, and the actual investment in 1~9 months has increased by 49.36%.

It is said that the delivery date of pahmag, TMT, Beijing Zhongli and other chemical fiber equipment manufacturers has already reached the beginning of 2014.

In the second round of the rise of the chemical fiber industry, has there been an overheated investment phenomenon? Zheng Zhiyi analysis, first of all, from the actual investment ability of the chemical fiber industry, there is no overheated investment.

He calculated an account to see how big the investment ability of the industry is.

In 2008, the depreciation of fixed assets was only 74 billion yuan in the chemical fiber industry. According to 60% for reinvestment, plus 60% of 8 billion 200 million yuan in profits for the year, the total investment capacity of the industry was 49 billion 300 million yuan.

In the 1~9 months of this year, the industry actually completed 27 billion 700 million yuan in fixed assets investment, an increase of 49.4% over the same period last year, but the absolute amount is not large. The annual estimate is around 37 billion yuan, accounting for only 75% of its own investment capacity.

This figure is calculated without considering bank loans.

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Secondly, under the influence of the global financial crisis, the investment in the chemical fiber industry has been increasing slowly in recent two years, and the surplus funds of the enterprises are relatively abundant, so it is necessary to find new investment fields.

Third, since the implementation of the national value-added tax reform, it is catching up with the outbreak of the financial crisis, and its role of guiding investment has not been brought into full play.

Fourth, summarizing the past experience and lessons of chemical fiber spinning enterprises, we must seize the right time for technological progress and rapidly enhance the core competitiveness of enterprises.

Zheng Zhiyi stressed that the rapid growth of investment in the chemical fiber industry needs to be highly concerned by the association, and the key must be correctly guided.

The current competition is no longer the competition between private enterprises and state-owned enterprises, nor is it competing with peers. It is technological competition, management competition, business philosophy competition and global strategy competition.

Therefore, from the perspective of industry, the association should focus on several tasks:

First, we must correctly understand the current global economic, economic and textile and chemical fiber industry's economic operation trends and laws.

Strive for coordination and avoid duplication of difficulties.

This is very important for us to grasp the pace of investment.

No matter what happens, the adjustment trend of the chemical fiber industry in 2011 has already begun to take shape.

Two is to guide the industry's investment enthusiasm to technological pformation.

If 50% of the investment power is used for technological pformation, for the purpose of innovating technology, innovating products and innovating the market, the adjustment and upgrading of the industry will obviously accelerate.

The industry association should further improve the guiding work of using traditional high technology to pform chemical fiber.

Large scale development and research and development of new fiber materials are the participation of individual dominant enterprises. Most enterprises are committed to product differentiation, development and development of biomass fiber and biochemical raw materials.

Everyone is full of hope that the road goes to the sky and goes all the way.

As for how to invest, Xiaoping also introduced that the first is to improve the industry investment early warning system as soon as possible, and give full play to its guiding role in guiding enterprises to avoid investment peaks, reduce investment costs, avoid centralized production and reduce operational risks.

Two, we must continue to actively promote the implementation of the "going global" strategy, mainly based on solving the domestic shortage of raw material supply problems, and in addition, we can shift part of the conventional capacity to occupy the international market.

At present, a good start has been made in this area, and we need to continue to strengthen our guidance, push ahead with our services, and strive for a solid first step in the next two years.