4. Industrial operational quality improved completely.
During the 1st half of this year, the industrial operational quality improved completely, featured with 9 out of the 13 index of industry performance improved obviously: Profitability, operational capability and development capacity improved to different degree. Although the liability level of the industry increased a little bit, solvency ability was acceptable. Improvement of industrial economic situation in the first half is closely related to a balanced and higher increase of supply and demand.
In terms of demand, textile production and export continued to grow rapidly, while in terms of supply, production for chemical fiber increased by 17.89% and import decreased by 8.42% for the first half of 2007. Therefore, analyzed from the supply and demand relationship in the chemical fiber market, supply and demand basically featured a balanced trend at a high level with slight surplus in supply side in the first half of this year.
(III) China chemical fiber industry will continue to maintain the trend of stable and rapid growth
1. In terms of macro economy, market demand is huge.
Analysis indicates that due to large disparity of productivity level between our country and developed countries, 28-year' s rapid growth of China economy, to a large extent, results from the "Waterfall Effect" after the opening-up. As the most direct consumption industry of national economy, textile industry will necessarily have stronger reaction and further pass to chemical fiber industry.
2. Industrialization and urbanization supports the potential of long-term rapid development of China economy.
Currently, total economic output of three city groups in Yangtze River Delta, Pearl River Delta and Bohai Sea Ring only accounts for about 4% of national GDP, still far behind the over 70% of developed countries. It is possible that the current industry concentration for three city groups can increase to over 50% in future 15 years.
3. Technology advance will make more contribution to economic growth.
This is prominent in our chemical fiber industry, particularly the polyester sector.
II. Outstanding conflicts and major problems existing in operation and development of China chemical fiber industry
(I) Two outstanding conflicts
1. Conflict between demand and supply
From the history of supply and demand relationship in China chemical fiber industry, four stages can be divided as follows:
First stage: Before 1998, chemical fiber was in severely short supply and the industry economy showed characteristic of a typical shortage economy, which was the quantity-type growth stage;
Second stage: From 1998 to 2001, adversely affected by Asian financial crisis, domestic chemical fiber market said goodbye to shortage economy and industry development was at variety-type growth stage;
Third stage: From 2001 to 2004, world economy started to enter into new round of growth cycle;
Fourth stage: 2005 and afterwards. New characteristic appears in China chemical fiber industry' s supply and demand relationship and industry development enters into restructuring stage.
New characteristic of supply and demand relationship of China chemical fiber industry in new era, the most realistic outcome in actual industrial operation, or the issues that our people working on macroeconomic should pay high attention to are that periodically excessive capacity may occur at any time, which is proved by the market in 2005, 2006 and the first half of 2007, even the differential and some functional projects can not have escape. This poses tremendous challenge to national macroeconomic control and self-discipline of industry.
2. Conflict of demand and supply of resources from rapid developing chemical fiber industry
Rapid development of China chemical fiber has increased demand for raw materials, mainly for synthetic fiber raw materials. However, due to shortage of oil resources in China, development of synthetic fiber raw material industry severely lags behind, causing rather sharp conflict between demand for resources from chemical fiber industry and supply.
Due to too large shortfall in domestic raw material market, too high degree of depending on foreign suppliers, plus few raw material suppliers and more purchasers spreading here and there, which leaves room for speculation and sensation, as a result, market price of raw materials fluctuates frequently with wide range.
Change in unit profit of polyester industry clearly indicates actual impact of raw materials' high price on the industry. Fiber profit per polyester ton was RMB904.9 in 2000 and dropped by 72.8% to RMB245.9 in 2004. It continued to fall 13.3% in 2005 and was only RMB213.1. The industry recovered largely in 2006 but the unit profit only increased 3%.
Therefore, considering from strategic perspective, if the conflict from supply and demand for raw material resources of chemical fiber is not resolved, it will restrain development of China chemical fiber industry.
If China reaches the current 22KG of chemical fiber consumption per person per year, we calculate that chemical fiber consumed by China will reach 28,750,000 tons and output will reach 37,280,000 tons. Resources are to be needed: 20,800 tons of PX, 8,710,000 tons of ethylene and 49,980,000 tons of cotton.
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