Can Sino US Trade Advantage Save The Endless Textile And Chemical Fiber Market?

The US Department of Commerce issued a notice recently that it will start the elimination procedure for China's 300 billion dollar plus tariff list since October 31st. After announcing the initial "first stage" trade agreement with the Chinese leader Liu He at the White House, Trump said that consultations with China were progressing smoothly, and he hoped to reach the first stage economic and trade agreement next month.

When Wang Yi talked about Sino US economic and trade negotiations, he said that the United States had launched a trade war and China was forced to fight back. It would not take advantage of or influence the third party, nor would it be at the expense of the third party. Le Yucheng, Vice Minister of foreign affairs, said there was no unresolved difference between China and the United States. Zuckerberg declared that China and Russia interfered in the general election of the United States. A foreign ministry spokesman said that decoupling from China is decoupling from opportunities and decoupling from the future.

Great progress has been made in Sino US consultations

On the afternoon of 22 th, the information released by the Ministry of Commerce showed that the US Department of Commerce issued a notice recently that it would start the elimination procedure for China's 300 billion dollar plus tariff list from October 31st.

From October 31, 2019 to January 31, 2020, the United States interested parties may apply to the US Trade Representative Office (USTR) to exclude applications, including information about the substitutability of the products, whether they have been charged with anti-dumping or countervailing duties, whether they have important strategic implications or are related to the 2025 industrial policies made in China. If the exclusion application is approved, the duties already imposed since September 1, 2019 can be returned retroactively.

On October 19th, at the opening ceremony of the 2019 world VR industry conference in Nanchang, Jiangxi, Liu He, member of the Political Bureau of the CPC Central Committee and vice premier of the State Council, attended and spoke. He said that the fundamentals of China's long-term economic development have not changed and the prospects for development are still bright. Substantive progress has been made in the new round of Sino US economic and trade consultations, laying an important foundation for signing a phased agreement.

Liu He believes that the cessation of the escalation of trade war is beneficial to China, to the US and to the whole world, and is the common expectation of producers and consumers. The two sides should properly resolve each other's core concerns on the basis of equality and mutual respect, and strive to create a good environment and achieve common goals.

Good stimulation of textile polyester raw materials

Some traders said that the conclusion of Sino US trade negotiations is a great benefit to the cotton, textile and garment industries.

In October 23rd, the domestic commodity futures market opened, involving many contracts such as PTA, cotton and so on. Since September, the PTA market has been shrouded in the shadow of overcapacity expectations. Recently, the implementation of the overhaul device has come to a bad end, and prices have shown signs of stopping. With the gradual progress of the negotiations, there is a new driving factor in the late PTA uptrend.

Can Sino US trade advantage turn the tide and rescue the domestic textile market?

From the analysis of the operation of the domestic textile market in recent weeks, although there were thirteenth rounds of Sino US economic and trade consultations during the period, the domestic textile market was running smoothly, and the commodity price fluctuation did not have much impact on the market. PTA and other polyester markets were still in a state of weakness throughout the whole year.

The reason is that Xiaobian believes that these two factors determine the new trend of the market.

1, Sino US trade friction has far-reaching impact on the textile industry, but it is not the only reason.

The US tax increase list covers most of China's chemical fiber, yarn, fabric, carpet, industrial textiles, clothing and household textiles. According to customs data, the total trade volume of textile and clothing exported to the United States every year is about 50 billion US dollars.

The US trade war with China directly resulted in a significant decline in China's textile and apparel exports to the United States, of which the most rapid and highly substitutable decline in yarn length and short yarn was relatively optimistic about exports of yarn to the United States. With the increase of tariffs, it is expected that by the end of this year, the export of upstream textiles will face greater difficulties, and the export pressure of clothing home textiles will become more prominent in 2020.

According to the data of China's main export markets, according to customs statistics, in 2019 1-6, China's total export price of clothing and accessories was reduced, and the export volume was $66 billion 574 million, down 4.7% from the same period last year. The number of garment exports was 14 billion 132 million, down 1% from the same period last year, and the average export price of garments was 3.64 US dollars / piece, down 4.7% from the same period last year. Sino US trade friction is one of the reasons for the slowdown in China's exports, but it is not the only reason. It also includes the slowdown in global economic growth and the adjustment of international textile supply chain. For example, the growth of international trade in some emerging countries is outstanding.

In addition, as the external situation changes and the scale of the industry expands, the development of China's textile industry has already entered a period of slowing down of aggregate growth and a period of deep adjustment and transformation. The current development speed is within the scope of reasonable expectations. This is the inevitable result of the development and structural adjustment of the textile industry. Therefore, Sino US trade friction is not the core factor for the slowdown of the industry. On the contrary, Sino US trade friction has accelerated the transformation and upgrading of the industry. In the future, the key areas of direct participation in international market competition will gradually shift from clothing to upstream products such as fabrics, fibers and other industrial chains.

Now, the good news of Sino US trade or easing the tense textile situation is still uncertain. There are still many uncertainties. We need to be alert to the changing trend of the trade situation.

2, the textile and chemical fiber Market under the prosperity cycle rule is experiencing deep adjustment of overcapacity.

This year, including the PX, PTA, polyester, weaving and other industrial chains are experiencing overcapacity, and the market will be deeply adjusted in this haze.

Since the beginning of 2017, the number of traditional textile cluster looms in the Yangtze River Delta has been decreasing. Meanwhile, the water jet looms of new textile clusters such as Anhui, Northern Jiangsu, Hubei and Jiangxi have blowout. The original enterprises in Jiangsu and Zhejiang provinces owned 100 or 200 looms. After they moved out, they became 300 or 500. The overall quantity of water looms has not decreased but increased.

The new water jet looms are homogenized because of their technical level, resulting in a surplus of conventional products on the market. In fact, after investigation, we found that apart from the loom, warp knitting machines and air-jet looms have varying degrees of surplus in the past two years. According to statistics, if the market is not optimistic this year, there will be 120 thousand looms everywhere. Meanwhile, the shrinkage of clothing consumption will directly lead to the extremely high inventory of products.

Similarly, the haze of overcapacity also appeared in polyester raw materials. In 2019, the first year of the crazy expansion of PX in China, the supply of domestic PX increased further as the 1 million ton / year PX plant of Hainan refinery and expansion went into operation at the end of September and plans to produce products around September 30th.

As of September 2019, China's new PX production capacity includes Hengli Petrochemical 4 million 500 thousand tons / year, Hongrun 600 thousand tons / year, Liaoyang Petrochemical capacity expansion 300 thousand tons / year, Hainan refining and chemical two phase 1 million tons / year total 6 million 400 thousand tons / year, compared with the end of 2018, production capacity increased by 46%.

2019 is also the peak of the domestic PTA industry. In the middle of this year, Sichuan Shengda 1 million ton plant was put into operation in May. At the end of the year, 1 million 200 thousand tons of Sino Thai Petrochemical Plant were removed, and 2 million 200 thousand tons of new Feng Ming 2 million 200 thousand tons and 2 million 500 thousand tons of Hengli petrochemical plant were put into operation. At that time, the domestic PTA capacity will reach 56 million 505 thousand tons. The overall oversupply is expected to grow.

Of course, when the Sino US trade benefits are in the capacity expansion, it is still necessary for everyone to make efforts to change the trend before the market can be changed. May the textile and chemical fiber bosses laugh in this 2019! (source: futures daily, network)