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Insight | Time:Jun 8 2018 9:24AM
Impacts on cotton textile industry downstream brought by environmental regulation
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“Lucid waters and lush mountains are invaluable assets.” To respond to the call, many regions in China conducted environmental regulation. So far, the regulation has not shown signs to ease and cotton textile industrial chain is still affected.

In the whole cotton textile industrial chain, downstream, especially sizing during grey fabric production and dyeing and printing during fabric production, suffers the strictest environmental regulation.

The impacts brought by environmental regulation are shown as follows.

1. Busy processing in dyeing plants extends peak season.

A large amount of dyeing plants which did not meet the standards are required to shut, leading to slump of overall dyeing capacity. Orders flow to those at work. Dyeing plants were busy in Mar-Apr and some even overstocked and refused to take in grey fabric. In addition, orders accumulated before the Spring Festival are still under processing, delaying delivery. In Apr, delivery time of some dyeing plants even extended to 60-70 days. As a consequence, the peak season was extended to a certain degree and traders and producers showed divergent performance. As traders cannot guarantee delivery, downstream customers mostly prefer to place orders directly to dyeing plants.

In early May, with the market moving slack, delivery of dyeing plants recovered somewhat, but the equipment cannot operate at full capacity amid continuous environmental inspection. In late May, however, delivery was heard to tighten again.

2. Dye prices move up and dyeing fees follow up.

Dye producing areas like Guanyun and Guannan Chemical Industry Park in Lianyungang shut down completely and some relevant product suppliers see tight supply. Price of dye auxiliaries used in printing and dyeing keeps upward all the way since the very start of this year. With active demand in peak season in Mar-Apr, dyeing plants raise dyeing fees accordingly.

Time Event
After Spring Festival Dyeing fees in Fujian were adjusted up generally.
7-Mar Some large plants like Hangmin Stock raised dyeing fee by 0.1yuan/m.
20-Mar Hangmin Stock raised dyeing fee again by 0.1-0.2yuan/m.
21-Mar Prices of isperse special red and yellow series were adjusted up by 3,000-5,000yuan/mt and some offers of disperse red were over 130,000yuan/mt.
10-Apr Conventional disperse dyes were revised up 3,000yuan/mt and disperse 300% black up to 53yuan/kg.
9-May Ten types of dyes moved up and disperse emerald blue S-GL200% up to 210yuan/kg.
12-May Reactive yellow moved up by 200yuan/mt.
14-May As Jihua, Yabang, Runtu and Wuzhong all suspended production, prices of 11 types of disperse dyes from Longsheng rose together. Disperse blue 2BLN 100% was quoted at 300,000yuan/mt.
18-May Emerald blue S-GL (60 blue) surged by 60,000yuan/mt to near 300,000yuan/mt.
19-May Bright blue 2BLN (56 blue) was quoted at 300,000yuan/mt and disperse blue SE-2R moved up by 20,000yuan/mt. Disperse, reactive and acid black ticked up by 1,000-3,000yuan/mt.

3. Fabric plants are burdened by tight delivery and rising dyeing fee.

The impacts on fabric plants caused by environmental protection are mainly from two aspects. Firstly, capacity of dyeing plants is restricted, extending delivery time. But the fabric plants cannot wait due to seasonal features of fabrics. The delivery time and quality are uncertain if they change dyeing plants. Therefore, fabric plants face more barriers to take orders. Secondly, rise of dye prices promotes dyeing fee to follow up, increasing the cost of fabric plants.

At present, sales of grey fabric plants slow down and inventory inches up, as market turned slack, demand reduced and slower consumption of fabric plants.

Environmental regulation will last long and the disturbance to traditional industrial chain will not ease soon. Related plants are suggested to adjust their own supply chain to deal with the trend patiently.
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