Today, two major events regarding the polyester industry have dominated the author’s circle of friends.
Xinfengming rings the bell for listing: At 9:30 this morning, as Tongxiang Municipal Party Committee Secretary Sheng Yongjun and Chairman of Xinfengming Group Co., Ltd. Zhuang Kuilong and others rang the gong for listing on the Shanghai Stock Exchange, “Xinfengming” officially landed on the A-share market, which directly connected the capital market and expanded the development space for “Xinfengming” to build a “chemical fiber kingdom”. The stock code of “Xinfengming” is 603225. The circulating share capital of this listing is 77.3 million shares. The total share capital after the public offering has reached 602 million shares. The issue price is 26.68 yuan. On the day of listing, it opened at 32.02 yuan and then hit the daily limit of 38.42 yuan. The increase was 44%.
Southern Petrochemical was auctioned tragically: On the other hand, a shocking news appeared on today’s judicial auction website. Southern Petrochemical, a well-known representative chemical fiber company in China, was sold for nearly 700 million yuan today. The price was auctioned.
It’s true that some people are happy and some are sad! On the one hand, we are proud of the listing of Xinfengming as another listed company in the polyester industry. On the other hand, we are also sad that Southern Petrochemical was auctioned off. It is really a mixed bag of emotions. And history will eventually record today’s important event in the history of polyester. It is foreseeable that the competition in the industry will become more intense in the future, and the pattern of the strong getting stronger and the weak being eliminated has been formed.
The strong get stronger: leading polyester companies expand their territory, seize the market, and compete for the upper reaches!
According to statistical data, as of the end of 2015, there were more than 150 polyester production companies in my country, mainly distributed in coastal provinces and cities such as Zhejiang, Jiangsu, Shanghai, Fujian, and Guangdong. Zhejiang accounts for half of the total, and East China accounts for more than 80%. . The industry concentration of Chinese polyester companies continues to increase. Among them, there are 13 factories with a production capacity of more than 1 million tons, with a total production capacity of 24.13 million tons, accounting for 52% of the total production capacity. According to publicly disclosed information collection, as of 2015, Tongkun Group, Sanfangxiang, and Yizheng chemical fiber production capacity ranked among the top three in the country, accounting for more than 20% of the country’s total production capacity.
In recent years, polyester companies have expanded their production capacity through acquisitions or expansion of production. However, competition in the polyester industry is no longer just a competition for production capacity. While leading companies are actively seeking to go public to reduce financing costs and gain competitive advantages, they are also expanding downstream and competing for upstream!
Top 10 polyester manufacturers in China in 2016 (ranked in no particular order, production capacity data are for reference only)
Weak ones are eliminated: The cake is so big, how many spoons can small and medium-sized polyester companies get?
At the same time, as the polarization of corporate benefits intensifies, some production capacity with large energy-consuming products of poor quality and weak competitiveness will be eliminated. Only a few large-scale production companies continue to expand their production capacity, increase their output, and increase industry concentration. Saying goodbye to the skyrocketing previous years, it is expected that domestic demand for polyester filament will only grow at an average annual rate of 2.4% from 2016 to 2020, reaching about 33.4 million tons in 2020. However, the cake is so big. In addition to the share of leading companies, how many spoons can small and medium-sized polyester companies get?
On the other hand, the current situation of the industry is still grim. When faced with the rising costs of labor and raw materials in recent years, it is difficult for large companies to bear it, let alone small companies. According to statistics from the National Bureau of Statistics, from January to December 2016, there were 147 loss-making enterprises in my country’s chemical fiber weaving and printing and dyeing finishing industries, and the loss area further narrowed to 11.37%, a decrease of 1.78 percentage points from the same period last year; the cumulative loss of loss-making enterprises was 531.37 million yuan, a year-on-year increase of 21.02%. The average cumulative loss of a single loss-making enterprise was 3.6147 million yuan, a year-on-year increase of 35.58%. Among them, there are 124 chemical fiber weaving enterprises with losses, and the cumulative loss of loss-making enterprises is 461.31 million yuan, accounting for 86.82% of the losses in weaving and printing and dyeing finishing. The average cumulative loss of a single loss-making enterprise is 3.7202 million yuan, which is higher than that of weaving and printing and dyeing finishing. The loss of a single loss-making enterprise in the processing industry was 105,500 yuan more. This data is still hardly optimistic for the entire industry!
In addition to the pressure factors of cost and supply and demand, continued sluggish demand in the downstream market, significant fluctuations in raw material prices, and pressure on new production capacity may be the last straw for chemical fiber companies!
All in all, after experiencing the era of “the leftovers are king”, now the polyester industry has become increasingly mature, and competition in the polyester industry is facing a new normal in which the initial pure price competition has transformed into a competition between scale and technology. It can be said that whether polyester companies can adapt to the new normal has become the key to the healthy development of polyester companies. In the future, the reshuffle of the polyester industry will continue, and industrial restructuring will also accelerate. Those polyester companies with innovative capabilities will win more development opportunities. At the same time, many polyester companies without innovative capabilities will disappear.
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