Dye Industry: Ice and Fire

Business Club December 29th, 2011, can be said to be a rising year, severe inflation, raw material prices fluctuated, labor and energy costs and other unfavorable factors on the development of dyeing industry in China It is very large, but some local dyeing enterprises have continuously improved the level of technology, management, and marketing by transforming their development methods, and have promoted the steady and healthy development of the industry.

According to Tian Liming, secretary general of China National Dyestuff Industry Association, from January to May of this year, the national dye production reached 320,000 tons, an increase of 7.4% year-on-year; sales revenue reached 9.86 billion yuan, a year-on-year increase of 10.2%. The output of organic pigments reached 57,000 tons, a cumulative increase of 10.4% year-on-year. The dyeing industry completed a total industrial output value of 10.08 billion yuan, an increase of 7.2% year-on-year; sales revenue was 9.58 billion yuan, an increase of 10.2% year-on-year; profits and taxes were 1.02 billion yuan, a cumulative increase of 8.8%. From this we can see that the dyeing pigments industry is running steadily and all indicators have also increased slightly.

Although the industry as a whole is operating stably, the internal performance of the industry is uneven, which can be described as two-fold. In particular, large-scale key enterprises are better than SMEs. After entering the market in May, due to multiple factors such as the declining domestic demand growth, increasing inflationary pressures, reduced investment, and declining domestic demand, the market of pigmented dye enterprises has significantly declined. From the data, in 2011, the production of dyed paints showed a slow growth trend. The output of some large enterprises maintained a positive growth, but the output of small and medium-sized enterprises fell sharply; the export volume of dyed paints showed a negative year-on-year growth. As a major dye province in Zhejiang Province, from January to October 2011, Zhejiang Province produced a total of 454,426 tons of various types of dyes, an increase of 2%; accumulated sales of 455,297 tons of dyes, an increase of 4%; of which 55,809 tons of exported dyes accumulated, year-on-year growth 2%. Exports account for 12% of all sales, and dyes have a 100% sales rate. It is expected that China's total dye production this year will reach about 750,000 tons.

Significant changes in the international market pattern The developed countries’ enterprises gradually withdrew from the basic dye synthesis business; while dyestuff industries in China, India and other developing countries have accelerated their development due to the transfer of dye manufacturing technologies and the rapid development of the domestic textile industry.

This is a marked change in the pattern of the international dye market.

Since 2011, new changes have taken place in the international market competition landscape. At present, developed country enterprises gradually withdraw from the basic dye synthesis business, forming a dye semi-finished product that mainly relies on imports from China and India to process high value-added dye commercial products, or directly purchase dye products from two OEM manufacturers and OEM Sales business model. On the other hand, the old dye enterprises represented by DyStar are actively re-adjusting their products and technologies, and will focus on the development of high-end dyes, functional dyes, and textile auxiliaries, as well as new environmentally-friendly dye products and new printing and dyeing technologies. The development, supplemented by global locations and advanced consulting technology services as the company’s competitive strategy, has maintained its dominant position in the high-end, featured dyes sector. The dyestuff industry in developing countries such as China and India has also emerged a number of large-scale enterprises with strong production strength and strong R&D strength and a large number of small and medium-sized dye enterprises due to the transfer of dye manufacturing technology from developed countries and the rapid development of the domestic textile industry. And invested a lot of funds for research and development of new dye products and application technology, which has a greater impact on European and American companies, but in the short term its competitive advantage is still mainly reflected in the conventional dyes with a low added value.

Supply and demand imbalances Today, China's dye production accounts for about 60% of the world's total production; but now the national supply and demand of the dye market has undergone great changes, the total market is too large, the overall supply exceeds demand, supply and demand imbalance.

This is an outstanding year of contradiction between supply and demand.

After years of development, China's dye production accounts for about 60% of the world's total dye production. At present, there are about 600 kinds of dyes produced in China, covering all major dye categories, which can meet more than 90% of domestic market demand. China's larger production of dyes followed by disperse dyes, reactive dyes and dyes. Since 2011, the growth of China’s dye production and export volume has slowed down. In the first half of the year, due to factors such as the increase in the prices of raw materials, labor costs and other factors of production, and the adjustment of the exchange rate, the growth rate of dyed pigments has decreased significantly, and even negative growth has occurred. . According to customs statistics, from January to May, the total amount of dyes exported nationwide was 109,000 tons, a year-on-year drop of 4%, showing a rare negative growth, especially the negative growth in May, which was a drop of 16% year-on-year. After entering the market in May, due to multiple factors such as the declining domestic demand growth, increasing inflationary pressures, reduced investment, and declining domestic demand, market operations have dropped significantly. However, the output of dyes is still growing. From the perspective of market supply this year, the supply is sufficient and it is more than sufficient to satisfy the market supply. At present, the relationship between supply and demand in the national dye market has undergone great changes. The total market volume is too large, and the overall supply exceeds demand and supply and demand are out of balance. In a word, the supply is sufficient and the demand is limited. The contradiction between supply and demand is very prominent. This feature is very prominent in the year of the rabbit and will have a great impact on the healthy development of the domestic dye industry and market.

Reducing the "three wastes" emissions has increased the supervision of enterprises in implementing environmental protection laws; the introduction of a series of measures has accelerated the elimination of backward production capacity.

This is an outstanding year for the development of two economies.

Since 2011, China's dyestuffs have made greater efforts in energy conservation and emission reduction, and actively developed recycling and low-carbon economy. After entering 2011, the country’s environmental protection requirements have become more and more stringent, and the supervision and management of enterprises’ implementation of environmental protection laws and regulations has increased. Correspondingly, the environmental protection requirements of the dye industry have also been increasing, and the “three wastes” in the dye production process have been discharged. Supervision increased. The grim situation has advanced the development of the two economies of the dye industry. For example, Shanghai Anokqi Textile & Chemical Co., Ltd. faces a huge pressure of low-carbon economy, circular economy, and energy-saving and emission-reduction. Based on the protection of the ecological environment and resource conservation, it continues to increase in the expansion of two dye factories in Yantai and Dongying. Environmental investment to promote cleaner production and maintain the ecological environment. At the same time, some companies have enhanced the initiative to develop the two economies. For example, Zheng Hongyu, chairman of Penglai Xinguang Pigment Co., Ltd. believes that the “three wastes” and emission control, as well as pressure from international conventions, will cause certain development in the future development of the dyeing pigment industry in China. Constraints. In order to reduce "three wastes" emissions, the industry needs to develop and promote cleaner production processes. Long-term development of dyeing pigment industry must be based on the protection of the ecological environment and resource conservation. To this end, Penglai Xinguang Pigment Co., Ltd. is actively preparing funds for relocation and entering the chemical industry park. As they build new factories, they will focus on developing two economies, producing green pigments, and protecting resources and the environment. For the future of the dyeing industry, the long-term development of dyeing pigment industry must be based on clean production, vigorously protect the ecological environment and carry out resource conservation work. According to the actual development of the dyeing pigment industry in China, speed up the elimination of backward production capacity, strict work schedules, announce the elimination of backward production capacity as soon as possible; stop low-level duplicate construction, establish and improve the exit mechanism of heavy polluting enterprises; eliminate serious environmental pollution, destroy ecological environment, Waste energy and energy production process. Strictly implement policies, speed up the improvement of the elimination of outdated production capacity, define standards, conscientiously implement environmental protection, energy consumption, safety, quality, land and other aspects of laws and regulations, strengthen supervision and inspection, and resolutely prevent backward production capacity transfer. Further promote the development of a green, low-carbon, clean and safe dye industry.

The high cost of confusion due to inflation expectations, fuel, chemical raw materials prices all the way up; some varieties of tax policy is canceled, so that the cost of some dye varieties rose by 5%.

This is a challenging year.

As global basic raw material prices continue to operate at a high level, the cost of domestic environmental protection, energy, manpower, and logistics continues to increase, and the pressure on production costs will increase. The situation of coal, electricity, oil and transportation has not been alleviated for a long time. In particular, the price of coal and natural gas has continued to rise, and domestic oil prices have continued to rise, causing the cost to rise sharply. At present, due to inflation expectations, the prices of fuels and chemical raw materials all have risen, which has become an important additional factor in the cost of dyes. At the same time, the elimination of tax exemption policies for some varieties has led to a net increase in the cost of certain dyes by about 5%. Since this year, the company’s cost pressures have been significant and sales expenses have increased significantly, which has greatly reduced the profitability of the company. In short, the increase in raw material prices in 2010, such as aniline products, the average price of 8,000 yuan / ton last year, the average price this year more than 11,000 yuan / ton. Other costs such as freight and labor are also increasing. The rising raw material and energy prices have made the dye industry, which has been profitably low, even worse. It is understood that several large dye companies in Shanghai and Shandong have such difficulties and are experiencing the same difficulties in their growth. Affected by the big environment such as inflation, raw materials for production have risen sharply and the cost has been pushed up. Affected by the increase in prices of raw materials and other products, the increase in cost has caused many companies to lose money. The rise in cost is difficult for companies to digest and become the pain in the dyes and pigments business. The reduction in costs through management measures to achieve profit growth has become a killer for dye companies to respond aggressively to challenges in 2011. In 2011, many dye companies improved their management levels in a timely manner, strengthened internal controls, had large-scale dye companies, and used large-scale procurement advantages to reduce costs.