In recent years, the growth rate of investment in the domestic polyester industry has slowed down. Last year, domestic polyester manufacturers planned to expand production capacity by approximately 4.38 million tons in 2016, of which polyester bottle flakes were expanded by 2.5 million tons, more than half of the overall production capacity. I thought that bottle flake manufacturers had a strong willingness to invest, and polyester bottle flakes would become a new investment hotspot. However, when we looked at the specific implementation this year, we found that many sets of equipment last year, such as Sanfangxiang, Hanbang (Chenggao), Wankai and other companies with more than 2 million tons of production capacity have been delayed.
2016 polyester production capacity commissioning schedule
2016 polyester production capacity commissioning schedule
So why does the enthusiasm of enterprises to put into production new equipment come and go so quickly?
1. Domestic demand and foreign trade demand are weak, and enterprises have hidden concerns
For a long time, polyester bottle flake companies have maintained a net export pattern, with an export dependence of close to 50%. Therefore, the export market is very important to domestic businesses. However, in recent years, under the influence of factors such as the slowdown in global economic growth, the new production of million-ton polyester equipment in India, and the increasing barriers to overseas export trade, polyester bottle flake companies are facing bottlenecks in exports. According to customs data, my country’s total export volume of polyester bottle flakes in 2015 was 1.8923 million tons, a year-on-year decrease of 10.95%. Although domestic polyester bottle flake manufacturers strive to expand exports, the export situation is not performing well.
In addition, the low growth rate of domestic soft drinks is also an important factor. Since 2015, the growth rate of the beverage industry has dropped to single digits. Especially last year, affected by the national economic downturn, the decline in income of some consumer groups, and continuous rainfall in most parts of the country, the beverage industry, which has entered a period of adjustment, has become even more depressed. . Therefore, when the domestic sales and foreign trade pattern are not very optimistic, it is understandable that the device originally planned to be launched in 2016 has been stranded or postponed.
2. Enterprises have long been stuck in the quagmire of losses. How can we invest without making profits?
For a long time, the polyester bottle flake market has been characterized by seasonal factors of end products, with obvious off-peak and peak season characteristics. In addition, the buyer’s market is also easy to control its own procurement period, resulting in bottle flake suppliers’ passive position in pricing power. Once the market fluctuates significantly, the dual pressure of low-price orders and high-price cost settlement can easily make a bottle tablet manufacturer return every drop of profit earned throughout the year.
In the second half of 2016, affected by the cost of raw materials, the price of bottle flakes basically fluctuated in a range. However, starting from the fourth quarter, downstream demand began to enter the off-season, and the market for bottle flakes was slightly weak. At the same time, there was too much rain in the south, which had an impact on commodity consumption, transportation and other links. The wait-and-see atmosphere in the downstream became stronger, and transactions gradually became deadlocked. Throughout the second half of the year, polyester companies were in a state of loss most of the time, and most of the equipment originally scheduled to be put into production in 2016 was concentrated in the fourth quarter. If the company is not profitable, how can there be enthusiasm for investment?
3. The freight issue has come back to “disrupt the situation”, and the cost pressure on enterprises has increased to a higher level
In addition, since the second half of last year, the biggest headache for market participants has been the adjustment of freight rates. Since the implementation of the new regulations on September 21, the road freight rates for polyester bottle flakes have increased by 20%-30%; and it is understood that last year, sea freight Fees also change more frequently. Following the large-scale withdrawal of ships in October, shipping companies’ shipping capacity has been significantly reduced, which has made positions tight in some regions, especially South America. It is often difficult to find a cabin. Therefore, there are pressures from many parties such as tight costs and financial capacity. Under the influence, sea freight also began to rise crazily. The increase in transportation costs has made the situation of bottle flakes export companies even worse, and their competitive advantages compared with other Asian regions have gradually been lost.
To sum up, the delay in putting into operation nearly 2 million tons of equipment in 2016 was due to the lack of bright spots in the terminal demand for bottle flakes. Especially in recent years, the industry has faced internal and external troubles, which has greatly affected the enthusiasm of enterprises for production and operation. It seems that after being quiet from 2014 to 2015, the polyester bottle flake industry was still unable to start the explosive growth mode from 2016 to 2017.
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