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Insight | Time: Apr 11 2019 9:50AM
After Xiangshui blast: Printing and dyeing industry
 
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After the explosion in the Chenjiagang Chemical Park in Xiangshui county on Mar 21, environmental regulation tightened again. The chemical companies in Xiangshui Industrial Park began to halt production for rectification.There was a meeting of the Standing Committee of the Municipal Party Committee on April 4 in Yancheng, Jiangsu, pointing out that Xiangshui Chemical Industry Park must shut down completely.

Dye fee rises sharply
It was reported that all domestic m-phenylenediamine enterprises shut down for maintenance, and the production of m-phenylenediamine moved down. Traded price increased from 45,000yuan/mt to 100,000yuan/mt. Disperse dyeing fee also followed up.



In recent years, printing and dyeing industry production capacity has been shrinking. 2018 China printing and dyeing fabric production reached 46.08 billion meters, up by 2.26% year-on-year. However, industry concentration still needed to be improved, so bargaining power was weak. In contrast, industry concentration of dye industry was high. Disperse dyes were mainly produced in Shandong, Zhejiang and Jiangsu.

The explosion led to production cut of disperse dye enterprises in North Jiangsu. Enterprises in Shandong halted production for maintenance. Most enterprises in Zhejiang cut production. Therefore, dye supply decreased drastically. In addition, April is the peak season for printing and dyeing industry, the dye price will run at a high level and may not drop in short term.

Stricter implementation of environmental supervision
On Apr 8, 2019, Standing Committee of Jiangsu Provincial Party Committee held a meeting to discuss the “Improvement Scheme for Safety and Environmental Protection of Chemical Industry in Jiangsu”, and emphasized that backward low-end chemical enterprises and parks that failed to meet environmental protection standards and safety production standards needed to shut down.

On Feb 3 2019, General Office of the People's Government of Jiangsu announced the “Implementation Opinions on Environmental Treatment Project of the Chemical Industry Park (Concentration Zone) in Jiangsu”. 53 chemical parks needed assessment in the document, including 24 in South Jiangsu, 12 in Middle Jiangsu, and 17 in North Jiangsu.

On Feb 2 2019, department of Ecological Environment in Jiangsu issued a notice on further improving environmental impact assessment of construction projects. New chemical parks, chemical companies outside the park, and new rebuilding and extension chemical projects of enterprises inside the park with imperfect environmental infrastructure or long-term unstable operation were not allowed. Building dangerous chemicals terminals within 1 km bank lines along main stream and main tributaries of the Yangtze River should be prohibited.

Combined with the explosion and a quick decision of Xiangshui County, environmental burden in 2019 may reach an unprecedented height. Of course, it was not difficult to foresee futures of various chemical parks in Jiangsu. Most of enterprises will shut down for maintenance and production resuming may slow down. The chemical industry parks in Jiangsu will face long-term shutdown or relocation under cost pressure. 

Dyeing fee increases
In Zhejiang, notice issued by Hangzhou Hangmin said that from Apr 8 2019, knitted fabric of finished products will quote up by 200yuan/mt. It was also the second notice of dyeing fee increment issued by Hangmin within 15 days. Some dyeing mills in Zhejiang also quoted up by 200-500yuan/mt.

In Jiangsu, due to supply shortage of disperse black dyes, some enterprises in Jiangsu raised by 1,000yuan/mt, and other sensitive colors were extra.

In Guangdong, some printing and dyeing enterprises in Zhaoqing adjusted all fabric processing fees from Mar 28 2019. The increment was at least 500yuan/mt on the basis of original dyeing fee. The highest increase was 1000yuan/mt, and the active dyeing was unified at 16,000yuan/mt. Others were prescribed separately.

Fujian knitting & dyeing factory adjusted dyeing and finishing of various products from Apr 1 2019, with a minimum increment of 300yuan and a maximum of 700yuan.

In addition, dyeing fees in dyeing factories in Jiangxi and other places realized mixed growth.

Conclusion
The sharp increase of dyeing fees this time is mainly driven by the higher dye price. Feedstock producers had a say on printing and dyeing market. From the development trend in recent years, oligopoly competition in dye industry was obvious, and downstream bargaining power was weaker. In addition, with increment of operating costs such as labor and environmental protection, printing and dyeing mills were forced to raise prices.

As to operating rate of dyeing mills after the Spring Festival holidays, printing and dyeing mills saw bearish production in traditional peak season. Whole industry was subdued after Mar mainly due to limited orders of dyeing mills. Currently, pessimistic mood still spread on the market. Higher dyes price and dyeing fee have nothing to do with the peak season.
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