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Insight | Time: Jul 21 2021 11:05AM
What is the impact of heavy rain in Henan on textile industry?
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The central Chinese city of Zhengzhou, the provincial capital of central China's Henan Province, has been lashed by record rainstorms, causing severe waterlogging, traffic disruptions, and power outages. More than 144,660 residents have been affected by torrential rains in central China's Henan Province since July 16, the provincial flood control and drought relief headquarters said Tuesday. A total of 32 large and medium-sized reservoirs have seen water levels rise above the alert level after torrential rains battered most parts of the province. About 20,000 hectares area of crops was affected by and 3,000 hectares inundated area was hit by heavy rains. Both Henan provincial and Zhengzhou municipal meteorological bureaus have raised the emergency response for meteorological disasters to level I.


After the communication with manufacturers and relevant sources, the latest information is as follows.


On Jul 21

Nylon: Pingmei Shenma Group (CPL and nylon 6 chip producer), located in Pingdignshan, Henan province, is not affected by the heavy rain fall, and is now running steadily and the logistic are kept normal so far.


Polyester: Anyang Chemical 300kt/year PET bottle chip line has shut down 150kt/year SSP line temporarily, as the heavy downpours affected PTA transport. PSF production of Sinopec Luoyang and Luoyang Shihua runs normally, but the transportation is affected by the downpour. The rain is forecast to stop today and the transportation may improve later.


Viscose: local VFY and lyocell fiber producers are running normally, while the production of some rayon yarn mills is affected, leading to minor decline of operating rate.


PP: The rainstorm has no impact on the PP production of Sinopec Luoyang PC, but the delivery transportation has been affected.


Spandex: Feedstock plant Henan Energy and Xinxiang Chemical Fiber's spandex unit sustain normal production now, while the logistics are restricted as the expressway is blocked.


Zhengzhou Commodity Exchange: the operation is normal.


Judging from preliminary communication, Zhengzhou was the most seriously affected area, and other areas also suffered heavy rainfall. However, production remained stable temporarily, but the transportation and shipment were affected.


From the perspective of capacity distribution, the impact of the rainfall on cotton textile industry attracted the most attention. As the top five provinces of domestic spinning capacity, many local cotton spinning mills in Henan got a certain influence, involving tens of millions of spindles. In addition, cotton storehouse in Zhengzhou, which has seen tight supply this year, may also be affected. However, the actual impact still needs to be evaluated. For example, the proportion of spinning in Zhengzhou is not too high.


(According to CCFGroup, textile mills in the surrounding areas of Zhengzhou had little influence on production, but transportation had some negative effect. The impact of cotton storehouse was limited for the time being and will be followed up further.)


The heavy rainfall will last until the night of July 21 and will still be concentrated in Northwest and central Henan, with precipitation of 100 to 250 mm and local 300 to 400 mm, Henan Meteorological Station chief forecaster Zhang Ning said. On Jul 22 to 26, there will be no obvious large-scale heavy rainfall weather but scattered thunderstorm weather in Henan.


In addition, it is noteworthy that in addition to the direct impact of the current rainstorm, there will be a series of problems such as flood discharge, risks such as power failure and landslide in the surrounding areas, as well as the impact of logistics and transportation, which need follow-up attention.

In the morning, most mills said that they maintained normal operation, but the subsequent rainstorm swept through again, which began to have an impact on some mills. At the same time, some express companies also postponed sending. 

On Jul 22

At 4:30 am on July 22, Henan meteorological service continued to issue red torrential rain warning for Henan: the precipitation in the western part of Anyang, Hebi and Xinxiang, the eastern part of Zhengzhou and the northern part of Xuchang has reached more than 50 mm. It was understood that Anyang, Hebi, Xinxiang and Jiaozuo received torrential rain from 6:00 am on July 21 to 6:00 am on July 22. Science and technology innovation center of Qibin District, Hebi City occurred maximum precipitation of 675.5mm and Muye District of Xinxiang City reported record-high hourly precipitation of 149.9 mm.


According to Dahe News, at 4:05 am on July 22, Anyang meteorological service issued red torrential rain warning: more than 100 mm precipitation has occurred in Qugou of Anyang, which may have a certain impact. Notice in Anyang: all public transportations in the city are out of action. All enterprises shall work remotely except for the necessary emergency response personnel and personnel on duty.


At 4:30 am on July 22, Xinxiang meteorological service issued red torrential rain warning: it is expected that heavy rainfall will continue in Xinxiang in the next three hours, and the accumulated precipitation will reach more than 100 mm. According to Xinxiang news network, Muye station in Xinxiang City received average precipitation of 267.4 mm within 2 hours, which waas more than the maximum rainfall of 262.5 mm in Zhengzhou yesterday!


According to CCFGroup, customers in Xinxiang said that there were difficulties in commuting, some of them could not arrive for work, but overall production was normal for the time being. The cotton storehouse in Xinxiang was not affected temporarily, but the downstream may still be affected during the flood discharge period in Zhengzhou, so eys are suggested to the operation of textile mills. Customers in Pingdingshan said they were fighting against floods, but normal production remained. The enterprises in Anyang said that it was still raining and they chose to work from home but were worried about blackout risk.


[RISK DISCLAIMER] All opinions, news, analysis, prices or other information contained on this report is provided by analyst of Zhejiang Huarui Information Consulting Co., Ltd (CCFGroup) as general market commentary and does not constitute investment advice. CCFGroup will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.
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