During the period when production and work resumed at the beginning of the new year, the chemical raw material market had a good start, and the quotations of major chemical products increased to varying degrees compared with the previous year. After the chemical market became popular, various price increase letters came one after another. Chemical giants such as BASF, Wanhua Chemical, and Kuraray have raised prices for various chemical products, resulting in changes in the prices of dyes in certain categories.
When dye prices gradually get rid of low consolidation and start to rise, where will the downstream printing and dyeing companies go?
The pressure is high and the printing and dyeing industry is under pressure
With questions in mind, let’s first review the overall operation of the printing and dyeing industry in 2022.
Data from the National Bureau of Statistics shows that from January to November 2022, the output of printed and dyed fabrics by enterprises above designated size in the printing and dyeing industry was 50.435 billion meters, a year-on-year decrease of 7.05%; the operating income of printing and dyeing enterprises above designated size was 282.540 billion yuan, a year-on-year increase of 5.97%; total profits were achieved 11.298 billion yuan, a year-on-year decrease of 9.66%. The number of loss-making enterprises among the 1,715 printing and dyeing enterprises above designated size was 554, accounting for 32.30% of the total; the total loss of loss-making enterprises was 3.110 billion yuan, a year-on-year increase of 77.39%.
It can be seen from the data that in 2022, not only the output performance of the printing and dyeing industry will not be as good as before, but even the total profit will drop significantly. These conditions directly lead to the expanding losses of printing and dyeing enterprises. Affected by unexpected factors such as the turbulent international situation, the slowdown in world economic growth, and the frequent occurrence of domestic epidemics, the operating efficiency of the printing and dyeing industry has been significantly under pressure, and the operating pressure of most companies has increased significantly.
Relevant people in a dyeing factory said that throughout last year, there was no “cylinder explosion” phenomenon in the factory, and the operating rate was lower than in previous years, sometimes even less than 50%. This operating rate obviously cannot maintain normal production operations, and coupled with the rising steam costs, losses occur from time to time.
According to monitoring data from Silkdu.com, the trend in the operating rates of printing and dyeing companies in the sample in 2022 can be described as “smooth” compared with previous years. The traditional peak season did not bring much ups and downs to the printing and dyeing industry, and the performance throughout the year was “unremarkable.”
As we all know, dyeing fees are the main source of income for printing and dyeing enterprises, and dye prices are an important factor affecting dyeing fees. In the “tepid” year of 2022, the dyeing fee price remained relatively stable. Even if the prices of dyes, auxiliaries, etc. changed, the dyeing fee did not fluctuate accordingly.
Group prices rise, can price increases reverse the predicament?
Just after the Spring Festival holiday, while printing and dyeing companies are waiting to start operations, dye prices have started to rise again, which is undoubtedly “making matters worse” for the printing and dyeing industry. In order to reverse the predicament, some printing and dyeing companies have issued emergency price adjustment notices and begun to “raise prices as a group.”
Looking at these price adjustment notices, there is a sense of helplessness between the lines. So is this wave of dye fee adjustments a regular price increase “routine” at the beginning of the new year? Or is it a “self-rescue” carried out by printing and dyeing enterprises to alleviate operating pressure?
Looking back on the past two years, printing and dyeing companies have occasionally increased dyeing fees. For example, in 2021, in just one month, dyeing fee prices experienced “three consecutive increases.” The rising production costs have become the “trigger” for increasing dyeing fees. In order to ease operational pressure, printing and dyeing companies can only pass on part of the costs through price increases.
A salesperson from a dyeing factory revealed that within a few days of starting work, several major customers came to place orders, mostly urgent orders. Since the fabric market has not yet fully recovered and there is a strong wait-and-see sentiment, most customers still focus on making samples. In terms of dyeing fees, we have not received any notice of price increases for the time being. Whether they will increase or not depends on the status of subsequent orders.
From this point of view, the increase in dye prices will have a certain promoting effect on the adjustment of dyeing fees by printing and dyeing enterprises. This wave of “group price increases” is a “self-rescue” measure taken by enterprises that are in a loss-making state to alleviate cost pressure. It is a trial sexual upregulation. However, if the order situation cannot be fundamentally improved, printing and dyeing enterprises will remain in a state of “not having enough to eat”, and raising dyeing fees may only be a drop in the bucket.
Postscript
2023 has just begun, but notices of price adjustments are coming one after another, which shows how eager printing and dyeing companies are to turn around losses and increase efficiency. However, the current situation of the printing and dyeing industry is not optimistic. Over-expanded production capacity, severe market involution, unrecovered demand, etc. have all become obstacles to development. Turning around losses through price increases may have little effect.
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