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Chemical fibre industry enters cyclical period

05
Dec '08

The chemical fibre industry has showed a sharp reversal from the peak it attained in the last few years thereby demonstrating characteristics of a strong cyclical period. In the first three quarters, chemical fibre production could achieve a growth of only 2.44 percent year-on-year, down 16.66 percent from the same period last year.

The growth also fell for the first time in eight years to below single digit rates. The growth rate of fixed assets also significantly fell by 18.6 percent, far below 51.6 percent of the first three quarters last year and 31.8 percent in the whole year of 2007.

The economic crisis and the resultant slump in off take and also the crash in prices of vital petrochemicals, the situation in the fourth quarter of the current year in China as well as abroad is expected to further exacerbate leading to a further deterioration in the once vibrant chemical fibre industry.

The chemical fibre industry in China is expected to realize a revenue growth of only 1.44 percent year-on-year, while growth rates in profits are expected to fall 65.38 percent year-on-year. Demand from the down stream sectors is not enough to utilize the capacities resulting in rising inventories.

Due to declining export orders and slowdown in the domestic downstream industries, companies have been compelled to reduce their operating capacities on the back of rising stock levels. This difficult phase is expected to continue in to the first half of 2009. Industry leaders are expecting the situation to improve towards the beginning of 2010 only.

Fibre2fashion News Desk - China

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