Abstract
Halfway through Q209, there were reports that prices for chemical fibre
products in China were
beginning to harden, perhaps signalling that the
worst of the recession might be coming to an end - at
least in the
synthetics sector. Products showing price gains since February 2009 included
viscose staple
fibre, filament, polyester fibre and spandex fibre. There
was also a mid-May revival in share prices of
important synthetics
producers such as Xinxiang Chemical Fibre and Shandong Helon. Asia Pulse
news agency noted that the price of polyester fibre POY150D had fluctuated up
to CNY9,400/tonne in
mid-May, up from CNY9,065 in April. Viscose staple
fibre prices had risen to CNY14,000/tonne, up
from CNY11,800/tonne in late
January, just before the Chinese Lunar New Year break. An analyst from
China-based Essence Securities who was quoted by the news agency said the
improvement in chemical
fibre prices reflected low inventories at the
start of April when for seasonal reasons demand usually
begins to pick up.
Opinions were mixed on future prospects. The Essence Securities analyst
predicted a
short term price bounce caused by seasonal factors, but
expected it to lose steam as the chemical fibre
industry entered its low
season after June. Shandong Helon executives were more optimistic,
predicting
that prices would stabilise after June but then pick up speed
again in August.
The next 12 months will remain a difficult time for
China' s textile and clothing industry. The global
economic slowdown is
taking its toll on an industry that has enjoyed more than 10 years of y-o-y
exportled
growth. The first shock of the downturn is now over and the
question being asked is whether Q209 is
witnessing the ' floor' of the
industry downturn, and at what point a recovery will kick in. Companies
are
dealing with the unfamiliar task of managing falling order books and
retrenching. Dangers include a
potential relapse into protectionist
positions across key global markets. However, BMI stresses that in its
estimation, the Chinese industry faces one or two years of lower growth - not
an absolute contraction -
and may well position itself to benefit strongly
from the expected recovery from 2010 onwards.
We estimate that Chinese
textiles and clothing manufacturing value added, which expanded by an
estimated 17.7% in 2007, slowed to 8.0% in 2008, and will have its worst year
in 2009 with growth of
only 3%. Thereafter it will begin a recovery with
predicted growth of 12.5% in 2010. In the five years to
2008, BMI
estimates that average annual growth of manufacturing value added was 14.0%,
ahead of
gross domestic product (GDP) at 10.6%. In the next five years, we
see the pace of growth falling to an
average of 11.1%, compared to an
annual GDP expansion of 7,1%. BMI expects textile and clothing
export
growth to fall 7.8% in 2009 to US$165.85bn, with imports contracting by 3.9%
to US$21.81bn.
Export growth, which averaged 18.1% in the five years to
2008, should reduce to 9.1% in the five years to
2013.
Although the
International Labour Organization (ILO) does not currently provide detailed
data series of
employment in China' s textile and clothing industry,
official estimates are that in 2006, employment
stood at around 20mn
people.
| 
View Cart
