Limited Production And Insured Behavior Affect Downstream Enterprises

For Yisheng group and other Chinese PTA manufacturers, since the mainland can not get the new PX capacity, then only by controlling the PTA production capacity, can we control the price of upstream PX raw materials, forcing Korean suppliers and other raw materials to reduce the PX price, thereby ensuring the profits of PTA enterprises.

The data of IHS chemical company also confirm the possibility of Yisheng group's success.

The capacity expansion of PX in South Korea began in 2013 - when the Korean HC Petrochemical Industries Co put into operation a set of 800 thousand tons / year PX installations. This year, Samsung's Total, SK global chemistry and SKJX Japan's total capacity of 3 million 300 thousand tons / year PX will be put into operation; GSC Sun Company will also put into operation a set of 1 million tons / year equipment in Lishui in 2015.

Overall, these projects will make Korea's PX capacity nearly doubled in 4 years, from 5 million 300 thousand tons per year in 2012 to 10 million 500 thousand tons / year in 2016.

In Singapore, Saudi Arabia and other places, the same story is still on. According to IHS chemical company, the total PX capacity of the world is expected to increase from 41 million tons per year in 2013 to nearly 60 million tons / year in 2018.

Due to the centralized production of PX capacity in South Korea and other places, the supply of PX will increase significantly next year, and the prosperous alliance with 70% China PTA capacity and a wider downstream textile market will usher in the best time they expect.

"Low price PX raw materials will not affect their profits, instead, the Chinese textile industry will gain new opportunities for development and lay the foundation for further expansion of the market."

The insider knew that.

He said: "even if Koreans can survive the price of Yisheng and so on, as long as the new pricing mode is accepted by downstream textile enterprises and Yi Sheng is harmless, they can still get 700-800 yuan / ton processing fee for a long time, and the price fluctuation of PX is directly accepted by downstream textile enterprises."

Therefore, time is more and more important for Yisheng and other enterprises. The longer the time limit for production and insurance, the lower the PX price in Korea and other places. The new PTA pricing mode is easier to be accepted by the market. On the contrary, "the entire Sinopec textile industry will suffer the most bitter frustration and become the processing workshop of foreign upstream enterprises".

It is an indisputable fact that Yisheng group and so on have done great harm to the downstream textile enterprises including polyester.

"They act as monopolies and infringe on the rights and interests of downstream businesses and consumers."

The head of Fujian polyester enterprise was indignant at the twenty-first Century economic report. However, he did not report to the relevant state departments, nor did he explain the specific reasons to reporters.

In June 8th, the Fujian polyester manufacturer, led by Fujian Jin Lun high fiber Limited by Share Ltd, issued a joint statement, protesting the unilateral disruption of contracts by the PTA suppliers, modifying the pricing mechanism, and calling on Fujian counterparts to jointly reduce their capacity to 70% in order to deal with the limited production and insurance policy of Yisheng group.

They believe that PTA suppliers try to pfer losses to polyester factories which have been in a loss for a long time in the form of joint monopoly. In the long run, it is not only the interests of polyester industry, but also the competitiveness of China's textile and garment industry, and the beneficiaries may only be the upstream industry chain of PTA.

At the same time, this behavior can not achieve the survival of the fittest in the PTA industry, and can not solve the situation of PTA's own overcapacity.

Since the announcement, more than ten polyester / chemical fiber enterprises in Zhejiang and Fujian have cut down production or even shut down, involving polyester production capacity of more than 2 million tons / year.

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Toys and so on have always been

However, due to the poor global economic situation, polyester, polyester / other chemical fibers, clothing / toys and so on are generally unable to pmit downward pressure on cost. Therefore, our production cuts or even discontinued production are both a protest action and an inability for enterprises to survive.

The above Fujian polyester enterprise official told reporters.

However, since the announcement, the protest has not been effective. Yisheng group, Xiang Lu group and Hengli banner all own their own PTA.

The production line can not be added to the "protest team", and the other Southeast provinces polyester enterprises are "hard to form a resultant force." so the waiting protesters may only have the market share gradually swallowed up by the PTA overlords, and finally have to withdraw from the market.

In response to this phenomenon, in twenty-first Century, the economic news reporter sent a call to the head of the national development and Reform Commission and the Ministry of Commerce and other competent departments to inquire about their views. However, no reply was received until the deadline.