By Wang Lina, China Dyestuff Industry Association
Dye supply and demand in tight balance
The overall economic operation level of China’s dyes and pigments, intermediates, printing and dyeing auxiliaries industries posted a slight year-on-year increase in 2019, with gross industrial output values and sales incomes both up slightly compared with 2018. While the economic indicators, including profit and tax and margins suffered a small year-on-year decline. Domestic dye intermediates prices increased sharply, mainly because of the relatively high industry barriers and further improved market concentration level. Meanwhile, dyes prices reaped notable gains, as environmental and safety problems caused some small and medium-sized enterprises to halt production and curtail output.
Domestic dyes and pigments output totalled 1 005 kt in 2019, down by 2.8% year on year. Of these, dyes production reached 790 kt, down by 2.7% year on year, organic pigments output at 215 kt, down by 3.1% year on year and dyes and pigments intermediates production stood at 463 kt, up by 5.9% year on year. The dyes and pigments industry achieved a total industrial output value of RMB70.98 billion in 2019, up by 3.2% year on year, sales income of RMB68.83 billion, up by 0.9% year on year and profit and tax at RMB11.63 billion, down by 1.9% year on year. The performance of China’s dyes and pigments, printing and dyeing auxiliaries and intermediates industries in terms of major economic indicators in 2014-2019 is shown in Figure 1 and Figure 2.
Figure 1 Industrial output value and sales income of China’s dyes and pigments industries in 2014-2019
Figure 2 Profit and tax of China’s dyes and pigments industry in 2014-2019
In recent two years, China’s dyes industry came under pressure from changes in internal and external markets, structural adjustment, environmental restrictions and rising costs, with capacity expansion pace slowing down. In 2019, reduced operating rate at domestic dye plants kept the market in a tight supply-demand balance. Domestic dyes output decreased in 2019. Disperse dyes and reactive dyes have the largest output and exports among major dyestuff, and much higher industry concentration. China’s disperse dyes output reached 338 kt in 2019, down by 12.6% year on year and reactive dyes output at 221 kt, down by 20.6% year on year.
Slower fall in dyes exports
Slower fall in dyes exports
China exported 217 kt of dyes in 2019, down by 1% year on year and earned US$1.55 billion foreign exchange through exports, down by 1.7% year on year. The exports of organic pigments and finished products totalled 126 kt, down by 3.8% year on year and earned US$1.01 billion foreign exchange, down by 4.4% year on year.
China’s dyes exports are declining in 2020, but at a slower pace. Major reasons are as follows. First, the domestic and overseas markets tend to become saturated, with rising dyes output around the world and the international demand has been shrinking notably. Second, distributors have to keep low inventories to reduce risks from the dye price fluctuations. Third, the capacity expansions of reactive dyes and related intermediates in southeast Asian countries in recent years have impacted China’s dye exports, and Indian reactive dyes are more competitive than Chinese products. Fourth, domestic supply has dropped as stricter environmental restrictions weighed on dye plants’ operating rates.
China mainly exports disperse and reactive dyes. With the structural adjustment and industrial transformation and upgrading of the domestic dyes industry gathering pace, the proportion of China’s dyes exports in domestic output has risen closer to one third. This reflects a high rate of reliance on the international market. Of the dye and pigments exports, acid dyes and basic dyes registered a bigger fall of 19.8% and 15.2% respectively, while direct dyes and reduced indigo both posted a drop of 12.2%. Unlike dyes and pigments, the export volume of optical brighteners increased by 15.3% and export value rose by 14.9%. The exports of printing and dyeing auxiliaries decreased by 5.7% year on year and export value was down by 0.8% year on year.
Major destinations of China’s dye exports include Pakistan in south Asia, Indonesia, Turkey, Vietnam in southeast Asia.
Relatively low share in medium and high-end market
China imported 44 kt of dyes in 2019, down by 0.4% year on year. Its imports of organic pigments and finished products totalled 29 kt, up by 40.9% year on year and used US$390 million of foreign exchange, up by 11.6% year on year. The rapid growth in China’s imports of organic pigments and optical brighteners is mainly driven by rising domestic demand, weak competitiveness of domestic products in such aspects as quality, grades and prices, especially the relatively low share in the medium and high-end market, as well as tight domestic supply, due to low production caused by stricter environmental controls.
Reactive dyes and acid dyes took a larger proportion in China’s dyes imports in 2019. The import volume of reactive dyes stood at 16 373 tons, accounting for 37.2% of the total, while that of acid dyes reached 12 845 tons, covering 29.2%. The imports concentrated in high-end dyes. Disperse, organic pigments and finished products posted a marked year-on-year growth in import volumes, at 69.8% and 40.9%, respectively, while optical brighteners imports soared by 236.7% year on year and foreign exchange consumption surged by 66.8%. The import volume of dyeing and printing auxiliaries slipped by 2.2% year on year. There remains a demand gap for high-end dyestuff. Dye producers from India, Taiwan and Thailand are expanding their market share in mainland China.
Focus on own strengths to confront with more severe challenges
China’s dyes and pigments industry is facing more complex and severe challenges both home and abroad. The coronavirus (COVID-19) outbreak has crippled global demand in the first half of 2020 and dented China’s economic growth, adding downward pressure to the industry economic operation. The domestic market is likely to stabilise and regain ground with the easing pandemic worries.
In the future, dyes and pigment enterprises shall accelerate the development of new energy saving and emission reduction technologies, promote industry transformation and upgrading, and optimize the industrial layout. In addition, they shall adopt digital, automated and intelligent new equipment to produce differentiated and high value-added new products, implement new management and innovative production models and develop towards a more environmentally friendly, efficient and sustainable direction.
They shall strengthen the integration of various elements of the industry, implement mergers and reorganizations, and start capital operations to make dye production and marketing more adaptable to market changes.