In the hot summer, when electricity consumption is at its peak, the textile and chemical fiber industry has received a “blow in the face”!
Being in a high-energy-consuming industry, textile and chemical fiber companies will face “increased electricity charges”, which is undoubtedly “making matters worse” for the companies. In the past month, raw materials have fallen. If the cost of electricity increases and faced with weak demand, textile raw materials will not be able to increase their prices even if they want to, and the losses will further expand.
Will the electricity bill increase again?
It is even more difficult for chemical fiber companies to transfer costs
Recently, following the lead of Zhejiang Province, the Hunan Provincial Development and Reform Commission issued the “Hunan Provincial High Energy-Consumption Enterprises’ Market Transaction Plan for the Summer Peak”. The plan is clear. The range of market transaction price difference declarations for high energy-consuming enterprises is: the base load transaction before the month is -90 yuan /MWh to 90 yuan/MWh, and the minimum bidding transaction within the month is 90 yuan/MWh, with no upper limit. For power consumption that exceeds the contract, the power dispatching agency predicts that there will be no power supply gap, and the settlement price difference will comply with the relevant provisions of the medium and long-term trading rules; during the period that there will be a power supply gap, a punitive electricity price will be implemented, and the settlement price difference will be based on the monthly transaction price difference + agency service price + 10 yuan /kWh execution.
In other words, if the electricity consumption exceeds the contract, the price will be increased by 10 yuan per kilowatt hour. I have to say, the price is quite fierce.
The increase in electricity prices will undoubtedly hurt energy-intensive enterprises such as textile and chemical fiber enterprises the most.
In this regard, many companies have also begun to discuss countermeasures. According to China Chemical Industry News, “The direct impact of this incident on us is an increase in electricity costs. We are contacting the electricity sales company for the specific increase, because it will involve many details, such as the calculation method for excess planned electricity consumption. The basic amount of electricity we absorb, etc., are all related to cost calculations and our response plans.” A chemical company said.
We know that electricity costs account for a relatively high proportion of enterprise production costs. For some enterprises, electricity expenses can account for 30 to 40% of production costs. On average, electricity expenses in the basic chemical industry account for 14% of operating costs, ranking first among all major industries.
The chemical fiber weaving cluster collapsed under the cost:
Startups are down, orders are down, and inventories are up!
If electricity prices rise, business costs will increase. However, with orders currently scarce and downstream demand weak, companies will find it difficult to transfer cost pressures. Benefits will decline sharply, and losses will further increase.
Recently, the China Cotton Textile Industry Association conducted a survey on the operation of the industrial cluster market. Affected by factors such as the current off-season market and the U.S. “Xinjiang-related Act,” the opening rate of cluster enterprises has declined, orders have declined, inventories have increased, and operating pressure has continued to increase.
According to reports from white fabric cluster enterprises, the current opening rate is about 80%. Affected by multiple factors such as insufficient market demand, poor price transmission, and power rationing in some coastal cities, printing and dyeing bases in Zhejiang, Guangdong and other areas have insufficient operations, and orders for gray fabrics have declined significantly year-on-year. It is expected that the pressure on enterprise production and operation may further increase.
According to the yarn-dyed fabric cluster enterprises, the operation of the enterprises is basically normal, but insufficient capacity utilization is common. The product orders of most companies have declined significantly, and a small number of companies have temporarily suspended production. Combined with factors such as exchange rate fluctuations, export orders have been greatly affected. It is expected that the market situation will be difficult to improve in the short term.
According to reports from denim cluster enterprises, the current operation is basically normal and the opening rate has been reduced. The order situation is not optimistic, product prices have been pushed down, there is basically no profit margin, and inventory continues to increase. It is expected that during the off-season, companies may further reduce their operating rates.
From the demand side, the current domestic performance is still weak, gauze inventory is high, terminal demand and export volume are relatively poor, and the overall consumption desire of the market is currently poor, and it is difficult to see a significant improvement in consumption in the short term. However, with the sharp drop in raw material prices, corporate profits have improved. If this situation can continue, it will be good for textile companies, and future consumption can also be expected. However, there are currently large pessimistic expectations in the export market. When the pessimistic expectations turn into reality in the future, it will have a very large impact on textile consumption. This is a consumer-side risk that cannot be determined at present.
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