Analysis of China’s Dyestuff Industry

Output growth in China’s dyestuff industry had slowed down in 2007, but growth quality had improved. Total export and import volume amounted to 351,400 tons, up 10.09% over previous comparable period (pcp), and total value was US$1.45 billion, up 20.3% over pcp. It is expected that in 2008, output growth of the dyestuff industry in China will remain stable or even slow down, but export volume may continue to increase.

2007: Slower growth but quality improved

Although total dyestuff output still registered a growth of 10.8% in 2007, the growth rate had declined 1.3 percentage points from the previous year. Statistics showed that output of all dyestuff varieties had grown in 2007, with disperse dyes, reactive dyes and sulphur dyes being the top three largest categories. In terms of output sources, provinces such as Shandong, Inner Mongolia, Zhejiang and Guangdong registered significant growth, and Zhejiang Province remained the number one dyestuff source in China.

Both export volume and performance had improved in 2007. China exported a record total of 284,000 tons of dyestuff last year, up 13% from 2006, and total export value reached US$1.004 billion, up 25%, a notable improvement from previous years. Among the dyestuff categories, disperse dyes, reactive dyes, vat dyes and sulphur dyes were popular export items.

Among major dyestuff exporting provinces, Hebei, Guangdong, Jiangsu and Shanxi had all experienced 20% plus growth rates. Zhejiang continued to be the biggest exporter of dyestuff, exporting 112,000 tons from China, equivalent to 39.4% of the national total.

In terms of destinations, Chinese dyestuff exports to Thailand, Korea, India and Taiwan were growing fast. US was the only destination which had seen a reduced volume, but the trade value still increased somehow.

On the other hand, China’s dyestuff imports had steadily declined in 2007. Total dyestuff imports amounted to 67,000 tons, down 0.9% from previous year, while the monetary value remained flat at US$442 million. The reduced number of imports does not necessarily mean reduced market demand, but the substitution by the fast growing domestic dyestuff industry. In terms of product mix, major import categories had all experienced decline, including reactive dyes, acid dyes and direct dyes.

The negative effects from the removal of export rebates had alleviated at the year end. Since 1st July 2007, China had reduced its dyestuff export rebates from 13% to 0%, leading to export price increases of 10 – 15%. The effect was evident in July and August, with immediate reduction of export orders. But the situation was returning to normal levels since October, which had largely offset the impact on domestic dyestuff manufacturers. And the removal of export rebates had not significantly impacted on the volume of dyestuff exports, either.

On abolishing of export rebates and lifting export prices, the price level of Chinese dyestuff in the international market is now similar to prices levels of other Asian dyestuff exports, but still a bit lower than European and American products. Despite the reduced price advantage, the product quality and market shares of Chinese dyestuff have improved considerably.

2008: A steady trend

Several factors may negatively affect the dyestuff industry in China in 2008, including government macro policy, production cost increase, environmental pressure and global economic uncertainty. The following aspects should warrant some attention from dyestuff producers.

Speed up the pre-registration process under the European REACH (Registration, Evaluation, Authorization and Restriction of Chemicals) regulation, which aims to more strictly regulate the trading of chemical substances. There is a short timeframe (June – December 2008) for pre-registration, so dyestuff exporters in China have to take quick actions, in order to fully pre-register all the relevant product lines. And the China Dyestuff Industry Association should also facilitate the process for exporters, so that the impact from implementation of REACH regulation can be reduced to a minimum.

There are three benefits for dyestuff products in China to go through the pre-registration process. First is the inexpensive pre-registration fee, which can ensure a company’s export permit for 2-10 years. Second is that as the number of pre-registered products increases, there will be more products available for exports. The last point is that the pre-registration requires a producer’s real name and product names and trademarks, which will be circulated in the network of European Chemicals Agency. This can potentially improve the brand recognition for the producer.

Chinese dyestuff companies should also improve product innovation, so that they can establish higher-value brands in the international market. There have been a few leading dyestuff companies in China investing in innovations, product qualities and technological contents, and some production technologies are also in the process of commercialisation.

Lastly, the dyestuff industry in China is now facing more and more environmental constraints. Therefore, companies should invest in researches of wastewater treatment technologies and equipment, and accelerate the development of less-polluting dyestuff production techniques. The whole industry should also encourage environmental technology exchanges and promotions, in order to meet the government’s energy efficiency and emission reduction targets in the next 3 years.



Source by Face Zhang