At the beginning of 2020, the sudden pandemic has had a major impact on the normal operation of the global economy and society, and also brought tremendous pressure on China’s economic development. The production and operation activities of enterprises were once severely impacted, and the main economic indicators of the textile machinery industry fell sharply in the first quarter. Since the second quarter, China’s economic development has gradually recovered, the production and operation order of the textile machinery industry has gradually returned to normal, and the decline in industry economic operation indicators has narrowed significantly compared with the first quarter, and the export has slightly decreased year-on-year. However, the impact of the pandemic still exists, and the production and operation of the industry still face greater pressure.
Operation quality and efficiency
According to statistics from the National Bureau of Statistics, from January to June 2020, 636 textile machinery enterprises above designated size achieved operating income of 32.137 billion yuan, a decrease of 17.02% year-on-year, and the growth rate decreased by 16.23 percentage points year-on-year, and the decline rate of business income of the industry was narrowed. Total assets were 102.256 billion yuan, an increase of 12.82% year-on-year. The decline in operating income in the second quarter narrowed by 19.88 percentage points compared with the first quarter. The total realized profit was 2.119 billion yuan, a decrease of 24.86% year-on-year, and the decline was 42.48% narrower than the first quarter of this year. The operating income margin was 6.59%, a decrease of 0.38 percentage points year-on-year. The industry’s profitability is still under great pressure. The loss of loss-making enterprises was 434 million yuan, an increase of 112.16% year-on-year; the percentage of loss-making enterprises was 33.19%, an increase of 14.21 percentage points year-on-year. From January to June 2020, the total cost of textile machinery enterprises above designated size was 29.404 billion yuan, a decrease of 30.53% year-on-year.
Investigation of key enterprises
In 2020, China Textile Machinery Association conducted a survey on the operating conditions of 108 key textile machinery enterprises in the first half of 2020. From the summary results, in the first half of the year, 67% of enterprises’ operating income experienced varying degrees of decline, the prices of textile machinery products were generally stable with a decline, and corporate inventories increased. 50% of enterprises believe that the main problems they face are insufficient domestic and foreign market demand, restricted sales channels, and cancellation of original orders. Regarding the situation of the textile machinery industry in the third quarter of 2020, 49.53% of the surveyed companies think it is not optimistic.
Import and export
According to customs statistics, the cumulative total of China’s textile machinery imports and exports from January to June 2020 was USD 3.282 billion, a decrease of 8.76% year-on-year. Among them: textile machinery imports were USD 1.393 billion, a decrease of 18.43% year-on-year; exports were USD 1.889 billion, a decrease of 0.03% year-on-year, which was basically the same.
Import of textile machinery industry
From January to June 2020, textile machinery was imported from 53 countries and regions, with a total import volume of USD 1.393 billion, a year-on-year decrease of 18.43%. From the perspective of imported product categories, chemical fiber machinery imports ranked first, with a total import volume of USD 543 million, an increase of 18.51% year-on-year, accounting for 38.99% of the total imports; except for chemical fiber machinery, the seven categories of products have significantly decreased to varying degrees.
Export of textile machinery industry
From January to June 2020, a total of USD 1.889 billion of textile machinery was exported to 169 countries and regions, a decrease of 0.03% compared to the same period last year. Driven by the export of pandemic prevention textile production equipment, the total export of textile machinery basically recovered to the same period last year. In terms of export categories, the export value of nonwovens machinery (including anti-pandemic textile production equipment) was USD 547 million, an increase of 604.92% compared with last year, accounting for 28.95%, ranking first, followed by dyeing and finishing machinery, knitting machinery, auxiliary devices and spare parts, weaving machinery, spinning machinery, chemical fiber machinery.
Each sub-industry situation
Affected by the pandemic at home and abroad, market demand is sluggish, new and technological transformation projects are few, and the demand for equipment has fallen sharply. The production and sales of many equipment companies in the first quarter are mainly to complete last year’s orders, and the task volume in the second quarter was obviously insufficient. The sales of cotton spinning frames decreased by 61.7% year-on-year. In addition to the spread of foreign pandemics, the sales of spinning machinery, including imports and exports, have seen a significant decline. Among the imported equipment, only air-jet vortex spinning equipment is still growing, indicating that the domestic investment enthusiasm for air-jet vortex spinning continues. It is expected that the market demand for spinning equipment will not show any signs of improvement in the third quarter, and the lack of orders will continue.
With the effective control of the domestic pandemic in the first half of 2020, the domestic market is gradually picking up. The production capacity utilization rate of weaving machinery enterprises has gradually recovered, and the supply capacity and industrial chain have continued to improve. However, since April, with the outbreak of foreign pandemics, the Sino-US trade war, the escalation of Sino-Indian friction and other factors, the production of enterprises has slowed down significantly, but production and sales volume of weaving machinery was gradually concentrated in the leading enterprises. In the first half of 2020, the sales volume of weaving machinery showed a downward trend. According to the statistics of the association, the sales volume of high-speed rapier looms in the first half of 2020 decreased by 6.9% year-on-year, the sales volume of water jet looms decreased by 26.3% year-on-year, and the sales volume of air-jet looms decreased by 2.7% year-on-year.
In the first half of 2020, the production and sales volume of flat knitting machine market decreased by 70% in the first half of 2020. Circular knitting machine industry showed a downward trend in the first half of the year, with a decrease of about 20%. In the first half of the year, the warp knitting machine industry continued its downward trend, and some subdivision models showed signs of recovery. According to the association’s statistics, warp knitting machine sales fell 5% year-on-year.
Dyeing and finishing machinery
From January to June this year, major domestic pre-processing equipment manufacturers have delayed delivery due to the pandemic, and foreign trade orders have dropped significantly. Companies are actively expanding the domestic market, making competition more intense. The overall sales volume in the first half of the year was basically the same as last year, but sales fell. Since 2020, export orders for downstream dyeing and printing factories have plummeted due to the pandemic, and domestic demand is insufficient, and they have become conservative in investing in updating equipment. In the first half of the year, dyeing and printing machinery companies were greatly affected by the pandemic, and sales volume fell more than that of the same period last year. Most equipment fell by about 30%, and exports fell even more. There were fewer new orders in the first half of the year. However, many companies used new technologies to create new opportunities in the first half of the year, becoming a bright spot in the dyeing and printing machinery industry. With the improvement of the export situation in the second half of the year, companies are also striving for foreign trade orders while actively expanding the domestic market. According to the feedback from the association’s sample questionnaire survey, companies’ expectations for the second half of the year are generally better than those of the first half.
Chemical fiber machinery
In the first half of this year, chemical fiber spinning machines increased slightly, up 17.54% year-on-year, and new projects by leading companies accounted for about 85% of domestic new capacity. Affected by the pandemic and the continued deterioration of Sino-US relations, the export of chemical fiber products has declined significantly. With chemical fiber factories integrating production capacity, reducing inventory, and industrial transformation and upgrading, it is expected that new projects will be suspended or terminated in the second half of the year. The new fixed asset market for polyester staple fiber will basically be stagnant in the first half of the year. The growth rate of chemical fiber machinery orders is expected to be slow in the second half of the year. In addition, special fiber and functional fiber production equipment such as green fiber and differentiated fiber are the development trend of small and medium-sized enterprises in recent years.
In the first half of 2020, the production and sales of nonwovens machinery continued to increase explosively. As the key material of masks, meltblown nonwoven and other materials are in short supply. In addition to the R&D and production of nonwovens machinery companies, other industries, including chemical fiber machinery and plastic machinery, have also switched production and expanded production. According to the statistics of key enterprises by China Textile Machinery Association, the sales volume of spunbond, meltblown and SMS nonwoven production lines in the first half of this year increased by about 265.85% compared to the first quarter of this year. As the key raw materials for disinfection and wipes, as well as the alternative materials for spunbonded fabrics on the mask, spunlaced nonwovens production lines also have a large increase compared with the same period last year.
On the whole, the new orders of nonwovens machinery companies are very optimistic. Some companies still have foreign orders in the third quarter, but they must pay attention to the quality assurance issues after the production lines are delivered to form a virtuous circle.
At present, the pandemic situation is still developing around the world. Countries generally regard personal protective equipment (PPE) such as masks and protective clothing as strategic reserve materials, and purchase relevant nonwovens equipment through government funding support and other means to build production bases. Although the competitiveness of China’s nonwovens equipment in Europe, America, Australia and other places is not comparable to that of European leading companies, it still has good market potential in Latin America, Africa, Central Asia, South Asia, Southeast Asia and other regions. It is recommended that industry companies pay sufficient attention.
In the second half of the year, the economic operation pressure of the textile machinery industry is still relatively high. The international economic and trade situation has become increasingly severe and complex. The global economy has suffered bilateral shocks from supply and demand, and has slipped into a recession in the short term; the global economy is facing great uncertainty. According to the latest forecasts by the IMF and the World Bank, the global GDP growth rate will decline to -5% in 2020. China’s economy is gradually recovering, but the main indicators such as GDP, consumption, investment, and exports in the first half of the year are still in a declining area and still need to recover.
The economic operation of China’s textile industry has gradually risen under pressure, and the production order has gradually improved. However, enterprise investment and development confidence are still insufficient, and market demand has not yet fully recovered. In addition, according to a survey report released by the International Textile Federation (ITMF) in June this year, affected by the pandemic, the turnover of major textile companies in the world is expected to drop by an average of 32% in 2020. Most textile companies are expected to return to the pre-crisis level after the first and second quarters of 2021. The pandemic has also prompted companies to pay more attention to the importance of local/regional supply chains, which may change the current global textile supply chain pattern. The adjustment of the domestic and foreign markets of textile machinery is still accelerating. The adjustment of the market has brought continuous impact on the operation of textile machinery enterprises. A new round of industry reshuffle is inevitable. It is affected by the pandemic, although the overall market size is shrinking and competition is more intense, but the leading companies in the segmented industries have more prominent competitive advantages.