Fiber prices generally expected to boost demand for stocking increased

Although the textile exports have not yet bottomed out, they have recovered. From a downstream point of view, exports of textile and clothing have recovered. Last year, the total export value increased by 2.8% from the same period last year and the chain economy continued to improve (the growth rate started to turn positive from September last year). Turn into this year, although the amount of textile and garment exports in January rose 14.8% year on year, but due to the Spring Festival reason (last Spring Festival in January) so the reference is not significant. Overall, however, demand for textiles and clothing, while still at the bottom, has started to recover. In the first quarter of 2013, the price of chemical fiber increased broadly and the profitability improved compared with the fourth quarter of last year. The price of chemical fiber increased broadly since the first quarter of 2013 and the profitability increased slightly compared with the fourth quarter of last year. PX last year squeezed PTA profit margins led to the PTA industry bleak, but tight supply this year, the price remained high, the cost of supporting PTA and polyester prices rose slightly; polyester and raw material spread better than 4Q12. Prices of nylon also rose on the basis of raw material caprolactam and polyamide chips. The spread between nylon and raw materials continued to improve from the second quarter of 2012 and has now reached the best level since 2012. Viscose staple fiber prices in the "spread of cotton viscose staple fiber" continue to rebound, there is still slightly upward space. Spandex and raw materials prices remained stable in January, with no change in profitability compared with the fourth quarter of last year. Due to the expectation of the traditional peak season, the demand for downstream stocking has increased. After the Spring Festival, with the improvement of downstream operating rate and expectation of the chemical fiber peak season (the first quarter and the third quarter are chemical fiber peak season), the demand for stocking in the market has increased. We think the price of chemical fiber will be between 3 April saw more, there are downside risks in the second quarter. In terms of demand, the utilization rate of downstream textile enterprises gradually increased after the Spring Festival, driving demand for the stocking of chemical fiber. Cotton prices, foreign cotton prices rose more than last November, resulting in narrowing domestic and foreign cotton spreads. As of now, the import price of cotton (40% import duty) has been higher than the domestic price of cotton, so foreign cotton weakened the suppression of domestic cotton prices. Therefore, we believe that cotton prices will rise steadily in March and April and will stabilize the cotton prices in the second quarter. In summary, chemical fiber prices are expected to continue to improve. Industry Investment Strategy and Key Company Recommendations Since the textile and apparel industry is an obvious early-cyclical industry throughout the business cycle, we are now seeing signs of a recovery of the textile and garment industry based on our tracking. Therefore, the recovery of the textile and apparel industry will lead to the recovery of the raw material business. In particular, the current operating rate gradually increased, followed by the new capacity of less chemical fiber raw materials industry. From the inventory point of view, the entire chemical fiber industry stocks at historic lows, the growth rate is also at the bottom of history, so the advent of the peak season will lead to increased demand for industry stocking; the other hand, the current international oil prices in the downward channel, with the chemical fiber products The rise in prices and the fall in crude oil prices Chemical fiber companies earnings will be significantly improved. From a sub-sector perspective, we believe that the higher utilization of capacity and the new production capacity will be the first sub-sectors to resume recovery, followed by polyester and other sub-sectors. Maintain chemical fiber industry "neutral" rating. Suggestions concern Hengyi Petrochemical, Thai and new materials, Xinxiang Chemical Fiber, Zhejiang Longsheng other companies. Risk factors: the risk of a substantial drop in cotton prices; downstream stockpiles after the Spring Festival lower than expected risk.

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