Under the intertwining of multiple factors such as the accelerated pace of industrial production, the strengthening of cold winter expectations, and the transfer of manufacturing orders, it is expected that some industries will face rising demand and increasing orders in the fourth quarter, resulting in a shortage of supply and demand. Cause product price increases. Investors are advised to focus on segments where demand has improved recently and prices have increased significantly.
Textile industry: The traditional peak season, cold winter and the return of orders have accelerated the rise in industry prosperity. In the third quarter, the textile industry's capacity utilization improved more than the overall manufacturing industry, and the improvement in sales and other indicators showed that the industry's prosperity was recovering. Since October, the Keqiao textile price index has moved up slightly, with the raw material price index rising most obviously. The formation of expected cold winter and the return of foreign textile orders have led to a significant increase in demand for textiles. Domestic consumers' demand for cold-proof clothing has increased. In foreign countries, because China has a relatively complete and safe supply chain, the spread of the epidemic in India and other regions has caused textile orders to return to my country. Some manufacturers said that the output of orders such as towels and sheets has been large and even the orders have been scheduled for next year.
Chemical fiber: The recovery in upstream demand coupled with the optimization of the industry structure has led to price increases for many products. Benefiting from the rapid increase in demand for textiles, the prices of many varieties (such as nylon, polyester, viscose fiber, etc.) in the chemical fiber sector upstream of the textile industry chain have increased.
Natural gas: heating is combined with atmospheric management in advance, and energy demand rebounds. The temperature drop in the north coupled with air pollution control in autumn and winter has led to a significant rebound in gas prices since the end of September. The LNG ex-factory price index in Northeast China has increased by nearly 20% since the beginning of the month. If the La Ni?a phenomenon further intensifies, the temperature in most areas of my country will further drop compared to the same period in previous years. Coupled with the advancement of the coal-to-gas policy, gas demand will further expand from the fourth quarter to the first quarter of next year and future growth will be more certain.
Planting industry: Price increases for agricultural products (grain, vegetables) are expected to be stronger. According to information released by the National Oceanic and Atmospheric Administration, La Ni?a is currently continuing to strengthen in the tropical Pacific; the central and eastern Pacific may usher in drought, affecting soybean and corn production; and in the western Pacific, it may bring heavy rainfall or even It is a flood disaster that affects crop growth and resource extraction. That is, the probability of heavy rainfall and floods in the south of my country greatly increases, while drought occurs in the north. The U.S. Department of Agriculture's October outlook report stated that soybean production in the 2020/21 season will decrease to 4.268 billion bushels. Since September, prices of agricultural products such as soybeans and corn have entered an accelerated upward phase. If drought occurs in the north and floods occur in the south, the planting industry will be greatly negatively affected, and the price increase of agricultural products is expected to be even stronger.
Paper industry: The peak season is coming, and prices are increasing. Since mid-August, manufacturers have successively announced price increases for white cardboard. Since October, many paper companies have continued to issue price increase letters, and the ex-factory price of white cardboard has moved upward. The price rise of white cardboard tends to be concentrated in the second half of the year, especially around the end of the third quarter. At the same time, the relative rigidity of the supply side creates favorable conditions for price increases. The current increase in industry concentration is more conducive to an upward shift in the price center; in the third quarter, the profits of papermaking companies have already There has been a significant recovery, and under the influence of continued price increases, there is strong momentum for continued improvement in the fourth quarter.
Tires: The increase in raw material prices and the recovery of the car market have prompted price increases. Many tire companies at home and abroad said that rising raw material prices have increased operating cost pressures, and have therefore increased the selling prices of some tires. The main reason for this increase in tire selling prices is that raw material prices have stopped falling and started to rise. Natural rubber prices have been rising rapidly since the third quarter. The recovery of the passenger car market is also one of the driving factors for the increase in tire sales prices.
Risk warning: The epidemic situation is repeated, economic data is lower than expected, and performance declines beyond expectations
Table of Contents
01 The cold winter is expected to superimpose the economic recovery, and some fields will face Increased demand
According to historical rules, under the background of the "Golden Nine and Silver Ten", the third and fourth quarters are often my country's traditional production peak seasons. The output value in the second half of the year is often higher than the first half of the year, and the capacity utilization rate of industrial production Annual highs are typically reached in the fourth quarter. The epidemic has caused great disruption to global economic activities, and the increased possibility of extreme weather will also have an impact on production activities. Compared with previous winters, there may be some differences this year:
First, the pace of production activities may further accelerate in the fourth quarter of this year. As my country's epidemic control is relatively good, many economic indicators currently show that the domestic economy is recovering rapidly, and infrastructure and real estate investment have improved significantly. With corporate profits accelerating in the third quarter, it is expected that manufacturing investment will also usher in the fourth quarter. Faster fix. Overall, the macro economy is still improving in the fourth quarter, and industrial companies are also in the upward recovery stage. In particular, the production activities of the procyclical sector have further accelerated; currently, some industries such as automobiles, machinery and equipment, electrical equipment and other sectors have begun to release profits. This trend is expected to strengthen in the fourth quarter.
Secondly, a La Ni?a event may form this winter, and one of the impacts will be low winter temperatures. After entering October, the temperature dropped significantly in many areas of my country, and winter entered early in some northern areas. The National Climate Center of the China Meteorological Administration pointed out that the equatorial central and eastern Pacific Ocean entered a La Ni?a state in August, which refers to the phenomenon that sea surface temperatures in the equatorial central and eastern Pacific Ocean continue to be abnormally cold. Statistics show that since 1954, in the years affected by La Ni?a events, the proportion of cold winters in our country has exceeded 80%; in early 2008, my country experienced a once-in-50-year rain and snow freeze, which caused problems for Spring Festival transportation, electricity, energy, water supply, agriculture, etc. It has brought extremely serious impact and losses.
Finally, the spread of overseas epidemics and the fact that some domestic industries have complete production industry chains have forced the reshoring of orders from some manufacturing industries (such as textiles, medical equipment, semiconductors, etc.). Due to the limited effectiveness of overseas new crown epidemic control and the number of new confirmed cases every day is still in a relatively high range, some foreign factories are shut down. Due to concerns about the security and integrity of the supply chain, some retailers may move orders from abroad to China.
Take the medical protective equipment industry as an example. In the early days of the epidemic, from upstream equipment manufacturers (machinery equipment) to midstream raw material suppliers (such as energy companies) to production OEM companies (masks, protective clothing ) and pharmaceutical manufacturers. Since the epidemic, all links in the industry chain have been in active production and have received more foreign trade orders. As the second largest textile producer and consumer, India has recently seen a rising number of confirmed cases. Many textile companies have stated that they are unable to deliver goods on time due to the epidemic, while China has a relatively complete industrial chain and strong supply chain security. It is expected that In the fourth quarter, more and more textile orders will be placed in China, which will bring positive impetus to the domestic textile manufacturing industry chain.
Due to the interweaving of multiple factors such as the accelerated pace of industrial production in the fourth quarter, the strengthening of cold winter expectations, and the transfer of manufacturing orders, it is expected that some industries will face rising demand and increasing orders, resulting in a shortage of supply and demand. Cause product price increases. The following will summarize and analyze the varieties whose demand has improved recently and whose prices have increased significantly.
02 Which industries are becoming “warmer”?
1. Textile industry: The return of orders in the traditional peak season and cold winter accelerates the prosperity boom
In the third quarter, the capacity utilization rate of the textile industry improved more than that of the overall manufacturing industry, and indicators such as sales improved. Industry sentiment is recovering. Compared with Q2, the textile industry's Q3 capacity utilization rate increased by 3.5 percentage points to 76.2%, becoming one of the industries with a more obvious month-on-month improvement in capacity utilization rate.
Retail sales of clothing, shoes and hats textiles have turned to positive growth (4.2%) in August. The arrival of winter in the fourth quarter and the "Double 11" promotions have also increased the demand for textiles to a certain extent. Judging from the textile industry prosperity index, the Keqiao textile price index has moved up slightly since October, with the raw material price index rising most obviously.
The expected cold winter and the return of foreign orders will accelerate the prosperity of the textile industry. In addition to the traditional peak season and other seasonal factors mentioned above that boost demand for the textile sector, the formation of cold winter expectations and the return of foreign textile orders have led to a significant increase in demand for textiles. In terms of domestic demand, as the gradual formation of extreme weather has enhanced the expectation of cold winter, consumers' demand for cold-proof clothing has increased; at the same time, textile sales are more suitable for "live streaming" and other methods, combined with textiles such as "Double 11" and other shopping festivals There will be a significant increase in sales. In terms of foreign demand, while China has well controlled the epidemic and has the production capacity of the entire textile industry chain, the spread of the epidemic in India and other regions has caused textile orders to return to my country. Some manufacturers said that the output of towels, bed sheets, etc. orders is large and even orders have been scheduled. Until next year.
Since India is the second largest textile producer and consumer in the world after China and the textile and clothing industry is also one of its pillar industries, according to previous forecasts by Ministry of Textiles, the size of the Indian textile market in 2023 will reach US$226 billion, with a compound annual growth rate of 8.7% from 2009 to 2023. The epidemic in India has not yet been effectively controlled, and multinational companies will adjust order production globally and international buyers will also select suppliers based on production capacity. Therefore, a large number of textile industry orders will flow into countries with complete and safe supply chains. .
2. Chemical fiber: upstream recovery, industry structure optimization, product price increases
Benefiting from the rapid increase in demand for textiles, the prices of many varieties of chemical fiber segments in the upstream of the textile industry chain have increased.
Nylon: This week, the mainstream price of nylon yarn DTY in the East China market increased by 500 yuan/ton, the mainstream price of nylon yarn POY in the East China market increased by 25 yuan/ton, and the mainstream price of nylon yarn FDY in the East China market increased by 100 yuan. /ton. On the one hand, the price of nylon’s upstream production materials has risen significantly. Crude oil prices have increased by more than 5% since October. Domestic caprolactam spot prices have been raised several times from 9,100 yuan/ton to 9,500 yuan/ton in October.
Polyester: The current national market price of FDY150D polyester filament has increased by 4.01% compared to the end of September, and the market price of polyester staple fiber has increased by 10.90%. Driven by the growth in demand from the downstream textile industry, the high inventories of polyester filament and polyester staple fiber were quickly digested. The inventory of polyester staple fiber has even dropped to the negative range, indicating that supply exceeds demand. In the future, with the support of high raw material prices, coupled with the current low inventory level driven by downstream demand, the polyester industry chain will still maintain high prosperity.
Viscose fiber: The price of viscose staple fiber has risen significantly recently. The current market price of 1.5D/38mm viscose staple fiber is 10,450 yuan/ton, an increase of 16.43% after the double festival, compared with 8 It increased by 25.90% in the month. Due to excessive production expansion in the past few years, the viscose staple fiber industry chain has entered a downward cycle since 2017, and the industry entered a stage of severe losses in the second half of 2019. This round of two-way support from supply and demand has brought about an inflection point in the market since August.
On the one hand, the increase in downstream demand has driven up prices in the industry chain. As the overseas epidemic situation is still severe, the production capacity of my country's textile industry chain has recovered relatively slowly, and Indian orders have been transferred to my country. Adding to the peak seasons of the Golden Nine and Silver Ten, the demand for textile and apparel is strong. Viscose fiber is an important cotton textile material, and the booming downstream demand has led to an increase in the price of viscose fiber. According to Longzhong Information, the operating rate of the viscose staple fiber industry has gradually increased, currently about 77.56%.
On the other hand, cotton prices have continued to rise this year, making textile production costs higher. Viscose fiber is a better substitute for cotton. As cotton prices continue to increase, the price of viscose fiber has also been further supported.
Looking forward, due to the continuous losses in the previous year or two, many small and medium-sized enterprises have gradually withdrawn from the production of viscose fiber, and after the peak of production expansion in 2018 and 2019, there have been basically no new additions to the industry. Production capacity, driven by the high demand for downstream textile and apparel, the supply and demand pattern of viscose fiber is expected to be improved, and the price is highly secure.
3. Natural gas: heating is combined with air pollution control in advance, and energy demand rebounds.
The temperature drop in the north is combined with air pollution control in autumn and winter. Gas prices have rebounded significantly since the end of September. Currently, China's LNG ex-factory price national index has risen to 2,950 yuan/ton, with a rebound of 10.2% since the beginning of this month, an increase of 14.9% compared to the beginning of September. Since the fourth quarter, many places across the country have experienced cooling, and some areas in the north have started heating in advance. Since the beginning of the month, the LNG ex-factory price index in the Northeast has increased by nearly 20%. On September 28, the Ministry of Ecology and Environment released the "Action Plan for Comprehensive Air Pollution Control in the Autumn and Winter of 2020-2021 in the Beijing-Tianjin-Hebei and Surrounding Areas and the Fenwei Plain (Draft for Comments)", emphasizing the recommendation and acceleration of clean heating bulk coal replacement projects Recommend the construction of a natural gas production, supply, storage and marketing system: Before the 2020 heating season, on the premise of ensuring energy supply, the Beijing-Tianjin-Hebei region and surrounding areas, as well as the Fenwei Plain, have basically completed the replacement of loose coal for living and heating in the plain areas in winter, and have basically completed the construction of a loose coal-free system. district. Driven by the above factors, domestic natural gas prices have risen rapidly recently.
If the La Ni?a phenomenon further intensifies, the temperature in most areas of my country will further drop compared to the same period in previous years. Coupled with the advancement of the coal-to-gas policy, gas demand will further expand from the fourth quarter to the first quarter of next year and will continue to grow in the future. The certainty of growth is strong, and we can focus on the opportunities brought by the rebound in gas demand. Due to low overseas natural gas prices and my country's relatively high dependence on natural gas imports, some companies that can receive LNG will have strong cost advantages.
4. Planting industry: Agricultural product price increases are expected to be stronger
According to the US Oceanic and Atmospheric Administration's news on October 17, La Ni?a continues to strengthen in the tropical Pacific. By this year From November to January next year, it may gradually strengthen to neutral intensity, and there is a 75%-80% chance of moving across the northern hemisphere. The central and eastern parts of the Pacific may experience drought, affecting the production of soybeans and corn; while in the western part of the Pacific, it may bring heavy rainfall and even floods, affecting crop growth and resource extraction. This is the case where heavy rainfall and floods occur in southern my country. The probability is greatly increased and drought will occur in the north.
When the La Ni?a phenomenon gradually strengthened from the end of 2010 to 2011, the volatility of futures settlement prices of soybeans and other agricultural products increased significantly and prices showed an overall upward trend. In 2011, soybean production in my country and the United States declined significantly. According to the October Outlook Report of the United States Department of Agriculture, soybean production in 2020/21 will decrease to 4.268 billion bushels, and soybean ending stocks will also drop to 290 million bushels; at the same time, its average agricultural product price forecast for 2020/21 will be significantly raised to 9.8 USD/bushel; current forecasts for soybean production in Brazil and Argentina remain unchanged.
Prices of agricultural products such as soybeans and corn have begun to stabilize and rebound since the second quarter, and have entered an accelerated upward phase since September. As the current cold winter is expected to strengthen, if drought occurs in the north and floods occur in the south, the planting industry will be greatly negatively affected, and the price increase of agricultural products (grain, vegetables, etc.) is expected to be stronger.
5. Paper industry: The peak season is coming, and prices are increasing
Since mid-August, Chenming Group, APP Jinguang Paper, Bohui, Wanguo Sun, etc. have successively announced plans for white cardboard Price increases have been carried out. Since October, many paper companies have continued to issue price increase letters. For example, the ex-factory price of white cardboard of Universal Paper (South China) has increased from 5,350 yuan/ton at the end of July to the current 6,350 yuan/ton; white cardboard The ex-factory price center moves up.
Since the third quarter, several paper companies have successively issued price increase letters for cultural paper. For example, Chenming Group stated in the price increase notice on October 15: Affected by high operating costs, in order to ensure In order to provide customers with continuous and stable high-quality products and services, it has been decided that starting from November 1, the price of coated paper series products will be increased by 300 yuan/ton. Bohui Paper, Shandong Huatai, Sun Paper, APP and many other companies have raised prices for cultural paper or white cardboard.
The price increase of white cardboard tends to be concentrated in the second half of the year, especially around the end of the third quarter. The back-to-school season and the double festival drive the demand for white cardboard to increase. At the same time, the relative rigidity of the supply side creates favorable conditions for price increases. , the current increase in industry concentration is more conducive to the upward movement of the price center; the profits of papermaking companies have been significantly restored in the third quarter, and under the influence of continued price increases, there is strong momentum for continued improvement in the fourth quarter. The market price of cultural paper stabilized and rebounded in July, and accelerated upward after entering September. For example, the offset paper and coated paper of Huaxia Sun (South China) currently increased by 700 yuan/ton and 500 yuan/ton respectively compared with June; Yueyang Paper The performance forecast was released, indicating that the profits of the papermaking segment have increased steadily, with net profits in the first three quarters ranging from 255 million yuan to 275 million yuan, with a cumulative year-on-year growth rate of 122% to 139%. After entering the fourth quarter, paper companies continue to issue price increase letters, and the prices of cultural paper and white cardboard continue to increase. It is expected that the profits of the papermaking sector will continue to improve. In addition, the second half of this year and next year will be a period of intensive publication and printing of party and government books, and the demand for cultural paper will be strongly supported.
6. Tires: Rising raw material prices and the recovery of the car market have prompted price increases
Many tire companies at home and abroad said that rising raw material prices have increased pressure on operating costs, thus raising the price of some tires. Selling price. Japanese tire manufacturer Yokohama recently announced that starting from December 1, the price of some commercial truck and bus tires in the U.S. market will increase by 6%; Bridgestone Americas Tire Business Unit plans to sell them in the United States on November 1 Prices for all Firestone brand radial truck and bus tires have increased by an average of more than 5 percent, with some prices increasing by more than 8 percent. Prior to this, Zhengxin Rubber, one of the global tire giants, announced that due to the increase in costs caused by the increase in tire raw material prices, it will successively adjust the prices of luxury car tires, high-performance sports and leisure tires, motorcycle tires and bicycle tires starting from August and September. Increase between 3~5%. Subsequently, Jianda Tire stated that it would follow up on the tire increase. Short supply is one of the reasons for the product price increase. Heda (Shandong) Rubber issued a price adjustment notice on August 8. Due to the recent increase in the prices of tire raw materials such as natural rubber, carbon black, and steel wire, the company's operations are facing real pressure, and it has decided to adopt a gradual price adjustment method starting from September 1. , raising the prices of some products by 1~3%. Jianxin Tire also raised prices for a certain type of tires.
Some A-share tire companies have also issued price increase letters. For example, on October 1, Sailun Tire issued a price increase notice. As the related raw materials required for tire manufacturing continue to rise in price, the pressure for rising costs is increasing. The more; starting from October 1, the prices and promotion policies of each passenger car tire brand of Sailun Group will be adjusted, and the corresponding sizes will be increased by 3%-7% respectively. Prior to this, Triangle Tire announced on August 24 that it would adjust the prices of commercial vehicle tire products to a certain extent. The specific price adjustment time and extent will be notified separately. It also stated that the prices of raw materials such as natural rubber, steel cords, and negotiated supplies are rising. General Motors also issued an adjustment notice on the 21st. Starting from August 29, prices below 16 inches have increased by 3%, and prices of sizes 16 inches and above have increased by 2%.
The main reason for this increase in tire prices is that raw material prices have stopped falling and started to rise. Since the third quarter, the prices of natural rubber, carbon black, and steel have bottomed out. The pickup in the passenger car market is also one of the driving factors for the increase in tire prices. As the epidemic disrupted the resumption of production of domestic automakers in the first half of the year, automakers will accelerate their production pace in the second half of the year to achieve the full-year production and sales targets set at the beginning of the year. Therefore, the output of the domestic passenger car market in the second half of the year will increase significantly compared with the first half of the year, and tire demand and orders will also be strongly guaranteed.
03 Conclusions and Suggestions
Under the intertwining of factors such as the accelerating pace of industrial production, the strengthening of cold winter expectations, and the shift of manufacturing orders, it is expected that some industries will face demand in the fourth quarter Improvements and increased orders have led to shortages in supply and rising product prices. It is recommended that investors pay attention to varieties whose demand has improved in the near future and whose prices have increased significantly.
Compared with previous winters, there may be some differences this year: First, the pace of production activities may further accelerate in the fourth quarter of this year. As my country's epidemic control is relatively good, many economic indicators currently show that the domestic economy is recovering rapidly, and infrastructure and real estate investment have improved significantly. With corporate profits accelerating in the third quarter, it is expected that manufacturing investment will also usher in the fourth quarter. Faster fix. Secondly, a La Ni?a event may form this winter, and one of its impacts will be low winter temperatures. After entering October, the temperature dropped significantly in many areas of my country, and winter entered early in some northern areas. Finally, the spread of the overseas epidemic and the fact that some domestic industries have complete production industry chains have forced the reshoring of orders from some manufacturing industries (such as textiles, medical equipment, etc.).