With countdown to Asian Games, what's the impact on chemical fiber industry?

In September and October, there are two major events taking place in Hangzhou. The 19th Asian Games will be held from September 23 to October 8, 2023, followed by the 4th Asian Para Games from October 22 to October 28, 2023.

The venues for the Hangzhou Asian Games are distributed across six cities in Zhejiang, namely Hangzhou, Ningbo, Wenzhou, Jinhua, Shaoxing, and Huzhou.

Hangzhou main venue

Zhejiang is a major hub for the chemical fiber industry. The polyester sector was significantly impacted by the policies because of the 2016 G20 Summit in Hangzhou. Therefore, market insiders have made some predictions regarding the impact of the Asian Games on the chemical fiber industry chain.

As of now, less than three weeks before the opening ceremony, CCFGroup has inquired about the impact of the Asian Games on people involved in the chemical fiber industry chain. The results showed that the relatively clear impact is mainly concentrated in the Hangzhou area, while no news has been heard from other regions.

In Hangzhou, the capacity proportion of polyester, nylon polymer, and spandex is at 9%, 15%, and 7% respectively.

In terms of polymerization sector, only polyester market is heard to be impacted and there is no confirmed notice on nylon polymerization temporarily. Some polyester companies' production will be intensively affected from mid-Sep to early-Oct, estimated to be around 2.16 million tons, accounting for 31% of total polymerization in Hangzhou and occupying near 2.8% of total polymerization capacity in China.

As for the middle stream field like chip-spun, DTY and fabric manufacturing sectors, there is no confirmed requirement for the time being. The environmental impact of these three links in the actual production process is also relatively small, so the impact is not expected to be too great.

In terms of printing and dyeing market, only dyeing plants in Hangzhou have received notice for the time being. There are many dyeing plants in Shaoxing but there are no confirmed news temporarily. Considering the environmental impact of the dyeing factory, it cannot be ruled out that there may be some temporary stop notices.

The impact on the operating rate of the whole value chain during the Asian Games is expected to be far weaker than that around the 2016 G20 summit. Polyester and printing and dyeing sectors will be the major links to be affected. Although September and October are traditional peak season on textiles market in the second half of year, it may have limited influence on the chemical fiber value chain as many have produced inventory in advance in Q3 with the worry of production suspension for the Asian Games. Taking PFY as an example, the inventory of the whole industry chain is mainly in grey fabrics.

In addition, players of the industrial chain may need to pay attention to some of the traffic impact during the Asian Games, which requires future attention under the official notice, immediately do a good job of raw material preparation and product delivery.