Analysis of favorable factors and development trends of the dye industry

1. Overview of industry development

Dyestuffs belong to the manufacturing of chemical raw materials and chemical products, and the subdivided industries belong to the dye manufacturing industry. Dyes are substances that can make a certain color adhere to the fiber, and are not easy to fall off and change color. According to the nature and application of dyes, China divides dyes into eight categories: direct dyes, disperse dyes, reactive dyes, and acid dyes.

After the financial crisis broke out in 2008, due to insufficient export demand for downstream textiles and leather products, the output of dyestuffs that year fell 10% year-on-year. Since the first quarter of 2009, the dye industry has bottomed out and maintained steady growth. Affected by the European debt crisis in 2012, the performance of all companies had a certain degree of performance. In 2013, as the country continued to upgrade its environmental protection efforts, some companies that did not meet environmental protection standards reduced or suspended production, the industry was reintegrated, and the prices of major dye products kept rising Situation, as of 2018, the output of China's dye market has exceeded one million tons, and its sales have exceeded 60 billion yuan.

2. The main obstacles to entering the industry

(1) Qualification barriers

If the raw materials and finished products involved in the production of dye companies are hazardous chemicals, they need to obtain a “safe production license” from the local safety production supervision bureau according to the “safe production license regulations”. In addition, according to the "Regulations on the Administration of Industrial Product Production Licenses", dye manufacturers must apply for the "Industrial Product Production License" before they can produce and sell their products. The license is difficult to handle and has a long period. Therefore, the ability to obtain relevant business qualifications will also become an industry barrier for new entrants.

(2) Sales barriers

Product sales network is one of the key factors to enter this industry. First, a complete sales network and stable and high-quality customer groups are important bargaining chips for companies to win in the competition. Once a customer trusts a dye manufacturer's product, the customer will maintain a long-term stable supply and demand relationship with the dye manufacturer. Other dye manufacturers It is difficult for companies to intervene, so companies that enter first can quickly grab high-quality customers; second, the establishment and improvement of international sales networks, the accumulation of a considerable number of high-quality customer resources will take a long time to complete, first enter the company in this regard Obvious first-mover advantage will be formed; thirdly, the establishment cost of international sales network is very high, and the maintenance cost is relatively low, and it will be more difficult for enterprises to compete for market share after entering.

(3) Technical barriers

The design of the dye production process is complex, especially the dye synthesis, separation and post-treatment process is complex, the process is long, and the technical level is high. Modern dyestuff manufacturing enterprises need to adopt advanced environmental protection production processes. With the increasing awareness of environmental protection, the international market has increased restrictions on harmful chemicals such as dyes, carcinogenic aromatic amines and environmental hormones, and more and more dyes and auxiliaries have been banned. All dyes that involve bans, allergies, and excessive heavy metal content are restricted. New production processes and methods place higher requirements on the company's product innovation capabilities and increase the barriers to industry entry.

(4) Brand barriers

There are a large number of dye manufacturers, and product quality and brand have become a necessary condition for companies to obtain excess profits. The value of the product brand is reflected in high customer awareness, high bargaining power, rapid expansion of production capacity, and high market share. In particular, there are many small and medium-sized dye companies in the country, and the quality of their products is uneven, and the cost of replacing dyes for downstream companies is relatively high. Therefore, for new entrants, whether they can establish brand advantages will become one of the industry barriers.

(5) Environmental protection requirements barriers

Dyestuff manufacturers will inevitably produce three wastes in the production process. With the increasing awareness of environmental protection, the state has strengthened macro-control in these areas. The eighth meeting of the Standing Committee of the National People's Congress voted and passed the "Environmental Protection Law Amendment" on April 24, 2014. The pollution industry has put forward stricter environmental protection requirements. The three waste treatment capabilities of a dye manufacturing company, especially the wastewater treatment capacity, will be an important factor for the company to gain a foothold and even develop in the dye industry. Existing laws and regulations have high requirements on the environmental protection of dye production enterprises, and the high environmental protection costs incurred every year will restrict new enterprises from entering the industry.

3. Favorable factors affecting the development of the industry

(1) Advantages of local resources

Compared with other countries, in terms of resources or price, Chinese dye manufacturing enterprises have considerable advantages in land use, energy, infrastructure, public works, and dye intermediates. This is the unique advantage of China's dye industry. Petroleum and coal industries are China's advantageous industries, which provide the dye industry with a guarantee of raw materials and energy; China's status as a major textile country and the vast number of dye applications have provided a stable market foundation for the products of China's dye industry. China has abundant labor resources. Compared with developed countries, China's labor force is reflected in "low price"; compared with developing countries, it is reflected in "high quality". Companies with labor cost advantages will inevitably take the lead in the international market.

(2) The technical level is improving year by year

At present, the more important high-tech technologies in the dye production process include catalytic technology, sulfur trioxide sulfonation technology, continuous nitration technology, adiabatic nitration technology, directional chlorination technology, combination synergistic technology, solvent reaction technology, and various clean process technologies. The emergence of these new technologies greatly reduces the emissions of the three wastes while improving the product quality, and can even eliminate the three wastes in the process to form zero emissions of the three wastes. In addition, the level of production equipment supporting the dye industry has also been improved, and key equipment such as large-scale clean production technology and equipment for leading varieties and key intermediates, and process control automation have been successfully applied. Technologies such as hydrogenation reduction, membrane filtration, and puree drying have been listed in the key industrial cleaner production technology demonstration and promotion project catalog of the Ministry of Industry and Information Technology.

4. Industry development trend

China has become the world's largest country in terms of production, trade and consumption of dyestuffs, and its dyestuff production accounts for about 70% of the world's total dyestuff production. The main production areas of domestic dyestuffs are in Zhejiang Province, Jiangsu Province, Shandong Province and Shanghai, and their output accounts for 90% of the country's total output. The industry is highly concentrated. In terms of disperse dyes, Zhejiang Runtu, Zhejiang Longsheng and Zhejiang Jihua rank among the top three dyestuff companies in China. In recent years, as the national safety and environmental protection situation continues to tighten, some small dye production capacity has withdrawn from the market, and the supply of the dye industry has shrunk. The "Thirteenth Five-Year Development Plan for the Dyestuff Industry" issued by the China Dyestuff Industry Association pointed out that dye companies must cater to the needs of market development, meet the requirements of textile printing and dyeing to supply new technologies, new fibers, energy conservation and emission reduction, and bridge the development of new dye varieties. The gap between the ability and the advanced level of foreign countries; speed up the integration and automation of the dyeing and pigment production methods, and the modernization of equipment.

With the increasingly severe domestic safety and environmental protection situation, the dye industry is facing the pressure of fluctuations in the supply of upstream raw materials, upgrading of dye production equipment, and increased investment in environmental protection technology transformation, which has affected the production capacity of some enterprises, and some small dye production capacities have gradually withdrawn from the market. Supply shrinks. On the other hand, the downstream printing and dyeing industry is facing the pressure of eliminating outdated production capacity and technological upgrading. In the short term, it may affect dye demand and face the risk of increasing difficulty in payment recovery. However, in the long run, it will help eliminate more outdated production capacity and increase superior production capacity. Concentration is conducive to the development of oligarchs in upstream and downstream industries.