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Impact of Xinjiang cotton incident over chemical fiber industry

Views: 1     Author: Site Editor     Publish Time: 2021-04-05      Origin: Site


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In fact, people in the industry were not particularly surprised about this issue at the beginning. The Xinjiang cotton incident was already being performed last year, but the brand apparel companies’ boycott has made this matter enter the public view and triggered a wider range of discussion.


However, short-term impact is also direct. For China cotton, there is no need to say, for US cotton, the boycott is also not a good thing. If the orders previously signed by China and US cannot be fulfilled, then there will be a great loss in demand.


Staple fiber will face the most direct impact. In terms of polyester section, PSF market was a bit miserable recently. Firstly, affected by the pullback of commodity futures, PSF profit is obviously lower than that of filament as PSF price dropped more, and recently it has encountered the impact of the cotton incident.


The influence over polyester staple fiber mainly lies in the spinning demand, especially cotton-polyester blended yarn enterprises. Some players may ask, will the restriction of cotton lead to more consumption of PSF and viscose to replace cotton? Isn't that a good thing? In fact, for spinning enterprises, the initial worry is that orders for yarn to downstream sector may get frustrated.


There was news near the weekend that US Amazon had removed all Chinese cotton goods from its shelves unless they could prove that Xinjiang cotton was not used. If this is really the case, then not only cotton products, but also blended products will inevitably be affected. In fact, when the cost or difficulty of self-certification is relatively high, even varieties that do not use Xinjiang cotton will be affected.


For polyester filament yarn and even chemical filaments, the impact may have to be seen at different levels. In theory, the direct impact may not be great. The producing areas of polyester filament yarn are basically in Jiangsu, Zhejiang and Fujian, and there is no PFY and PSF factory in Xinjiang (nor does nylon spandex spinning factory). In addition, in terms of volume substitution, overseas enterprises do not use Xinjiang cotton, but they can also use American cotton, Indian cotton, Brazilian cotton, Pakistan cotton and even Australian cotton, but chemical fiber may not be able to do such substitution. At present, China's chemical fiber output has accounted for more than 70% of the world total, there is no suitable alternative at all.


But the impact of this incident itself lies in the deep-seated dispute between China and the United States.

As a matter of fact, everyone knows very well that the so-called forced labor is, to a large extent, only a cause of exerting political pressure and more of an orientation of rejecting goods made in China. Disguised trade war is not a good trade environment, in addition, from the direct impact, apparel is also mostly blended, so it is not realistic to completely put aside the relationship.


So generally speaking, Xinjiang cotton storm has a greater direct impact on PSF for spinning use within short, while for polyester filament and other chemical fiber filament varieties, it lies more in the unfriendly trade environment, and the impact is more in medium-long term.

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