On the evening of June 11, Hengli Shares announced the release of the “Meeting Materials for the Second Extraordinary General Meeting of Shareholders of Hengli Shares in 2018”, in which the first agenda item The “Proposal on the Investment and Construction of the “PTA-4 Project with an Annual Output of 2.5 million tons” by its subsidiary Hengli Petrochemical (Dalian) Co., Ltd. will be reviewed soon. The announcement shows that in order to further consolidate the scale advantage of upstream production capacity and enhance the entire polyester chemical fiber industry chain Comprehensive competitive strength and enhance the sustainable profitability of listed companies, Hengli Petrochemical (Dalian) Co., Ltd. (hereinafter referred to as “Hengli Petrochemical”), a subsidiary of Hengli Petrochemical Co., Ltd. (hereinafter referred to as the “Company”), plans to invest 2.90757 million yuan in construction. “PTA-4 project with an annual output of 2.5 million tons”. Project progress: The project is expected to complete civil construction by the end of 2018, and commissioning and trial production will begin in the fourth quarter of 2019.
According to the announcement, after completion, the existing PTA production capacity of subsidiary Hengli Petrochemical will increase from 6.6 million tons/year to 9.1 million tons/year, and the new device will adopt INVISTA’s latest technology technology, it is expected that after the completion of the project, Hengli Petrochemical will have an average annual sales revenue of 11,245.73 million yuan and an average annual total profit of 906.98 million yuan.
What does the 9.1 million tons of PTA production capacity mean?
Hengli Petrochemical ranks first in China’s PTA monomer production capacity!
It is understood that as of the end of 2017, my country’s total nominal PTA production capacity reached 51.334 million tons.
From the perspective of nominal production capacity, Yisheng Department ( Hengyi and Rongsheng)’s total effective production capacity accounts for approximately 27% of the country’s total production capacity, and their actual effective production capacity accounts for 29% of the total production capacity. The top five companies in nominal production capacity account for approximately 65% of the total, while the top five companies in effective production capacity account for 68%.
From the perspective of individual production capacity, Hengli Group has grown to 660 million yuan in recent years. Its PTA production capacity of 10,000 tons ranks first. As the industry has experienced years of difficulties, the investment enthusiasm of new entrants has been greatly reduced. New PTA projects in the future will also be relatively limited. The 2.5 million tons annual production capacity project that Hengli is about to build will enable Hengli Group to secure the top spot in China’s PTA monomer production capacity with a volume of 9.1 million tons/year.
The oligopoly trend in the industry chain has been highlighted
The influence and control over the industry has been significantly enhanced!
In 2018, the intensity of national environmental protection rectification and policy support have obviously gradually shifted from the previous Generalized System of Preferences to supporting the strong and the excellent, and the market competition in the entire industry will also Upgrading again, the market is increasingly concentrated on a few giant companies with leading technologies and obvious production capacity advantages.
Looking at the textile industry chain, the oligarchy situation in the industry chain has become prominent. In the PTA field, five giants have gradually formed, including Hengli Petrochemical, Fuhua Group, Hengyi Group, Rongsheng Petrochemical, and Tongkun Group; in the upstream refining and chemical field, Hengli Group, Rongsheng Group, Hengyi Group, and Tongkun Group Projects of Kunming Group and Shenghong Group are about to be put into production; in the filament field, these same giant companies occupy 43% of the production capacity.
On the other hand, the influence and control of oligarchs on the industry have increased significantly. Taking PTA as an example, after the market supply and demand turned to a tight balance in the past two years, leading PTA companies took the lead in changing the cooperation model with downstream polyester factories. One is adjusted from spot purchases to annual contracts, and the other is that the product freight is transferred to the downstream. The settlement price is determined by a certain ratio between the cost plus and the spot market price, and different degrees of discounts are given based on the volume of delivery. The market influence and control of leading enterprises are fully demonstrated.
From recent years, we have learned that major domestic factories have higher quality requirements for products. As a result, those companies with average technology and manufacturing levels will face more severe tests, while PTA companies with outstanding high-quality production capacity will have an increasingly prominent advantage in the subsequent competition. Many of the older, smaller and older production capacities that were built earlier have become less competitive and are basically in a state of long-term parking. As of the end of 2017, domestic long-term parking capacity totaled approximately 6.25 million tons. Due to the relatively backward technology and high energy consumption, it is expected that this type of equipment will be difficult to restart in the future.
Objectively speaking, it will lead to the following two trends:
First, a major manifestation of integration and differentiation within the industry is that the shipment growth of leading companies will be higher than the industry growth rate. At the same time, these giants enjoy bargaining advantages and may continue to maintain high profitability and achieve rapid growth in product sales. This will lead to the intrusion of more capital into manufacturers, further accelerating the centralization of enterprises.
Second, the capacity utilization rate of leading enterprises is still at a high level. Due to the long production expansion cycle, in order to further consolidate the market share advantage and meet the industry turning point, leading enterprises will not let go. Slow down the pace of production expansion, but continue to expand production at a certain speed. Those who follow the dragon…�Enterprises of enterprises will drive their own development with the rapid growth of leading enterprises.
It is foreseeable that the advantages of these leading companies will become more and more prominent, and in order to avoid risks, downstream companies cannot only use the raw materials of a certain company. It is not only a competition between the strong and the weak. , the competition between the strong and the strong will become increasingly fierce.
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