ZHONG GUAN

Since 2013, dye prices have been rising continuously. Industry insiders said that although enterprises and related associations hope that all parties will unite to improve bargaining power with upstream enterprises, due to the dispersion and small scale of enterprises, it is currently impossible to reach a complete agreement.

Chen Quansheng, Secretary General of the Printing and Dyeing Industry Association of Keqiao District, Shaoxing, said that in June this year, the Keqiao District Industrial Printing and Dyeing Association had taken the lead in launching an action by enterprises to resist the price increase of dyes, but it has not yet been effective. In August last year, the Shaoxing Printing and Dyeing Industry Association organized more than 200 printing and dyeing enterprises to sue the two major dye giants Zhejiang Longsheng (600352, SH) and Runtu Shares (002440, SZ) for monopoly. After the government department investigated, it was fruitless due to lack of evidence. "It is very difficult for printing and dyeing enterprises to survive. In the first half of this year, the profits of all printing and dyeing enterprises in Keqiao District were not as much as those of Longsheng Group alone. According to the current situation, the price of dyes will continue to rise."

Dye prices have been soaring

Shaoxing is a place where the printing and dyeing industry in Zhejiang Province is concentrated. According to a report in Shaoxing Daily in March this year, there are hundreds of printing and dyeing enterprises in the local area, and the printing and dyeing processing capacity accounts for more than 1/2 of the total in Zhejiang Province and nearly 30% of the total printing and dyeing above a certain scale in the country.

Even so, the bargaining power of Shaoxing's printing and dyeing industry with upstream suppliers is still limited. "Raw material enterprises are relatively concentrated, and several giants such as Longsheng and Runtu occupy most of the market share." Chen Quansheng said, "In contrast, printing and dyeing enterprises are very scattered, and no one can compete with these upstream large enterprises."

According to Chen Quansheng, dyes are the main raw materials for printing and dyeing enterprises. Most of the large domestic dye enterprises are concentrated in Jiangsu and Zhejiang. The output of Zhejiang Longsheng, Runtu Co., Ltd. and Hangzhou Jihua, three dyeing and chemical enterprises, accounts for more than two-thirds of the national dye market. In the past, about 90% of the dyes used by printing and dyeing enterprises in Keqiao District came from these three enterprises. Dye prices have skyrocketed, and printing and dyeing enterprises can only respond passively.

It is reported that after the Spring Festival this year, the price of disperse dyes soared, doubling compared with last year. The rise in the price of disperse dyes has led to an increase in the prices of other dyes, and some varieties have tripled from last year. According to the Tiantian Business Daily, in order to cope with the rising cost of dyes, local printing and dyeing companies in Shaoxing raised dye prices around the Spring Festival. Starting from March 1, more than 20 knitting printing and dyeing companies in Binhai, Lizhu, Lanting and other places generally raised their printing and dyeing processing fees by 10%~12%.

Before 2012, the price of dyes as printing and dyeing raw materials had been hovering at a low level, staying at 15,000 yuan to 17,000 yuan per ton. In 2013, the domestic dye price rose by more than 70%. Among them, the average price of mainstream disperse dyes rose from 17,000 yuan/ton at the beginning of the year to 33,000~35,000 yuan/ton at the end of the year, an increase of 94.12%~105.88%; the average price of reactive dyes also rose from about 20,000 yuan/ton to 35,000 yuan/ton~36,000 yuan/ton, an increase of 75%~80%.

The printing and dyeing industry chamber of commerce took the lead in resisting

"The industry has overcapacity and increasingly stringent environmental protection standards. Printing and dyeing companies can slowly transform and adapt, but the skyrocketing prices of dyes and chemicals have further compressed the originally negligible profits." The general manager of a long-established printing and dyeing company in Keqiao District said that since the beginning of this year, most printing and dyeing companies have also raised dyeing fees, but the increase is still lower than the increase in dye prices, and the profits generated by the increase are completely pocketed by dye factories.

As a large market for dyes and chemicals, the purchase volume of the entire Shaoxing printing and dyeing company can account for about 40% to 50% of the output of several companies such as Longsheng and Runtu. The Shaoxing Printing and Dyeing Association hopes to unite printing and dyeing companies to cope with the rise in dye prices. It is hoped that prices will return to a reasonable level to facilitate the overall long-term development of the upstream and downstream industries.

The Shaoxing Printing and Dyeing Industry Association organized more than 200 printing and dyeing companies in Shaoxing to jointly submit a report to the Zhejiang Provincial Price Supervision and Inspection Bureau, mainly targeting the two major dye giants in the A-share market, Zhejiang Longsheng and Runtu shares. After a joint investigation by the Zhejiang Provincial Price Bureau, the Economic and Information Commission and other departments, the case was left unresolved due to the lack of solid evidence. A person related to the Keqiao Development and Reform Bureau also revealed to the reporter of the "Daily Economic News" that the Zhejiang Provincial Price Bureau had interviewed several companies such as Longsheng and the Printing and Dyeing Association at that time, demanding reasonable pricing, but no evidence of monopoly was found.

Raw material giants benefited a lot

Compared with the difficulties faced by printing and dyeing companies, the two major raw material giants in Shaoxing, Zhejiang Longsheng Group and Runtu Shares, benefited from the continued rise in dye prices. Zhejiang Longsheng's semi-annual report shows that the net profit attributable to the company's shareholders in the first half of 2014 was 1.542 billion yuan, compared with 547 million yuan in the same period last year, a year-on-year increase of 181.60%. According to statistics from Eastmoney, Zhejiang Longsheng's gross profit margin has increased from 26.07% in the first quarter of last year to 40.08% in the first half of this year, and its net profit margin has also increased by 14.27 percentage points during the same period, from 6.35% to 20.62%. In terms of dye business, Zhejiang Longsheng's semi-annual report shows that the gross profit margin of this business increased by 13.89 percentage points year-on-year to 44.73%;

Regarding the situation reflected by the printing and dyeing enterprises, on September 12, the reporter called the secretary of the board of directors of Longsheng Group. The other party said that Yao Jianfang, the secretary of the board of directors of the group, was on a business trip and could not respond to relevant information immediately. On September 15, the reporter went to Daoxu Town, Shangyu City, Shaoxing, where Longsheng Group is located. The relevant personnel of Longsheng Group said that all media interviews and contacts were handled by General Manager Yao, who was still on a business trip. Afterwards, the reporter called Yao Jianfang again, and the other party said that he would not accept the telephone interview and would have to wait until his trip was over before making a public reply.

Industry insiders believe that as the country continues to pay more attention to environmental protection, especially the intensification of the rectification of high-pollution industries, the situation of enterprises reducing and limiting production will continue to occur, and it is likely that the price of dyes will continue to rise this year.