After the Lantern Festival, the Spring Festival holiday officially ended. With the return of businessmen and the restart production of downstream dyeing plants, the acid dyes market began to recover gradually, and the speculative atmosphere of the dyestuff market began to intensify.

Here, I want to share with you another question: Why does the acid dyes market have such a clear trend after the Spring Festival? No matter acid yellow dyes, acid black dyes or acid red dyes.

Some people say that the rework of dyeing plants after the Spring Festival has led to an increase in demand for dyes and chemicals, and a better demand has brought bullish stimulus to the market, thus driving up market prices.

Others people say it is cost-driven, upstream raw materials benzene, naphthalene and chlor-alkali products soared, resulting in increased pressure on the production cost of acid dyes, driving up the price of acid dyes.

All these reasons make sense, but when we go deep into them, we will find that these reasons are just the arguments put forward by the market to convince the participants in the market.

The increase of demand will indeed bring some favorable support to the market, but for the market, demand never exists independently, and the balance between supply and demand is the real focus of the market. As a serious surplus of production capacity, in the fierce competition in various factories, the pattern of excess supply has always been difficult to eliminate. In the textile dyes printing season of the first half of the year, although some time point will appear due to the concentration of pick-up caused by supply tension, but the overall social inventory of acid dyes is still high, enterprises and traders still have a large amount of invisible inventory.

The cost-side rise seems to be the most logical reason, but there is a certain deviation in the time point. The price rise of raw materials did not start after the Spring Festival, but in the second half of the year of 2016, and in the long period of six months, the cost pressure has slowly shifted to the downstream.

The real reason for the dyestuff market price going up after the Spring Festival is the lack of short-mechanism in the acid dyestuff market.

In traditional commodity markets, factories, traders and downstream often play different roles at different period. They usually become the long and short forces in the market respectively. The acid dyes market is similar to China’s stock market in that it lacks a short-mechanism.

As middle-link traders, they have a more flexible position, the holders can actively push up, the sellers can take the initiative to hit the price. However, as people in docking dyestuff factories, their behavior is often affected by factories, and is still hampered by the persistence of supply in the process of price dropping.

As the downstream dyeing plant,  they may choose to stop purchasing and wait to see the market prices in off-season. However, in the peak season, most dyeing plants can only choose acceptance, increase processing fees and transfer costs to the downstream.

After sorting out the relationship among them, we can see the price rise of dyestuff market after the Spring Festival, which may be more clear. To put it plainly, this is not an upward trend brought about by the improvement of the market, but a rising tide caused by the agglomeration of rising intentions of factories and businessmen. Of course, the upstream in the first quarter is inseparable from the arrival of the peak demand season. After all, in the peak season, when prices are raised, customers are easily accepted.

Risks in Dyes Up-going

Here, we also want to talk with you about some other things. One point mentioned above is that dyestuff manufacturers and traders should be cautious in choosing downstream customers in the new year, because in 2017, affected by environmental protection and other factors, it is expected that many dyeing and printing enterprises will still be in trouble, which may affect upstream dyeing and chemical suppliers.

In fact, the risk of customer selection is bidirectional, and there are many crises implied in the selection of upstream suppliers in dyeing plants – true and false suppliers. There are many quality inspection indexes for dyes: appearance, strength, color, water insoluble substance, fineness, sunshine fastness, dispersibility, etc. But in normal production and trade, only fastness and shade are tested, and high-precision indicators are required for testing instruments. Some dyeing factories even have difficulty in preparing complete sets of testing instruments. And the merchants samples for testing  sometimes have some difference with the quality of the goods.

Especially in the process of rising dye prices, if the customers only focus on lower prices, they may fall into the trouble of poor dyes quality. Purchasing inferior dyes and chemicals is a trivial matter, leading to production accidents and even orders can not be delivered is the greatest risk.

As the experienced manufacturer of dyes in China, Xincheng Weiye will insisit on its own principle and produce various kinds of Paper Dyes, Wood Dyes, Textile Dyes, egg trays Dyes, fountain pen Dyes, Mosquito Coils Dyes with Consistent quality.

This article is from Rhodamine manufacturer –XCWY.