The dye sector collectively surged significantly, with multiple stocks hitting the limit up, driven by a sharp rise in raw material prices.

On February 9, the A-share dye sector experienced a strong rally, surging once again and becoming a highlight of the day's market. By the close, four stocks—Runtu Co., Ltd. (SZ002440), Yabang Co., Ltd. (SH603188), Fluorescent Technology (SH605566), and Jihua Group (SH603980)—had hit the daily limit up. The industry leader, Zhejiang Longsheng (SH600352), saw its stock price surge by 9.50%, with the overall sector performing actively.

Behind the sector's significant rise is the recent wave of price hikes initiated by dye companies, directly triggered by a sharp surge in the prices of key upstream raw materials. It is understood that the price increase trend among domestic dye companies began in late January and accelerated noticeably in February. The pricing adjustments by leading companies in the industry have continued to attract market attention.

On February 8, industry leader Zhejiang Longsheng took the lead in issuing a price adjustment notice, explicitly raising the prices of various dye varieties, including Disperse Black, by RMB 2,000 per ton effective that day. The company stated that the direct reason for this price adjustment was the increase in raw material costs, such as intermediates like reduction compounds, leading to corresponding adjustments in dye product prices. Among these, the quoted price for the company's main product, Disperse Black, has recently accumulated an increase of up to RMB 5,000 per ton.

This price hike has accelerated in the short term. On February 5, during an institutional research meeting, Zhejiang Longsheng disclosed that the quoted price for Disperse Black had recently accumulated an increase of RMB 3,000 per ton. By February 9, the cumulative increase for this product had risen to RMB 5,000 per ton, meaning it increased by another RMB 2,000 per ton in just four days. In addition to disperse dyes, reactive dyes have also seen price increases of varying degrees. For instance, the quoted price for Reactive Brilliant Blue rose from RMB 150,000 per ton to RMB 180,000 per ton, a relatively significant increase, while the overall price hike for major varieties of reactive dyes has been relatively moderate.

Following Zhejiang Longsheng, other dye companies have also followed suit with price adjustments. On February 9, media reports indicated that Fluorescent Technology's sales department had issued a price increase notice to customers, adjusting the prices of disperse dyes effective that day. Among the adjustments, nine products, including Disperse Black ECT (300%), were raised by RMB 2,000 per ton, while Navy HW-SR was raised by RMB 3,000 per ton. The price increase for the ten affected products is expected to be around 10%.

Runtu Co., Ltd., which adopted a price-following strategy, has also raised product prices multiple times in the short term. During a research meeting on January 28, the company stated that the price of Disperse Black had recently increased by about RMB 1,000 per ton. By February 9, the company disclosed again that the product had accumulated a recent increase of RMB 5,000 per ton, clearly keeping pace with the industry's price hike trend.

The core driver behind this collective price increase in the dye industry is the soaring prices of key upstream intermediates, such as reduction compounds. Zhejiang Longsheng explicitly stated that the current dye price hike is primarily due to rising raw material costs, especially for important intermediates like reduction compounds and hexachlorobenzene. According to industry insiders, the market price for reduction compounds rose from RMB 20,000 per ton on January 20 to RMB 50,000 per ton on February 5. By February 9, the market quoted price had further climbed to RMB 70,000 per ton, representing a staggering increase in a short period.

In an interview with reporters, the industry insider noted that the dye chemical industry is a fully competitive cyclical industry. As a essential product for downstream industries such as apparel and home textiles, dye prices and profit margins were previously at low levels. The current price increase is a normal transmission of cost pressures, and the pricing of reduction compounds follows market trends rather than being controlled by any single company.

From the perspective of production capacity for reduction compounds, there are currently only three major domestic producers: Zhejiang Longsheng, Runtu Co., Ltd., and Ningxia Zhongsheng New Technology Co., Ltd. Among them, Zhejiang Longsheng has an annual production capacity of about 20,000 tons for reduction compounds. Runtu Co., Ltd. has an annual capacity of about 8,000 tons, with production volumes adjusting to market conditions. Most of its output is used in-house to support the company's disperse dye production.

The continuous rise in reduction compound prices may have a profound impact on the dye industry landscape. Analysis indicates that reduction compounds account for 20% to 30% of dye production costs. Their rigid price increase will directly transmit to downstream dye products. For small and medium-sized dye manufacturers without integrated supply chains, this hard cost is difficult to absorb. If they cannot pass the cost downstream, their profit margins will be severely squeezed. Therefore, this price hike transmission is smooth and expected to have some sustainability.

The research report also predicts that if reduction compound prices continue to rise, the cost pressure faced by small and medium-sized dye manufacturers will be far higher than that of leading companies with well-established industrial chains. This may force them to reduce production or exit the market, accelerating industry consolidation and further strengthening the pricing power of leading companies. Meanwhile, the "Guiding Opinions on Carrying Out Zero-Carbon Factory Construction Work" jointly issued by the Ministry of Industry and Information Technology and four other departments明确 states that zero-carbon factory demonstration projects will be selected starting in 2026. Higher environmental requirements and green compliance costs will further compress the survival space for small and medium-sized enterprises, while the advantages of leading companies will become more prominent.

As industry leaders, Zhejiang Longsheng and Runtu Co., Ltd. have significant production capacity advantages. Zhejiang Longsheng, as a global leader in dyes and textile chemicals, has a manufacturing sector covering three major businesses: domestic dyes, Dystar, and intermediates. Its total dye production capacity is about 300,000 tons per year, and its intermediate production capacity is about 120,000 tons per year. Leveraging its integrated intermediate industrial layout, the company stated that its dye production capacity will further increase.

Runtu Co., Ltd. has a total dye production capacity of nearly 238,000 tons per year, including 118,000 tons per year for disperse dyes, 100,000 tons per year for reactive dyes, and nearly 20,000 tons per year for other dyes. Its product sales market share consistently ranks among the top two in the domestic dye market. In terms of performance, Runtu Co., Ltd. expects its net profit attributable to shareholders for 2025 to be between RMB 600 million and RMB 700 million, a year-on-year increase of 181.05% to 227.89%. It expects adjusted net profit attributable to shareholders to be between RMB 270 million and RMB 370 million, a year-on-year increase of 26.75% to 73.70%. The company attributed this mainly to increased operating profits from reactive dyes and basic chemicals compared to the same period last year.

It is worth noting that amid the dye industry's price hike热潮, downstream demand remains relatively cautious. According to data from a Guojin Securities research report on February 7, the comprehensive operating rate of printing and dyeing enterprises in the Jiangsu-Zhejiang region was 27.86% that week, down 23% from the previous week. The report分析 stated that relatively slow order growth in the downstream textile industry has led to a significant decline in the operating rates of printing and dyeing enterprises. These companies mostly focus their dye purchases on actual production needs, generally lacking enthusiasm for active stockpiling. With no positive boost from the demand side, the market overall maintains a cautious wait-and-see attitude.