The worst record in more than 300 years was born, the “energy crisis” broke out, and the stock markets of the United Kingdom, the United States, Europe, Germany, and France “slumped” sharply! Many major exporting countries are in “order shortage”! Factory production has slowed, workers are taking shifts and orders are being delivered late.
The worst record in more than 300 years was born
Stock markets in Britain, the United States, Europe, Germany and France fell sharply
According to the latest revised data released by the United Kingdom recently, the country bore the brunt of the COVID-19 pandemic in 2020, recording the largest decline in output in more than 300 years, and a larger decline than any other major economy. The Office for National Statistics said GDP fell by 11% in 2020. This is larger than any previous estimate by the Office for National Statistics and the largest fall since Britain suffered the Great Frost in 1709, according to historical Bank of England data. Affected by this data, the British stock market suffered a sharp decline, and the British FTSE 250 index opened lower and moved lower.
In Europe, the three major European stock markets all fell on Monday. The European Stoxx 50 index fell by more than 1.5%, and the German DAX30 index once fell by more than 2%. The European Central Bank predicts that the European Central Bank will raise its benchmark interest rate by 50 basis points in September.
U.S. stocks are also facing greater pressure, and the performance of futures indexes was also weak in the pre-market on Monday, with several major futures indexes falling close to 1% or more than 1%. U.S. stocks fell at the beginning of the session, with all three major stock indexes falling more than 1%, and then the losses continued to expand. As of 11:30, the Nasdaq fell 2.19%, the S&P 500 fell 1.73%, and the Dow fell 1.39%.
The supply of natural gas, coal and crude oil continues to be tight
The energy crisis is getting worse
Analysts believe that the conflict between Russia and Ukraine has entered its sixth month, natural gas prices continue to rise sharply, the possibility of an energy crisis is increasing, and the risk of stagflation is increasing again. Due to the impact of the Russia-Ukraine conflict, European society is “deeper and deeper” in the energy crisis. Whether it is the tight supply of primary energy sources such as international crude oil, natural gas, and coal, or the passive pressure on secondary energy sources such as electricity, these have put a global It has had a huge impact on the survival of industrial enterprises and residents. Crude oil futures closed slightly lower, with concerns that “production may be reduced at any time in the future” due to tight supply re-emerged.
When the international crude oil market weakened sharply on Monday due to the progress of the Iran nuclear agreement, Saudi Energy Minister Prince Abdulaziz bin Salman clearly sent a signal to the market that “production cuts may be possible in the future,” pushing oil prices to rebound. It also said the Organization of the Petroleum Exporting Countries (OPEC+) and its allies had the “commitment, flexibility and means” in their declaration of cooperation to respond to market challenges, including cutting production “at any time and in different forms.” U.S. natural gas prices hit 14-year high, European natural gas surges 20% As U.S. natural gas prices soar to a new 14-year high, natural gas has become the focus of attention. As supply entered a tight winter trend, European natural gas and electricity prices soared on Monday (August 22) local time. European benchmark natural gas prices once soared 21%. German electricity prices exceeded the 700 euro mark for the first time, reaching a record high. €710/MWh.
Gazprom announced that it would suspend natural gas supply through the Nord Stream 1 pipeline from August 31 to September 2, triggering panic in the market. The Dutch TTF natural gas September contract price hit a record high for the third consecutive day. The price was reported at 287.2 euros/MWh, an increase of 17.44% from last Friday’s closing price. A new high since the Russia-Ukraine conflict at the beginning of the year. It rose more than 20% to 295 euros during the session, also hitting a 52-week high.
Coal futures contracts rose 5.1%, reaching a record high of $335/ton. Affected by the sharp rise in natural gas prices, many European countries have restarted coal power generation. Since the EU bans the import of Russian coal, member states can only turn to other markets to snap up coal. This is also This intensifies competition in the market and drives up prices. On the 21st, the price of European coal futures contracts for delivery next year rose 5.1% to a record $335/ton.
In Europe, the EU’s ban on Russian coal has officially taken effect. 45% of the coal imported by the EU each year comes from Russia, and 70% of thermal coal for power generation and heating is imported from Russia. The restart of coal power coupled with sustained high temperatures has led to new highs in electricity consumption and increased demand for coal. In Asia, the supply reduction is greater than�� is decreasing and the pattern is tightening. The world has entered an interest rate hike cycle, and commodity consumption has been suppressed. Due to the increase in the scope of loss-making maintenance of steel mills in Japan and South Korea, raw coal consumption has decreased, and the high temperature changes in the Asia-Pacific region are smaller than those in Europe. The demand for coking coal has decreased, while the demand for thermal coal has remained stable. Some cross-border coal types have been replenished, and overall coal demand in Asia has decreased.
Many major exporting countries are in “order shortage”
Factory production slows, workers take shifts, and orders are delayed
As gas and electricity prices soar in Europe, a series of knock-on effects are coming. It is reported that due to high inflation, soaring energy prices, slowing demand and other factors, some major exporting countries are experiencing order shortages.
Vietnam
After entering the second half of the year, many factories in Vietnam received fewer orders, which forced them to reduce production hours and arrange for workers to take turns to take vacations.
The deputy secretary-general of the Vietnam Textile and Garment Association said that exports in the textile industry have been hit this year, severely affecting many companies. At the beginning of this year, companies received a large number of orders and faced labor shortages. However, since the second quarter, the impact of the Russia-Ukraine conflict has caused fuel prices to rise. Consumers in many countries have changed their consumption habits. The demand for fashion clothing products has dropped significantly. Inventories cannot be sold and brands do not sign new orders.
According to Vietnamese media reports, the person in charge of a company in Dong Nai that specializes in the production of children’s clothing said that in the past two months, the number of new orders has dropped by 20-30%. A shoe manufacturer said it had to let 40,000 workers take three-day vacations in turns in August and September, otherwise about 8,000 workers would have nothing to do.
The person in charge of a textile company said that the factory is still operating normally, but orders will decrease in September and October. According to the plan, the company will arrange for workers to take vacations. In conjunction with the National Day holiday, the factory will suspend production for 8 days, and then arrange employees to take Saturday off as appropriate to reduce overtime work.
Separately, employees at a clothing factory in Ho Chi Minh said their revenue dropped by 20% due to fewer new orders. Workers at an electronics factory said they were laid off last month as the company’s production slowed. The deputy director of the Vietnam Institute of Workers and Trade Unions said that once orders slow down, workers will inevitably be hardest hit, with millions of people affected by the drop in global demand.
The vice president of the Ho Chi Minh City Business Association said that labor-intensive industries such as electronics, clothing, footwear, wood and steel production have been hardest hit by the slowdown in orders from key markets such as the United States and Europe, and many factories have large inventories and are still struggling after lowering prices. There are no buyers.
India
It is reported that the global economic recession is having an impact on Indian textile exporters. Industry bodies and businessmen said export orders for apparel and home textiles from the United States and Europe fell by about 15-20% as Western retail brands faced slowing demand.
In Panipat, India’s important home textile production center, there are signs that export orders have dropped by 40%. It is reported that inflation and rising interest rates caused by the Russia-Ukraine conflict are the reasons for the decrease in export orders.
Industry insiders say that importers from Western countries have not only reduced orders for the next season, but also delayed the delivery of previous orders. Last month, importers for several home textile exporters refused to take delivery of goods. Buyers said retail sales in Western countries have slowed sharply due to high inflation, leaving warehouses filled with unsold goods.
Exporters from Panipat, after attending a trade fair in Germany in June, said they had received 40 per cent fewer export orders for home textiles compared to last year.
Ramesh Verma, a Panipat-based exporter and member of the Handloom Export Promotion Council, said: “Last year, big companies and retail brands in the US and Europe purchased a lot of home textiles, but retail sales remained very weak. Therefore, they must not No reduction in purchases. Exporters have fewer orders for next season.”
Bangladesh
Affected by the dual impact of slowing global demand and the domestic energy crisis, Bangladesh, one of the world’s major apparel exporters, has seen a decrease in clothing orders, while exporters are facing problems such as increased operating costs.
A supplier to global apparel giant PVH Corp. and Inditex SA’s Zara said its company’s new orders in July were down 20% from a year earlier. Retailers in European and American markets are either delaying shipments of finished products or postponing orders. This has a severe impact on export destinations as inflation soars.
In addition, due to the energy crisis, the country’s authorities have implemented blackouts to protect fuel reserves, which will reduce plant productivity and increase operating costs. One exporter that supplies Gap and H&M said its company relies on generators for at least three hours a day, which costs three times the cost of getting electricity from the country’s national grid.
Earlier this month, the country significantly increased fuel prices by more than 40%. According to recent foreign media reports, the country will shorten office hours to save energy, specifically reducing daily working hours by one hour.
One exporter that supplies H&M said its company relies on generators for at least three hours a day, which cost three times the cost of getting power from the country’s national grid.
Earlier this month, the country significantly increased fuel prices by more than 40%. According to recent foreign media reports, the country will shorten office hours to save energy, specifically reducing daily working hours by one hour.
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