This year’s 618, clothing brands with an overall inventory of more than 250 million yuan on a certain platform may also face inventory problems in the future! The recovery of terminal orders is not optimistic, and it is currently difficult for textile products to form a healthy price increase and destock. Although the increase in raw material prices in the early stage drove some speculative demand, it was only a transfer of inventory and was not digested by the terminal. The nearly one-month inventory of gray cloth factories has already overdrawn the market demand in advance. Textile export orders have been transferred outwards, domestic demand has not yet recovered, and there are doubts about future orders. The continued accumulation of inventory has formed a “barrier lake” in the gray fabric market.
Weaving 618 retreat: full of longing
Actual orders are still limited
As one of the highlights of the year for e-commerce platforms, the “618” event, which spans more than half a month, has just ended, and merchants are busy releasing various “battle reports.” At a time when the economy is stabilizing, this year’s “618” is destined to have high hopes from e-commerce platforms and merchants of all sizes. In a sense, it is not only a competition ground for e-commerce platforms, but also bears the important mission of boosting consumer confidence and releasing consumption potential.
Affected by the epidemic, especially the Omicron variant that has repeatedly rebounded and is highly contagious, before the start of this year’s “618”, many media and industry insiders took a pessimistic attitude: consumers only have “a few taels of broken silver” in their pockets. How can you still have the desire to buy? Indeed, judging from the recent weaving market, most of the sales outlets in previous years were around the 618 event, but the wait-and-see sentiment on the e-commerce platform is relatively strong, and the inventory is relatively high in the recent stage, so the actual orders are still limited.
At the same time, the battle report of e-commerce giant JD.com is not optimistic. During the shopping festival on June 18 this year, the total transaction volume of JD.com’s platform was 379.3 billion yuan (56.47 billion U.S. dollars), an increase of 10.3% over last year. This year’s growth rate has dropped significantly compared with last year’s 27%. Chinese consumers’ consumption desire has been severely hit by the epidemic.
Shopping festivals are traditionally popular in China, with many buyers making bulk purchases to benefit from the huge discounts offered by brands to lure shoppers. But there were already signs of sluggish consumer demand at such events last year, when rival Alibaba reported sales rose just 8.5% during its Singles Day boom, its slowest growth ever Rate.
Demand has not improved
Domestic textile prices continue to be under pressure
The latest data from the National Bureau of Statistics shows that in May, industrial production in most industries rebounded, while the industrial added value of the textile industry still fell by 3.5% year-on-year. Domestic cotton sales continue to be sluggish, textile companies’ raw material replenishment plans continue to be postponed, and production and sales have not been effectively connected. Downstream gray fabric companies have followed suit by significantly lowering prices, and the profits of textile companies have not yet seen a significant improvement. In the terminal market, domestic retail sales of clothing, shoes, hats, and knitted textiles fell by 16.2% year-on-year in May, maintaining a downward trend for three consecutive months. There is an obvious disconnect in orders in the external demand market. Guangdong enterprises reported that some orders were outflowed to Vietnam and other countries. Products were piled up and the capital chain was on the verge of being interrupted. They were unable to maintain production and decided to suspend production until mid-October.
According to the industry association’s research on the fabric market in Jiangsu and Zhejiang, the current average operating rate is about 70%. Some weaving factories only operate night shifts and the day shifts have holidays. Raw material prices have fallen, the market has been sluggish, product inventories have increased, and production and sales rates have been lower than normal levels. Foreign trade orders have resumed growth, and prices have dropped by about 30% year-on-year. Short orders, urgent orders, and small orders are the main ones, and operations are at a loss. Some downstream home textile brands have opened ordering meetings, and the regular varieties are in a wait-and-see mode, with few actual orders. Affected by factors such as the inverted price difference between domestic and foreign cotton and the Xinjiang cotton problem, downstream orders are expected to remain sluggish.
In addition, the current destocking effect of weaving enterprises is slow, and under the dilemma of high inventory and low demand, “reducing production shutdowns” seems to be a strategy to save lives. However, at this stage, the industry’s start-up is already at a low level, and although long-term low-load operation will aggravate the enterprise Production costs, but in order to maintain the loss of workers, etc., the overall startup will not decline significantly in the short term. As the temperature gradually rises and terminal orders are not good, the downstream weaving industry is expected to decline. While supply and demand are mismatched, the supply of raw materials will also be reduced.
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