Now the market is once again worried about the new super coronavirus variant, which will affect demand recovery, and prices across the entire industrial chain, including oil prices, have collapsed. As the new year approaches, the textile market will come to an end, and a drop in prices is expected. However, the “roller coaster” market situation caught the textile people off guard and made them unbearable. At present, textile, clothing and other enterprises are surviving in the cracks of sharp rise and fall in raw material prices, low end-order orders, and tightened credit policies.
Loss reduction and production suspension have occurred on a large scale among textile enterprises?
Look at the actual situation of Jiangsu and Guangdong textile clusters
Recently, there is constant news that the current production profits of textile enterprises have turned negative and large losses have occurred. Some small and medium-sized textile enterprises have responded by reducing production and suspending production. What is the actual situation?
Jiangsu Gray Fabric: The current operation is normal, with an average opening rate of more than 95%. During the Double Eleven promotion period, the main focus is on digesting inventory fabrics, and there are few orders for new products. Currently, orders are on hand for 10-30 days. Conventional varieties are shipped slowly, with few quotations and few actual orders. Affected by the rising prices of upstream raw materials, downstream home textiles and clothing purchases are cautious. Due to the high prices of raw materials and dyeing fees, the unclear delivery date, and the increase in electricity costs, the profit margin of gray fabrics has declined. Orderly electricity consumption is gradually normalizing, but rising electricity costs will further affect profits. Raw material prices fluctuate, and it remains to be seen whether downstream customers can withstand the pressure of price increases. Sales are expected to slow down further.
Guangdong denim: The price of denim yarn has been running at a high level recently, and the pressure on product price transmission is still high. It is difficult to increase the price of denim. The operating rate of enterprises has reached more than 95%, orders have improved, and inventories have declined slightly. At present, the power consumption pressure of enterprises has eased. With raw material prices running at high levels and downward transmission slow, customers are cautious in placing orders.
Lanxi gray fabric: raw material prices are still at a high level, and corporate production costs are high. At present, the sales of autumn and winter fabrics are coming to an end, while the pattern making of spring and summer fabrics has just begun, resulting in a scarcity of orders in the downstream market. The enterprise’s gray fabric inventory is at a high level and is on the rise. The power restriction situation has been slightly relaxed, but the follow-up situation is unclear and the factory is on the verge of losing money. The market is full of uncertainty in the later period, and it is expected that there may be a turnaround after mid-December.
Jiangsu yarn-dyed fabrics: The overall market is weak, sales are basically normal, and product prices are relatively stable. Affected by factors such as weak downstream demand, continued high upstream yarn prices, and fluctuations in the RMB exchange rate, the company’s internal and external orders are weak, costs are high, and profits are thin. Most yarn purchases are based on rigid demand. It is expected that the market will continue to operate at its current level in the short term, and many companies will be cautious.
Hubei pure cotton cloth: Raw material prices have been relatively stable recently, but they have been at a high level and cost pressure has not diminished. Downstream prices are generally accepted, and orders have been placed. They are basically small-batch orders. Currently, production-to-order production is the main focus, and regular varieties are out of stock. At present, domestic and foreign market demand is unsatisfactory, especially foreign trade orders have not shown improvement, and there are few orders. It is expected that there will be little change in the short term.
No orders, no funds
It is helpless to sell the goods, but even so, no one will take the order.
Recently, with the end of “Double Eleven”, the weaving market has begun to return to desertedness. In particular, domestic sales orders have declined significantly, while foreign trade orders have improved. However, the entire gray fabric market cannot hide the signs of decline, with gray fabric prices falling and inventories rising…
Even the popular stretch fabric has lost its former glory, and both volume and price have dropped! According to the person in charge of a manufacturer specializing in the production of elastic fabrics: “The domestic sales market has been too weak recently, and no one wants the goods. No one wants the 100D four-sided elastic with 2.2 throws. The current price is 2.4-2.5, which is directly reduced by 0.3 cents. They can’t even be sold!”
It is understood that the current price of gray fabrics has already fallen from the high level and is still falling, and the market has seen another phenomenon of selling goods. According to monitored sample data, gray fabric inventory has recently risen to about 29.1 days. As the market’s operating rate rebounds, the previously tired inventory has not been eliminated, but new gray fabrics have been woven, and the gray fabrics in the factory have begun to become tired again. Although Boss Bu knew that selling goods could not solve the fundamental problem and would plunge the market into a vicious cycle, they were forced to sell goods due to many helplessness.
However, selling goods cannot save the high inventory. In the final analysis, it is because there are no orders and no funds! After the price of gray fabrics rises and falls, it may be a good time for speculation, but there is no group of speculators in the market today. One very important reason is funds! As the end of the year approaches, everyone is withdrawing funds and grabbing money. This is why the price of polyester yarn has dropped by nearly 3,000 yuan/ton, and production and sales are still light. All companies are tightening their purse strings. If there are no substantive orders, no one is willing to spend money. In terms of orders, for the domestic market, this year’s orders have basically ended. Before the Spring Festival holiday, small batches such as duplicate orders and supplementary orders will be the main ones, and large batches are difficult to reproduce.
Therefore, oversupply is bound to happen, and it may be difficult for manufacturers to alleviate their inventory in the future. The manufacturer also stated that now�No one buys the goods at the selling price, and the price will drop again. However, if the price of gray fabrics falls below the bottom line and the selling effect does not take effect, then manufacturers should take a holiday to reduce production and supply.
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