Some cotton textile companies in Shandong, Hebei, Jiangsu and other places have reported that since early March, gauze stockpiles have continued to rise and cash flow pressure has increased. With the comprehensive upgrade of epidemic prevention and control in some areas, the transportation of cotton and cotton yarn is not smooth, and small and medium-sized enterprises The willingness to reduce production and reduce operating rates continues to increase.
A medium-sized textile company in Texas said that there are currently epidemics in areas where some cotton warehouses are located in Shandong, Hebei and other areas. Drivers need to carry a 48-hour nucleic acid certificate, otherwise they will not be able to transport goods at high speeds normally. Some warehouses require drivers whose vehicles pass through epidemic areas and have * marks in their itinerary codes to contact the warehouse in advance, and the warehouse will bring proof to pick them up at the highway entrance. Not only does the short-term replenishment cost increase, but the replenishment time is also lengthened. In addition, the epidemic control measures in some light textile markets in Guangdong, Zhejiang, Shandong and other places have intensified. In addition, the prosperity of clothing orders has been significantly weaker than expected. The enthusiasm of cotton yarn traders and weaving mills in coastal areas has continued to decline, and the replenishment time has been repeatedly postponed. .
According to reports from some textile and clothing companies in Shaoxing, Suzhou and other places, printing and dyeing factories have recently notified customers that dyeing fees will be significantly increased. Direct dyeing generally increases by 500-600 yuan per ton, and secondary styling increases by 1,000 yuan per ton. Recently, the prices of oil, natural gas, coal and other energy sources have risen sharply, and geothermal power plants in Jiangsu, Zhejiang, Guangdong and other places have also raised steam prices, resulting in a significant increase in dyeing factory costs. The pressure can only be quickly transferred to downstream fabrics, clothing and other customers.
An import and export company in Zhejiang said that it is currently difficult to directly transfer dyeing fee increases to consumer terminals. Textile and clothing export orders have been weak since 2022, and the quality of “gold, three, silver and four” is obviously insufficient. If the quotation is increased, the loss of orders may be accelerated. It is also difficult for foreign trade companies to digest, so they can only reduce the number of medium and long-term orders, and at the same time negotiate with customers to bear part of the increased costs. In addition, the conflict between Russia and Ukraine has caused air freight prices to double and is now having a serious impact on sea freight. As the supply of container ships decreases and oil prices continue to rise, shipping companies use emergency fuel surcharges to pass costs on to freight companies, and freight companies pass them on to sellers. Consumer terminals such as gray fabrics, fabrics, and clothing are experiencing dual pressures from rising costs.
According to feedback from some small and medium-sized cotton textile enterprises in Hebei, Henan, Shandong and other places, there were relatively few new orders after the Spring Festival, spinning profits were greatly compressed, and some orders even suffered losses of more than 1,000 yuan/ton, and the accumulated stocks of cotton yarn and gray fabrics are also increasing. Recently, the willingness of textile companies to reduce production has continued to increase. In addition to the raw material inventories of cotton-using enterprises above designated size remaining relatively stable, small textile mills buy as they are used and purchase according to orders.
A medium-sized textile factory in Handan, Hebei Province stated that the factors leading to the company’s expectation of short-term production reduction or even suspension of production include the following three points:
First, the domestic epidemic has spread across a large area, and prevention and control has continued to escalate rapidly. Logistics in some areas has come to a standstill, which has made it even worse for textile enterprises. Not only are the access to and from some cotton warehouses in Shandong, Hebei, Jiangsu and other places restricted, but the shipping of cotton yarn is also not smooth, and freight rates are rising.
Second, the wide fluctuations in the RMB exchange rate have made it more difficult for textile and garment enterprises and foreign trade companies to receive orders. Multiple uncertainties such as the situation in Russia and Ukraine, the domestic epidemic, and the Federal Reserve’s interest rate hikes have made market transactions more cautious. The exchange rate of the RMB against the US dollar has continued to decline for two weeks, giving up almost all the gains since the beginning of the year. In the first two trading days of this week, the RMB exchange rate fell by more than 570 basis points, with a depreciation rate of 0.90%. However, yesterday, supported by the strong “stable growth” signal released by senior officials, the onshore RMB exchange rate against the US dollar once strengthened, with the highest intraday increase of more than 370 basis points. point.
Third, the U.S. government has restarted its trade investigation against China, which has intensified market concerns about the outbreak of a trade war. The Office of the United States Trade Representative (USTR) released its annual trade policy report in early March, stating that it is recalibrating its trade policy towards China and studying all existing tools and possible new tools to combat so-called “non-market behaviors.”
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