The price of raw materials is booming, but the downstream demand remains unchanged!
On the occasion of the opening of the “Golden Three Silver Four”, some textile trade centers in Dongguan, Hangzhou, and Zhili were shut down due to the epidemic. Dongguan Dalang Wool Trading Center is closed, Hangzhou Sijiqing Clothing Street is closed, and Zhili Children’s Clothing Market is closed. Coupled with the outbreak of the domestic epidemic in many places, textile trade centers in many places were temporarily closed, resulting in the continued shrinkage of domestic textile market demand and the delay in the recovery period.
The conflict between Russia and Ukraine has a greater impact:
Raw material quotations have been “increasingly low”, and downstream inventory replenishment has been pushed back again and again.
Textile raw material prices have been rising continuously, but the “buy up” mentality in the downstream has not been reflected. The wait-and-see sentiment in the market has become stronger, and the enthusiasm for replenishment in the downstream has been sluggish. The spot sales in the textile market are still slow, and the inventory barrier is high. The current gray fabric inventory in Jiangsu and Zhejiang is 33.2 days. about.
According to feedback from some weaving companies and traders in Jiangsu, Zhejiang, Guangdong and other places, the market prices of cotton fabrics and cotton gray fabrics have fallen slightly since early March. The replenishment of cotton yarn inventory has also been adjusted to purchase as needed and buy as needed. Reduce the pressure on working capital occupied by raw materials and finished products, and the pressure on terminal consumption will be transmitted in the opposite direction to cotton yarn and cotton. Inquiries and shipments of cotton yarn from small and medium-sized cotton spinning mills in Henan, Shandong and other places are not smooth. The phenomenon of overstocking is becoming more and more obvious. Some yarn mills’ quotations have been “overtly and covertly reduced” – they have adopted expanded profit margins for old customers and large orders. , operations such as increasing bargaining space.
A medium-sized textile company in Henan said that after the Spring Festival, the company’s orders for high-count yarns of 40S and above were lower than expected, and spinning profits continued to be compressed or even incurred losses. Coupled with tight operating funds, cotton raw material procurement will be from 2021 to 2021. /22 Xinjiang cotton, port customs clearance US cotton/Brazilian cotton are adjusted to state-owned Xinjiang commodity cotton, high-quality and high-index real estate cotton in the Yellow River Basin, and port medium and low-quality foreign cotton. The flagship product is also adjusted from high-balancing and bleaching 40S to high-balancing and bleaching. 32S, and appropriately expanded the production and order taking of T/C 65/32 32S and T/C 65/35 45S yarns. Reducing costs, improving efficiency, and ensuring profits have become top priorities. The company reported that in the past week, the demand for C32 high-end yarn and C40S high-end yarn has improved in Guangdong, Zhejiang, Fujian and other markets, and customers mainly place short orders and urgent orders.
Judging from the survey, due to the rising prices of commodity futures such as crude oil, natural gas, chemicals, heavy metals, agricultural products, etc., coupled with the recent trend of domestic epidemics blooming in multiple places and spreading rapidly, various regions have upgraded their epidemic prevention and control measures and internal measures. The new orders of exported textiles and clothing are not very prosperous. Therefore, the confidence of some textile companies has dropped significantly compared with the complacency before the Spring Festival, and the replenishment of raw material stocks has been pushed forward again and again.
An export company in Jiangsu stated that due to the increasing impact of the Russo-Ukrainian war on the global economy, transportation, and trade, negotiations on the second phase of the Sino-US trade agreement have not yet begun, and USTR released an annual trade policy report stating that it is re-adjusting its trade policy towards China. , studying all existing tools and possible new tools to fight China, coupled with uncertain factors such as rising shipping costs again, Chinese companies are also cautious in accepting export orders.
The epidemic has caused obstacles to terminal clothing retail sales
Face the risk of order cancellation or postponement
From the perspective of the downstream textile market, several major textile markets for terminal clothing retail that are currently restricted by the epidemic may encounter obstacles in placing fabric orders in the first half of the year. The editor believes that there are three main impacts:
First, the window period for spring clothing sales has been shortened, making it difficult to chase orders, which has led to a backlog of spring clothing for some wholesalers.
Second, summer clothing orders also need to be further observed. Due to the problem of inventory crowding out capital flow, wholesalers dare not stock up in large quantities, and it is difficult to see explosive growth in fabric orders.
Third, some Spring Festival orders may be temporarily canceled, which will have a greater impact on the production side.
However, due to further compression of textile profits, the textile industry maintains a buy-and-use model for raw material procurement, and industrial inventories have dropped to relatively low levels. Recently, the terminal apparel industry is holding a spring order fair. Although overseas consumption has peaked, there is still motivation to continue placing orders to restock. The “Gold, Three, and Silver” market is expected to slowly start, which may lead to a round of replenishment, which will have a short-term impact on textiles. Raw material prices provide support.
Everyone knows that the epidemic has become normal and everything is testing our ability to face difficulties, but we believe that this time it will be quickly suppressed. However, it has been really difficult for textile and garment workers in recent years, and various situations have emerged one after another. In this case, the only thing I can say is: “Wearers, hold on!”
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