At present, the overseas epidemic situation is still severe, and the serious losses of foreign clothing brands caused by the epidemic continue.
Data released by McKinsey Consulting shows that the textile and apparel industry has lost 20% to 25% of its sales, of which the European market has lost 25% to 30% and the US market has lost 20% to 25%. Currently, the value of unsold ready-made clothes in stores and warehouses is approximately US$168 billion to US$192 billion (equivalent to approximately 140 billion to 160 billion euros), more than double the amount before the epidemic.
For my country’s foreign trade companies, foreign clothing brands are poorly managed and continue to suffer losses, and the demand for clothing factories, fabrics, and gray fabrics will naturally shrink. According to a report by Spain’s El Pais, the emergence of the epidemic has greatly impacted the textile and apparel industry. Measures to force the suspension of business activities have led to the industry’s revenue sources drying up and forced many well-known European and American brands to protect themselves by canceling and delaying orders or deferring payments. its capital turnover capacity. A head of a Spanish clothing company who did not want to be named said: “During the period of lockdown in Europe, our payment time for all suppliers was extended by 30 days. This has a big impact on them, but this is a matter of concern. A matter of our survival.”
High costs and inventory pressure
There is great uncertainty about whether orders will improve after the year
Last year, the textile industry chain was affected by rising costs and imbalances between supply and demand, and it has been uncertain. With the recent fluctuations in the prices of chemical fiber and cotton yarn, textile companies are in a dilemma between clearing inventory and stocking up for the year.
“Under normal circumstances, March to April after the new year is a traditional peak season. Domestic demand itself is not optimistic about the raw materials after the holiday, so there is no rush to place orders,” a clothing industry analyst told reporters. According to market reaction, this year’s stocking The volume is less than in previous years, and the industry believes that the textile and apparel industry will be on a low-growth recovery track this year.
In addition to the uncertainty of consumption, the person in charge of the above-mentioned Jiangsu enterprise said that on the one hand, the weaving factory is subject to cost pressures such as electricity bills, labor, raw materials, etc., and on the other hand, there is new inventory pressure. “In the past few years, the market first built the inventory and then promoted the popular models. Inventory pressure is shared among weaving factories, traders, and garment factories, but now the marketing model has become to attract popular products first and then keep up with inventory, so the inventory pressure is all on the weaving factory.”
The above-mentioned fabric dealer also mentioned cost pressure, “The current market price of fabric accessories has stabilized, but the cost of raw materials this year is still relatively high, and downstream purchasing willingness is not strong, and more are only purchased on demand. With cotton raw materials For example, the price increase of yarn and clothing downstream of cotton is relatively small, and most of the costs need to be absorbed by textile companies themselves, so we cannot compress factory profits.”
At the same time, when the Filament Weaving Association investigated the main problems faced by enterprises in current production and operations, the concentration of raw material price fluctuations exceeded 80%, which was the primary problem plaguing enterprises; the second thing to be vigilant about was rising electricity bills, insufficient new orders, and power cuts and outages. and labor shortages; about 30% of companies are facing problems with poor sales channels and increased inventory; at the same time, some companies have reported problems with traffic and logistics obstructions or excessive prices, financial constraints, and order cancellations or rejections.
Main issues faced by businesses
The long and short game in the post-holiday market
Raw material production and sales will only become more cautious
Against this background, data shows that the current market industry chain is mostly in a state of low raw material inventory and high finished product inventory, and there is great uncertainty about whether orders will improve after the year.
According to market understanding, in order to reduce risks as much as possible, most companies plan to maintain low inventories on both the raw material and production ends, and will be more cautious in production and sales to prevent losses. Regarding the trend of raw materials, some downstream textile companies believe that in the short term, under the support of oil prices and polyester raw material prices, domestic polyester yarn prices will remain strong. However, as prices continue to rise, the current price of polyester yarn has increased by nearly 1,000, and the downstream industry accepts and The significant weakening of digestion capacity will inevitably affect long-term demand, and raw materials do not have the basis for long-term sharp increases in the future.
It is reported that after companies successively suspended work and took holidays, the purchasing and selling activities of raw materials have significantly slowed down. As the Spring Festival approaches, the entire industry has entered a holiday state, and the market has temporarily lost its direction. The start-up time of enterprises after the holiday should be similar to that in previous years. As for the operating rate, it will also be determined based on orders and profits. Recently, many industry players are optimistic about the post-holiday market due to factors such as power cuts and the Asian Games, and believe that demand may be forwarded to February to March. , however, considering that there are still many variables in the overseas epidemic situation, high freight costs may inhibit certain demand, and the long-short game in the market after the holiday, it is recommended that industry players should not be overly optimistic. The several rounds of increases in polyester filament at the end of the year were all driven by the cost side. Therefore, the post-holiday oil price and raw material trends have a greater impact on the polyester filament market.
From the perspective of the export market, affected by the overseas epidemic, the global economic recovery is slow, the uncertainty in the foreign trade market has increased, and the pressure on shipping is still there. The original market share may be challenged and needs to be treated with caution; however, with the formal entry into force of RCEP, it is expected that Expanding cooperation between my country and the ten ASEAN countries may bring benefits to the export of the filament weaving industry.
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