Since the beginning of the year, the A-share textile and apparel sector has continued to rise. In the eight trading days as of January 12, the textile and apparel sector performed strongly, with an overall increase of 4.13%, outperforming the Shanghai Composite Index. The rise in textile and apparel stocks can also indicate, to a certain extent, that market confidence is recovering in the near future.
Looking back on 2021, the performance of the textile and apparel industry in 2021 is generally better, and both performance and profits have increased significantly compared with 2020. According to statistics from Tonghuashun, among the 114 listed companies in the textile and apparel industry, 82 companies achieved year-on-year growth in net profit in the first three quarters of 2021, accounting for more than 70%. Among them, 36 companies doubled their net profits year-on-year during the reporting period.
In particular, the recently released national textile and apparel export data has allowed the market to see signs of order growth. According to customs statistics, from January to December 2021, the cumulative exports of textiles and clothing were US$315.466 billion, an increase of 8.38%, an increase of 16.17% over 2019, of which textile exports were US$145.203 billion, a decrease of 5.6%, an increase of 20.80% over 2019. Clothing exports amounted to US$170.263 billion, an increase of 24.0% and an increase of 12.48% over 2019.
Hengli order unknown
Cost increases may come first
At present, the price of upstream polyester yarn has seen a significant rise since January and continues to this day. Driven by the rise in international oil prices, the prices of polyester raw materials PTA and polyester filament continue to rise. Polyester filament has continued to rise for 13 consecutive years. POY150D has increased from 6975 yuan/ton to 7780 yuan/ton, an increase of 11.54%; DTY150D has increased from 8550 yuan/ton to 9350 yuan/ton, an increase of 9.36%; FDY150D has increased from 7200 yuan/ton. Ton rose to 8,000 yuan/ton, an increase of 11.11%.
Even though the textile market is shut down for the New Year, polyester manufacturers have no intention of relenting. I heard that polyester factories will raise prices again on the 22nd, and the cost of polyester has once again broken the record. Bren Special crude oil has reached its highest peak in seven years. Under such pressure, it is still difficult to bring the price down.
Downstream printing and dyeing companies have experienced long-awaited liquidation. On the one hand, these situations are related to the increase in their own costs, but more importantly, they are due to the increase in terminal orders. The market bottomed out and rebounded in the fourth quarter, and the overall market order volume improved significantly compared with the same period last year. Especially in the foreign trade market, there has been a substantial improvement. Such demand dynamics gave them the courage to raise prices.
Quantity for price
Textile and apparel companies still find it difficult to make profits
Can our textile workers really benefit from these favorable conditions after the Spring Festival? Will profits increase with the increase in order volume? It’s hard!
Taking last year as an example, at the beginning of last year, due to the excessive price increase of polyester filament, the price of gray fabric also increased significantly. But then it entered the off-season, and the gray fabric market fell both in volume and price, and the price once fell to the bottom. It was not until the end of September that the market conditions improved, and the entire industry chain also ushered in a wave of price increases. However, because the downstream market was not hot enough, the prices of gray fabrics, fabrics, etc. increased slightly. Then the peak season ended and the price of gray fabrics dropped again, so the overall profits of gray fabrics did not improve very well.
The sharp rise in various clothing stocks in the domestic stock market and the continuous correction of raw materials seem to have given us the answer. Before the horoscope was even written, the capital market had already caught wind of it and began to speculate on the concept of orders. Under this market thinking model, it is difficult for underlying textile and apparel companies to profit from it. Looking back at the raw material and dyeing fee markets in September and October last year, all kinds of costs took off with the news of the return of orders.
The market, which is accustomed to hyping various concepts, will not let go of the increase in raw material prices in the near future. We textile people may not have received the order yet, but when we wait, we will hear news of various cost increases. When the epidemic situation in many countries around the world is deep in the quagmire, textile workers must be careful that their orders may be canceled, or the shipments may not be received, and the payment for goods may be damaged. They must also make rational judgments about the future textile market.
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