According to real-time statistical data from the WHO, as of 17:31 on January 10, Central European Time (0:31 on January 11, Beijing time), there were 300 million confirmed cases of COVID-19 and 5.486 million deaths worldwide. Especially since the emergence of the Omicron mutant strain, the risk of epidemics at home and abroad has continued to expand. According to a report from USA Today on the 9th, as the Omicron strain accelerates its spread in the United States, the current average daily increase in confirmed cases in the United States exceeds 700,000, and 8 people are diagnosed every second. Confirmed cases have also appeared in Tianjin, Henan, Jiangsu and other places in China. It is understood that in order to avoid being affected by the escalating epidemic prevention and control situation, some textile companies are accelerating the completion of order production before the Spring Festival, promoting products in a timely manner, and reducing gauze inventory.
Due to the emergence of the Omicron mutated virus at the end of November, which triggered panic among financial and commodity market players, Zheng cotton plummeted, prompting a large number of concentrated transactions at low price points. Low-cost raw materials for textile companies poured in, and cotton yarn inventories rose rapidly. After mid-December, as specific vaccines were launched one after another and crude oil prices strengthened, cotton prices steadily rebounded. Downstream textile companies were affected by rising costs, and yarn prices stopped falling and rebounded. Some textile companies have seized the favorable opportunity and accelerated the pace of product destocking through packaging, profit sharing and other methods. According to feedback from textile companies in Shandong, Henan and other places, textile yarn consumption in the fourth quarter of last year was significantly lower than the previous year, but the performance in the first three quarters was outstanding, and corporate operating profits throughout the year improved year-on-year.
After New Year’s Day in 2022, the operation strategy of most textile companies will still be based on sales and production. On the one hand, this is due to the lack of matching between cotton prices and yarn profits. On the other hand, it is expected that the Federal Reserve’s interest rate hike in March will be detrimental to the market. There is also the risk of the epidemic expanding during the Spring Festival travel period. Therefore, as long as the product inventory held before the holiday is not too high, the raw materials can meet the demand during the holiday, and the New Year is spent smoothly, the overall production and sales situation of textile enterprises will not be greatly affected. After the holidays, purchasing raw materials from the market and determining further production and sales plans are currently relatively sound business strategies.
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