Last week, with the escalation of epidemic prevention and control in Xiaoshan, Shaoxing, and Ningbo, Dalang Town, the “Global Wool Textile Center” in Dongguan, also began to implement epidemic control this week. Towards the end of the year, the epidemic struck, and the market’s concerns about downstream polyester and terminal textile printing and dyeing continued to rise. Judging from the current evolution of the impact of the epidemic, the impact in Zhenhai District has decreased compared with last week, while the impact in Shangyu District, Shaoxing City is temporarily difficult to alleviate. A reporter from Futures Daily learned that textile printing and dyeing is the second pillar industry in Zhejiang, among which Shaoxing City accounts for one-third of the national printing and dyeing production capacity. At present, the popularity of the textile market is declining. The market has changed from the bustling and busy scene in the past, and printing and dyeing companies cannot escape the cold winter. Affected by the epidemic, the printing and dyeing operation rate is at a relatively low level compared with previous years, and this week the printing and dyeing operation rate fell again compared with last week.
“Due to the recent downturn in the market and unsustainable supply of goods, the company has decided to arrange for some employees to take annual leave in advance.” “Due to insufficient orders in the factory, we will first make adjustments to the holidays in batches for employees in the factory”…
In fact, some printing and dyeing factories have started taking annual holidays from December 1, and the 2022 Spring Festival holiday seems to have come a bit early.
Printing and dyeing leader issues production suspension announcement, terminal starts “Spring Festival holiday” ahead of schedule
According to Shaoxing, as of 16:00 on December 15, Zhejiang (Hangzhou, Ningbo, Shaoxing) had reported a total of 292 confirmed cases and 1 asymptomatic infection (excluding the number of confirmed cases, the same below). Among them, Ningbo has reported a total of 62 confirmed cases; Shaoxing has reported a total of 209 confirmed cases and 1 asymptomatic infection; and Hangzhou has reported a total of 21 confirmed cases.
As epidemic prevention and control continues to intensify, polyester factories, weaving factories, and printing and dyeing factories in Zhejiang have suspended operations and production, and related listed companies have also issued temporary suspension announcements.
CCF senior analyst He Lingli told a reporter from Futures Daily that Shangyu District, Shaoxing City, the epicenter of the Zhejiang epidemic, mainly involves polyester terminal dye production giants Zhejiang Longsheng and Runtu Co., Ltd. All subsidiaries of the two companies located in the Hangzhou Bay Shangyu Economic and Technological Development Zone in Zhejiang Province have suspended production in an orderly manner. The combined production capacity of the two companies in dyes is estimated to be about 60-70%, with the production capacity in Shangyu District accounting for a larger proportion. Among them, according to the announcement, Zhejiang Longsheng Co., Ltd.’s subsidiary located in Shangyu Economic and Technological Development Zone currently mainly produces chemical products such as dyes, chemical intermediates, water reducing agents, etc., and its operating income accounted for 52.55% in the first to third quarter of 2021 (unspecified Audit); while all subsidiaries of Runtu Co., Ltd. located in Shangyu Economic and Technological Development Zone mainly produce dyes, auxiliaries and chemical raw materials, accounting for approximately 95% of operating income from January to September 2021 (unaudited). It is estimated based on the operating income ratio of the two companies that the total dye production ratio of the two companies in Shangyu District is about 40-50%.
“At present, judging from the evolution of the impact of the epidemic, the impact in Zhenhai District has decreased compared with last week, and shipments from major polyester raw material companies are continuing; the impact in Shangyu District is temporarily difficult to alleviate, and it is expected that production in December will recover or There are difficulties. But as we enter December, the demand from the terminal weaving end is weak.” He Lingli said that the current start-up of major printing and dyeing bases in Zhejiang is already weakening. In terms of dye procurement, on the one hand, factories have stocked up on raw materials, and on the other hand, traders have switched supply sources. There has been no short-term shortage in the dye market. In addition, polyester factory installations in Ningbo, Shaoxing, and Hangzhou are mostly operating stably, except for Tiansheng, which has reduced production.
Chart 1 Revenue proportion and main production businesses of Zhejiang Longsheng and Runtu Co., Ltd. in Shangyu District
Remarks: Organized according to company announcements (unaudited)
The epidemic in Zhejiang has not yet stopped. On December 14, Dongguan City held a press conference on the prevention and control of the new coronavirus epidemic to report on the two asymptomatic cases of new coronavirus pneumonia discovered in Dalang Town.
It is understood that Dalang Town in Dongguan is known as the “Global Woolen Textile Center”. Currently, there is a huge woolen industry cluster centered on Dalang and covering surrounding areas. It has nearly 10,000 woolen industry companies. It has become the home of 10 companies such as POLO and Goldlion. The production base of many of the world’s top brands and more than 20 domestic brands such as Ordos and Shanshan.
“At present, domestic epidemics continue to emerge sporadically, and unfortunately Dalang Town has also been affected. Comprehensive traffic control has been implemented. During the control period, in addition to necessary support vehicles holding passes for epidemic prevention and control, emergency rescue, nucleic acid sampling, and material support, etc. , prohibiting all other vehicles from entering and exiting the Dalang Town area. At the end of the year, the epidemic struck, and prevention and control upgrades in many places were intensified, which also caused factories to be unable to receive orders and ship goods, so the operating rate was greatly reduced.” Industry insiders said.
At this time in previous years, although it was in the final stage of the year, a batch of orders would often be placed before the Spring Festival holiday, and the dyeing factories were still very busy, with the operating rate generally above 80%.
According to statistics from the China Silk City Network, as of December 10, the weaving, printing and dyeing operations in Jiangsu and Zhejiang regions have shown a slight downward trend. Recently, domestic orders for weaving have dropped sharply, and orders from the export market have gradually weakened. Compared with last week, the overall number of shipments has dropped. Affected by this, the printing and dyeing market has seen a decrease in the number of gray fabrics entering warehouses.Too pessimistic expectations. “Although the current data such as construction starts are indeed relatively poor. But from a medium to long-term perspective, the impact of the epidemic and high sea freight on demand will eventually weaken and demand will pick up.” Zhu Lihang said that as demand recovers , the downstream began to replenish the inventory, and polyester textile still has a promising future. “If the impact of the new virus does not expand further, the textile market may usher in its own spring as new orders are issued after the Spring Festival.”
Pang Chunyan believes that currently at the end of the year, there are not many market variables when it comes to epidemic prevention and control, and the epidemic may accelerate the weakening of terminal demand. However, in the opinion of industry insiders, compared with the impact in the first quarter of 2020, the impact this time is still relatively limited. It is expected that production will return to normal after the Spring Festival. The market outlook will mainly focus on the order performance after the Spring Festival.
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