At the beginning of 2020, affected by the COVID-19 epidemic, the textile industry further adjusted and shuffled, resulting in increasingly prominent pressures such as sluggish production and sales and difficulty in capital turnover in the entire textile industry. Coupled with market concerns caused by tense relations between China and the United States, and the domestic epidemic situation having basically improved, most textile companies producing mid-to-high-end yarns have switched from exports to domestic sales.
Since the resumption of work and production in March , the order recovery volume of large textile enterprises is around 70%. However, the recovery speed of export orders is slightly slower, and small-scale enterprises are producing at full capacity, mainly pre-holiday orders. Some other enterprises choose to partially start up to ensure continuous production.
Although demand is slowly recovering, many textile companies have recently reported that the market is still not optimistic. Since July, The textile industry has gradually entered the traditional off-season. The production-to-sales ratio of both the upstream and downstream industries has declined. Orders have decreased, the operating rate has dropped, the production-to-sales ratio has dropped significantly, and the financial pressure on enterprises has increased. In order to relieve financial pressure, some enterprises have begun to partially reduce selling prices to maintain normal production. Required capital turnover needs. A cotton spinning enterprise in Julu, Hebei Province, mainly produces medium and low-count yarns. The enterprise’s cotton demand is 200 tons/month, mainly Xinjiang cotton. Due to the shortage of funds and the impact of the epidemic, raw materials are purchased as needed, and the inventory can be Lasts about 6 days.
With a shortage of orders and losses, entering July, the downstream woven and knitting market is even more worrying
Whether it is warp knitting, circular knitting, water jet, or jet knitting, downstream renewals are still mainly sluggish. Especially in July, the market situation is even more worrying. The main performances are as follows:
1. Since entering the third quarter, as the temperature gradually rises, the inventory pressure of polyester filament companies continues to increase, while the downstream texturing, weaving, printing and dyeing industries have I have heard that some companies have plans to take vacations, and it is currently understood that individual weaving, printing and dyeing companies in Shaoxing have started summer vacation mode.
2. Since July, corporate orders have been out of stock, cost inventory and raw material inventory levels are relatively high, and some corporate inventory levels have Reaching the highest level in recent years, companies are not willing to continue stocking up, and polyester filament companies are also facing a shortage of orders.
3. Since the end of the second quarter, the price of domestic polyester filament has continued to drop, and since the third quarter, the majority of polyester filament has The cash flow of varieties is in a loss situation. Taking POY150D/48F as an example, the cash flow in mid-June remained around 300 yuan/ton. After the end of June, the cash flow continued to narrow, and in July the cash flow was in a loss situation. As of last week The cash flow loss is more than 400 yuan/ton.
The promotion of raw materials failed, and the downstream exchanged low prices for sales. The survival rules of textile enterprises: first The priority is survival, followed by profit
The market is paying more attention to the future trend, but everyone is generally less confident. In late June, as the market’s off-season deepened, more and more weaving companies chose to reduce their operating rates under capital and inventory pressures, further reducing demand for polyester filament. Affected by this, the price of polyester filament began to decline. According to analysis, the main reasons are:
First, the United States, India, Italy, Spain and other countries “re-blocked” , foreign trade orders have become even more difficult. Affected by the epidemic, many states in the United States suspended their economic restart plans, Uttar Pradesh in India announced a new blockade, Spain returned to a state of lockdown, and Italy extended its state of emergency… In addition, starting from July 9, the United States resumed additional taxes on some goods on the exclusion list. 25% tariff. Therefore, the trade orders of domestic enterprises are even more miserable. They have no choice but to switch exports to domestic sales and have to exchange sales at low prices.
Second, market pessimism is spreading, and various entities are afraid to enter the market easily. In 2020, the global epidemic has not yet been brought under control in some countries; international crude oil prices have plummeted, and there has been no significant improvement so far. The entire international situation is turbulent and unstable, and the “cash is king” mentality of various entities has brought numerous obstacles to economic recovery.
Third, sufficient supply of raw materials is the key for enterprises to increase efficiency in receiving orders. “As long as you have money in your pocket and production orders, it doesn’t matter when you want raw materials, what grade you want, or how much quantity you want.” When communicating with the person in charge of a textile company, I often hear such statements.
In the current buying and selling environment with abundant raw materials, taking into account market risk factors, the vast majority of companies generally maintain raw material inventories lower. Take a small and medium-sized textile factory in the Yangtze River Basin with 20,000 spindles and more than 100 workers as an example. The normal raw material inventory is 100 tons, which is equivalent to the company’s monthly cotton consumption. It is different from the stockpiling of hundreds or thousands of tons in the past. The ingredients are in stark contrast.
The business leaders interviewed said that their main energy is now spent on market order procurement and corporate management to tap potential and increase efficiency. superior. After the fight against the epidemic and the resumption of production, most companies are busy processing and producing orders on hand after the Spring Festival.�We have ushered in a slight rebound in the domestic demand market. Although there are uncertainties in market prices, supply and demand quantities, varieties, etc., it is undoubtedly a new opportunity for survival for small textile companies that are about to close down.
At present, the production and operation of small and medium-sized textile enterprises in the Yangtze River Basin are in a tepid state, with about 80% of the startup capacity basically maintained. rate, some existing production orders can be produced until August-September. However, the strength and softness of domestic demand will change with time and season. If foreign trade is difficult to recover, coupled with the downward impact of the COVID-19 epidemic on global economic activities, it is expected that the actual production situation in the third quarter will be relatively weak, and the economic trend of the entire industry cannot be said to be optimistic. At present, many small and medium-sized textile enterprises are busy looking for orders and ensuring operation, and the procurement situation is uneven.
Don’t expect a sudden windfall in the sudden change of the market, and be prepared for a major reshuffle in the industry!
For most textile companies, survival is the first priority, followed by profitability. We have seen that many companies are making great efforts to save energy, reduce consumption and reduce costs. When purchasing raw materials, make repeated calculations and comparisons to try to get suitable and affordable raw materials. Most companies arrange full-vehicle production during the low power supply period at night, and the equipment and use of people and vehicles are also small but precise. The internal management of the company is also tight and strict on the basis of humanization and institutionalization.
The person in charge of the company said that today’s market interests are highly transparent, and they do not expect sudden windfalls due to sudden changes in the market. They can only abide by the rules of market economic development, pay attention to trends, control operations, and Only by grasping advances and retreats, not being overjoyed when winning, and not being disappointed when losing, can we gain a better foothold, survive, and develop in today’s market.
In summary, the bottom-out process of chemical fiber products may continue, and the market will Entities should operate with caution and be prepared for a major reshuffle of the industry. </p
