For fabric companies, this year’s “Golden Nine and Silver Ten” are particularly important.
High costs and sluggish demand… Since the beginning of this year, the performance of the fabric market has been mediocre. The “gold, three, and silver” peak seasons failed. Although the market rebounded slightly in May and June, the ensuing months of July and August plunged companies into the “coldest” summer. Now, the “Golden Nine and Silver Ten” time has arrived. If you still can’t seize this traditional peak season, you can imagine the sales pressure throughout the year.
“Golden Nine and Silver Ten” had a dull start
In the past two years, the fabric industry has not ushered in a real “Golden Nine and Silver Ten”. Facing this year’s “Golden Nine and Silver Ten”, fabric companies still did not get a particularly ideal start.
The China Keqiao Textile Index released on September 5 showed that the current textile price index closed at 107.29 points, down 0.29% from the beginning of the year and down 0.73% year-on-year. Among them, the transaction prices of polyester, polycotton, polyester-viscose, polynylon, and polyester-span fabrics fell in varying amounts, driving the clothing fabric price index to fall slightly.
On the same day, the Shengze Silk and Chemical Fiber Index issued an index warning. Due to the average market sentiment and unstable international crude oil prices, the chemical fiber index subsequently declined. Data monitoring and analysis of feedback from 350 price-extracted units showed that the chemical fiber fabric price index closed at 99.22 points, a decrease of 0.75 points compared with the previous trading day.
Zhang Feng, a chemical researcher at Zhuochuang Information, said that currently, the textile market is in a period of alternating between low and peak seasons, and order volume is the key to development in the next month or even months. She pointed out that the fabric market in July declined compared with June, and the cumulative growth did not reverse the negative value in August. The market did not make up for the loss of demand in the early period during the off-season. She predicts that with the gradual release of seasonal demand, the trend of the fabric market will improve in September. “However, this peak season may not achieve the expected quality, and its role in promoting market conditions will be limited. Companies should not have too high expectations.”
“In any case, the market situation of this year’s ‘Golden Nine and Silver Ten’ will definitely be better than that of ‘Golden Three and Silver Four’.” Li Jiangwei, corporate sales director of Yuding Textile Co., Ltd., is relatively optimistic. He introduced that the company’s current orders have increased slightly compared to August. “The performance of woolen fabrics is quite impressive, and the company has just sent a batch of goods to Wenzhou. However, compared with previous years, the volume of these orders is generally small, and the profits are also limited, so the company is still facing development pressure.”
Hu Zecong, sales manager of Binshiwang Textile Co., Ltd., also has similar feelings. He believes that since mid-to-late August, market demand has been recovering and the company’s inventory has been reduced. In addition, Christmas orders and “Double 11” orders have recently begun to be placed in the market. Generally speaking, this peak season can still be expected. “There is hope for a small increase in product prices, but the possibility of a big increase is not high, and industry profits will remain at a low level.”
“In previous years, the ‘Golden Nine and Silver Ten’ period was my busiest time.” Recalling the “Golden Nine and Silver Ten” years ago, Meng Lingtao, a salesperson at Xinsheng Dyeing and Weaving Co., Ltd., couldn’t help feeling that the market was changing too fast. He believes that reducing prices to increase quantity may become a last resort for fabric companies to break through the difficulties in the next few months.
“I communicated with customers and found that as long as the company’s products have an advantage in terms of price, some customers are willing to make a quick move, indicating that the market demand is still there, but the upstream and downstream are competing.” Meng Lingtao said.
“Price war” implies market game
As Meng Lingtao said, although the order situation in the fabric market has improved, it is not uncommon for clothing brands and buyers to “lower prices”. In order to eliminate inventory, some companies can only choose to sell products at low prices.
Li Jiangwei said frankly that in the past, he did not recommend that the company’s salesmen take orders at low prices. The reason is that behind the orders there is usually an extremely demanding procurement process. The market situation is changing rapidly. As long as the price of the product in one link increases, the order may not be profitable. “However, this year’s situation is special. The overall market demand is not strong, and companies still have to maintain a basic operating rate. Therefore, we will depend on the situation. If the customer has the possibility of long-term cooperation in the future, we will appropriately lower the price. ”
“We have no choice but to choose to sell at low prices.” Chen Dehan, the relevant person in charge of Shengtong Textile Co., Ltd., told the reporter of China Textile News. This is mainly because the supply exceeds demand in the market. Once the price of corporate products is raised, they will be faced with being sold by clothing companies. risk of being shut out.” He said: “Now the prices of some textile raw materials have risen, but they cannot be used as a ‘bargaining chip’ to increase the price of fabric products. For example, the quotation of polyester filament has recently increased by one to two hundred yuan per ton, but downstream buyers are not If they accept this quotation, they will negotiate based on the previous low price of polyester filament.”
“In the past, price wars were between peers competing with each other, but now it is a competition between fabric companies and clothing brands.” Hu Zecong said that in recent years, profits in the fabric industry have become less and less, and prices have basically reached a point where they cannot be reduced. reached the point. However, some clothing brands and buyers have always lowered prices. There are only two options before the company: one is to be forced to choose to abandon the order and suspend production; the other is to choose to accept the order, but the profits shrink. He also mentioned: “If…�It’s not bad if profits are compressed, but if the prices of raw materials and dyeing fees increase again, the company will run the risk of falling into losses. ”
Not only small and medium-sized enterprises are in low-profit dilemma, but some listed companies are also experiencing divergence between revenue and net profit. In the first half of 2022, Huafang Co., Ltd. achieved operating income of 1.828 billion yuan, a year-on-year increase of 8.33%; the net profit attributable to shareholders of the listed company was 2.4292 million yuan, a year-on-year decrease of 66.06%. Zhejiang Yingfeng Technology Co., Ltd. achieved revenue of 664 million yuan, a year-on-year increase of 47.63%; the net profit loss attributable to shareholders of the listed company was 11.3091 million yuan, a year-on-year decrease of 120.17%. Fujian Fengzhu Textile Technology Co., Ltd. achieved operating income of 610 million yuan, a year-on-year increase of 2.26%; the net profit attributable to shareholders of the listed company was 14.7923 million yuan, a year-on-year decrease of 53.26%.
Reducing prices to increase quantity is not the only way out
Could it be that now fabric companies can only gain vitality by lowering prices and increasing quantity?
In fact, not all fabric products are at a disadvantage in this game. The China Keqiao Textile Index released on September 5 showed that the spot trading volume and order dispatch volume of innovative color and pattern fabrics increased month-on-month, and the price index increased slightly month-on-month. “The transaction volume of this type of fabrics has always remained stable and rising, and the unit price of the fabrics has also shown a slight upward trend recently. From the perspective of added value, it is higher than ordinary fabrics.” said Jiang Jianren, an observer at China Textile City.
In this regard, Li Xiaofei, deputy director of the Fashion Trend Department of the China Textile Information Center, pointed out that such a situation is expected: “Due to the impact of the epidemic on consumption, some fabric companies will be relatively conservative in product development, and some companies choose to continue to produce explosive products in previous years. Styles will naturally reduce competitiveness. While other companies still insist on innovating and developing products according to market trends, they may gain more market share.” She pointed out that in terms of pattern and color, companies should appropriately use fashion Trends to enrich product content.
“Fabric companies should develop designs based on each season’s popular themes or neutral colors. This will not only better reflect the advantages of the fabrics, but also provide downstream brands with accurate choices.” Cao Yunfeng, senior purchasing manager of Jiangnan Buyi, believes that brands pay great attention to the feel of fabrics. , ingredients, and the creative stories behind the fabrics. For fabric companies, fashionability is an indispensable foundation, and in addition, product connotation needs to be enriched.
Yu Qianzi, creative director of the original women’s fashion brand LALABOBO, also has a similar view: “We need fabric products with strong fashionability. Fabric companies can work hard on printing texture, technology, etc., and be based on the concept of environmental protection and sustainability to ensure the quality of fabrics.” The feel, the performance, the quality. We will pay for fabrics like this.”
Qi Mei, director of the Fashion Trend Department of China Textile Information Center, suggested that at present, while fabric products meet consumer demand in terms of color and style, new raw materials must be added, such as the use of organic cotton, recycled polyester and other raw materials to ensure the sustainable development and development of products. Feature. “Fabric companies must start from multiple perspectives such as color, style, and raw materials to achieve more optimized design and variety development. Only in this way can they seize opportunities and gain advantages when the ‘Golden Nine and Silver Ten’ come.”