The Joint Prevention and Control Mechanism of the State Council recently held a press conference to introduce the situation of further strengthening epidemic prevention and control.
This round of epidemic has now affected 17 provinces, with 144 medium- and high-risk areas across the country, the most since normalized prevention and control.
The Delta (Delta) variant virus is coming fiercely, and the epidemic situation around the world is urgent. According to Worldometers data, the cumulative number of confirmed cases of COVID-19 worldwide exceeds 200 million. There have been more than 36 million confirmed cases in the United States, nearly 31.77 million confirmed cases in India, and nearly 20 million confirmed cases in Brazil. In terms of deaths, more than 630,000 people have died in the United States, nearly 560,000 people have died in Brazil, more than 420,000 people have died in India, and more than 240,000 people have died in Mexico.
Data shows that the United States, India, Iran, Turkey, and Russia are the five countries with the largest number of newly confirmed cases. Indonesia, Russia, India, Iran, and the United States are the five countries with the largest number of new deaths.
With the rapid spread of the Delta variant and the slow progress of vaccination, Southeast Asia has now become one of the “hardest-hit areas” of the new coronavirus in the world. In the past week, confirmed cases in Southeast Asia increased by 41%, with more than 500,000 new cases, and deaths also increased by 39%, making it the region with the fastest increase in deaths in the world.
The rapid spread of Delta variant strains threatens crude oil demand
Oil prices plummeted
On the first working day of August, international oil prices fell sharply and stopped in the “three consecutive positive days”. The WTI September contract fell as much as 4.6% during the day, and finally closed at US$71.49/barrel; Brent crude oil futures fell as much as 4.1%, as low as US$72.32 that day, falling below three levels of US$73, US$74, and US$75 during the day, the largest decline in the past two weeks.
As the king of commodities, crude oil Price fluctuations will inevitably affect the price trend of chemicals. The deep fall in international crude oil prices has also dragged down the prices of downstream chemical products. In the early trading of the domestic futures market on August 4, crude oil futures were among the largest decliners. As of 9 a.m. that day, the main contracts of fuel and LU futures all fell by more than 2%, and the main contracts of 13 varieties including LPG, crude oil, short fiber, rapeseed meal, and soybeans all fell by more than 1%. The chemical market has also seen a decline, and some products have been declining for several days and prices have been falling.
This week’s main PTA contract fell back and fluctuated after the price hit a new high on Monday. After a negative closing, the price continued the previous day’s decline on Tuesday, with a decline of 3.42%.
Similarly, with the epidemic suppressing the market, many companies are worried that the rising market prices of raw materials, especially spandex, will pose a great risk of collapse in the future. Therefore, when it comes to purchasing raw materials, manufacturers will be more cautious in the future and will not have a strong willingness to purchase. Under the influence of repeated epidemics, the mentality of the end market is under pressure, and subsequent order intentions are unclear. Polyester products such as polyester filament may experience another wave of corrections.
Factory closure and shutdown
Vietnam and other Southeast Asian regions “fallen again” ”
So far, the cumulative number of confirmed cases in Southeast Asia has surpassed Latin America and India, which were previously severely affected. Especially since the large-scale diagnosis in Vietnam in April this year, nearly 140,000 people have been diagnosed so far. Ho Chi Minh City in the south and its surrounding provinces and cities are the hardest-hit areas. Take Binh Duong Province, an industrial town, where the latest wave of epidemics has Tens of thousands of people were infected. In addition, Vietnam’s production capacity is being severely affected by the epidemic. Shoe industry leader Baocheng and textile giant Ruhong were affected by the epidemic and were suspended. Saigon High-tech Park was also reported to be closed. Some Samsung Electronics factories suspended operations. Many organizations issued reports warning that if emerging markets cannot be controlled in the next few months, The epidemic may harm local economic recovery and exacerbate global supply chain challenges.
1. The Nike Vietnam factory has suspended operations
An industry source revealed that every Nike factory in Vietnam has stopped working, and shipment delays are serious. Those who have the means to maintain isolation measures have to stop work, and production is not smooth; mainland production lines are also short of workers, and the average salary Reaching US$1,000, workers were temporarily unable to find workers despite the original downsizing. In addition, raw materials and shipping costs have increased threefold during this period. “Although the cost has not yet been reflected on the retail side, some American brands have been saying that they will increase prices.” , I guess I can’t hold it back.” However, there is no clear announcement on the time and amount of price increases for brand shoe manufacturers.
Analysts pointed out that after the implementation of the extended shutdown time, in terms of production capacity, Vietnam is the largest producer of Baocheng shoemaking industry.One of the main production capacity layout locations in China, accounting for about 45% of Baocheng Group’s shoemaking production capacity, and Fengtai’s production capacity in Vietnam also accounts for about 50%. The extended shutdown of factories in Vietnam has a significant impact on the short-term operations of the two major shoe manufacturers. Currently, the companies plan to increase output by working overtime after the shutdown is lifted to meet customer order demand.
However, it is estimated that even if the lockdown is lifted and work resumes in the future, the recovery rate of production capacity will not be too fast. The revenue recovery of shoe manufacturers will not be achieved all at once. Production at full capacity is expected to resume between the end of the third quarter and the fourth quarter.
2. The domestic cotton yarn leader Vietnam factory has restricted the movement of personnel due to the epidemic
Coincidentally, Blum Oriental Co., Ltd. issued an announcement on the evening of August 2 It said that due to the epidemic, Vietnam began to implement the second round of 14-day social distancing measures from 0:00 on August 2. As a result, Blum Oriental’s wholly-owned subsidiary Blum (Vietnam) Co., Ltd. located in Tay Ninh Province, Vietnam, has implemented the second round of the “three locals” policy since 0:00 on August 2, that is, employees in the factory work on site, Eat and rest on the spot. Due to restrictions on the movement of people in the places where some Vietnamese employees live, they cannot come to work within the above 14 days, which will affect the existing production capacity of Blum in Vietnam. As of now, Vietnam Blum has a production capacity of 1 million spindles, accounting for approximately 60% of Blum Oriental’s total production capacity. According to preliminary calculations by Blum Oriental, during the implementation of this round of Vietnam’s epidemic prevention and control measures, Vietnam Blum’s production capacity will be reduced to 32 %about. It is expected that for every 14 days that Vietnam Blum is affected, the company’s annual output will decrease by 2%.
Southeast Asia faces a big test of the epidemic
The recurrence of the epidemic in Vietnam may promote overseas Orders are returning to China
World Health Organization Secretary-General Tedros Adhanom Ghebreyesus recently stated that in the four weeks of July, the number of confirmed cases around the world increased by 80%. The epidemic that was easily controllable has almost gotten out of control, and the medical systems of many countries have been overwhelmed.”
Southeast Asia, where the Delta variant virus is raging, is currently the region hardest hit by the epidemic. The industrial output of seven Southeast Asian countries hit a record high of 5 last year. The biggest contraction since August was in Indonesia and Malaysia.
Indonesia is now in a semi-blockade state, and the economy has been hit hard. So far, nearly 3 million Indonesians have fallen below the poverty line. Indonesian President Joko still insists that for the sake of people’s livelihood, he will not completely close the country and points out that a blockade may not be able to solve the crisis.
Malaysia reported 17,786 new confirmed cases on July 31, a record high. According to the Manufacturers Association, about 1.2 million Malaysians are unemployed. The Malaysian government plans to gradually restart production activities when the number of cases drops below 4,000 per day. It still seems a long way off.
U.S. media recently reported: “The epidemic has led to the closure of factories in South and Southeast Asia, exacerbating the risk of disruption to the global supply chain. U.S. consumers may soon Quickly find your local shelves empty.” Data from the U.S. Census Bureau shows that U.S. retailers have just enough inventory on hand to sustain sales for just over a month, near the lowest level since 1992.
Early reports stated that due to the global pandemic of the new crown epidemic in 2020, many Western importers have canceled contracts or delayed payments, resulting in many textile and apparel products in Bangladesh Production plants closed and output dropped significantly. However, Vietnam has controlled the epidemic well, and commodity exports have risen instead of falling.
In particular, textile and apparel exports reached US$29 billion, a year-on-year increase of 6.4%, surpassing Bangladesh and becoming the world’s second largest textile and apparel exporter. In the first six months of this year, Vietnam’s foreign merchandise trade continued to grow, with exports from the textile and apparel industry reaching US$19.18 billion, a year-on-year increase of 21%.
Regarding the export and production of Vietnam’s textile and apparel in the second half of 2021, the Chairman of the Vietnam Textile and Apparel Association said that in the face of the huge risk of the epidemic, some overseas orders have moved out of Vietnam, There is a tendency to return to my country again. Sun Weiwei, a researcher at Everbright Securities, emphasized here that although the production capacity of garment manufacturing companies with production bases in Vietnam will be adversely affected, with some factories already shutting down or operating at low capacity, the recurrence of the epidemic in Vietnam may also prompt overseas orders to return to the country. Benefit the local textile and apparel industry.
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