The peak season is getting closer and closer, how will the market conditions change? To observe market changes, the best entry point is the printing and dyeing factory, which is the vane of the textile market.
“It’s been difficult for dyeing factories to ship out goods recently. It takes almost ten days to ship, and orders are waiting in a hurry.” The person in charge of a trading company told the editor.
Looking at this situation, the dyeing factory seems to be very prosperous. Has the market gotten better?
Obviously, if you ask anyone on the road now, you will know that the market situation has not improved and is still in a relatively deserted state. Could it be that the wind direction has failed?
Insufficient orders and reduced production capacity
After entering the off-season in July, the market has plummeted. With few orders, the weaving end’s operating rate has been lowered. At the same time, the off-season atmosphere has also affected the load of printing and dyeing plants.
The person in charge of the above-mentioned trading company said: “In fact, the most critical reason why the goods cannot be shipped is that the production capacity of the printing and dyeing factories is now low. Several dyeing vats have been closed. It seems that there is not much work, but the waiting time has not been reduced at all.”
According to statistics, the current operating rate of printing and dyeing factories in Jiangsu and Zhejiang is 63.8%. From the chart below, we can find that the operating rate has not declined much after entering the off-season.
Compared with previous years, the current printing and dyeing operation rate is much lower than in previous years. In fact, this trend coincides with the weaving operation rate. The weaving end has also maintained a stable trend this year.
Dyeing fees are reduced, and we are busy doing inventory
In addition to this reason, on the other hand, printing and dyeing factories finally couldn’t help but lower their dyeing fees because the market was too weak. It is worth noting that recently, driven by crude oil, commodity prices in most upstream industrial chains have increased.
Therefore, reducing dyeing fees at this time will undoubtedly bring several discounts to profits. According to the performance forecast of a leading printing and dyeing group, it is expected that the attributable net profit loss from January to June 2023 will be approximately 204 million yuan, a decrease of 111% year-on-year. about.
However, printing and dyeing factories are losing profits. For upstream trading companies, this is the time to harvest wool. Now the market focuses on “quick response” and “spot goods”.
Therefore, after hearing that the dyeing fees of printing and dyeing factories have dropped, many companies have rushed into warehouses to make inventory, and now the time node has reached a relatively critical point. In half a month, it will be the eve of the peak season.
Fabric “reservoir”
It is these two points that create the illusion that the printing and dyeing factories look very busy now, but in fact the market off-season is still not over. On a larger scale, the printing and dyeing factory has become the largest fabric “reservoir”.
As for the spot companies just mentioned, the trading model of fabric spot supermarkets that has emerged in the past two years has very high requirements for fabric inventory. A very important factor in making money is to buy low and sell high.
The current market is average, but things that can’t be bought are still cheap. If we don’t stock up on inventory now, will we have to wait until the market improves and prices are high to purchase them again?
Moreover, in the current market, fabric spot supermarkets not only sell low-end pongee and polyester taffeta, but also high-end T400 and T8 fabrics.
But in the end, no matter how popular the dyeing factory is, as long as there are few actual transactions and low demand, there will still be production capacity that cannot be absorbed. The goods have changed from being in the hands of clothing companies to being in the hands of intermediary traders, but they still have not reached the hands of consumers. inside.
The biggest problem in the textile market now is that consumer spending power has not recovered, but this will take a long time to recover. When demand recovers, if a large amount of inventory accumulates, even if the market improves, prices may not rise for a while.
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