I still remember that in early March, the editor came across a truck driver who had been in the industry for 10 years. He made a unique analysis of the current situation of the textile industry from the perspective of freight transportation. (Both volume and price have dropped?! A truck driver who has been in the industry for ten years tells the current situation of the textile industry)
In the blink of an eye, April is coming to an end. In order to understand the market operation more intuitively, the editor specially visited an “old master” who has been in the textile industry for more than 20 years to see from his perspective whether today’s traditional peak season is still what it used to be. So lively.
Foreign trade fell short of expectations and orders shrank sharply
This textile boss makes polyester taffeta, pongee and other conventional fabrics. He has more than 50 looms and is a small-scale weaving enterprise. According to him, since the beginning of the year, the performance of foreign trade has not been as good as expected, and reserve customers are still engaged in foreign trade business, which has also affected them, and overall orders have shrunk significantly. From the current point of view, the number of orders has decreased by 60%-70% compared with previous years. After entering late April, due to weak orders, we could only rely on part of the production inventory to keep the machines running, and the operating rate also dropped to 80%.
It can be seen from the above feedback that since the beginning of this year, overseas textile and apparel demand has continued to weaken, resulting in a decrease in related orders. As early orders are gradually delivered, subsequent orders are out of stock, and some companies are experiencing a shortage of orders.
When asked whether relevant measures would be taken, the textile boss said that due to the small scale of the company, many operating variables and high risks, the only way to make complete changes is through transformation and upgrading. However, the high cost makes people hesitate.
Through research, we found that since macro-environmental risks have not been completely eliminated, textile companies have become more cautious about the market outlook and have a stronger wait-and-see attitude, and the downstream market conditions have weakened compared to March. In terms of order acceptance, during the “Golden Three Silver Four” period, the orders of textile companies focusing on foreign trade did not see a significant improvement. After various exhibitions, the number of people sampling and making inquiries only increased, and the actual order performance was not satisfactory. Looking back at the domestic market, after a short-term surge in consumer demand, the popularity of domestic orders has gradually shown signs of weakening.
As we all know, orders are the basis for companies to maintain production operations. Without order support, weaving companies reduce their operating rates and have no choice but to produce part of their inventory.
Gray fabric prices barely remain stable, inventory may become a hidden danger
Since the company’s business scope is mainly conventional fabrics, the current inventory of gray fabrics has exceeded 1 million meters. For small-scale weaving enterprises, this value is already in the warning range.
“We are just an ordinary water-jet company with very conventional products and weak competitiveness. After so many years of operation, as the number of peripheral looms has continued to increase, the living space has become smaller and smaller, and pressure from all aspects has increased. It’s increasing.” The textile boss said.
Data show that as of the end of 2022, the scale of looms in my country’s filament weaving industry reached 836,000 units, including 770,000 water-jet looms, a year-on-year increase of 5.48%. For the whole year of 2022, my country’s total output of chemical fiber filament fabrics will reach 59.5 billion meters, a year-on-year increase of 6.82%. According to market practice, newly emerging production capacity will choose to start with the most basic conventional products. Such products are less difficult and not only help new employees get started as soon as possible, but are also the best option for debugging machines. As overcapacity intensifies and inventories remain high, the prices of such fabrics face the dilemma of being easy to fall but difficult to rise. “The price of gray fabrics is mainly stable, and we are lucky that the price will not drop.” He said with emotion.
According to monitoring data from Silkdu.com, in early April, the inventory of weaving enterprises stopped the downward trend and gradually stabilized and recovered. As gray fabric inventories continue to accumulate, some textile companies do not hesitate to sell goods at a “loss” in order to relieve inventory pressure. Various low-price sales information begins to appear frequently in WeChat Moments. For a time, the “price war” was everywhere.
Postscript:
In today’s textile market, the polarization among enterprises is becoming more and more obvious. Some textile enterprises with acceptable scale are relatively optimistic about receiving orders, while small-scale enterprises are more likely to suffer from insufficient orders. Therefore, this textile “old master” said that for small and micro enterprises, “not busy in the peak season” may be the norm, and they just want to spend 2023 safely…
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