As February gradually comes to an end, the traditional peak season of “Gold, Three and Silver” is approaching.
Recently, a piece of news in the circle of friends about “sale of spot gray fabrics at low prices” surprised people. Let’s look at the price first. The selling price of polyester taffeta of different specifications is around 1 yuan/meter. Then look at the quantity. The total spot inventory has exceeded 1 million meters…
There is still a lack of “final kick” in the peak season. Will this “turnaround war” turn into a “price war”?
Polarization is obvious, inventory leads to involution
According to market research feedback, although the order volume in the textile market has improved since the resumption of work, the increase in orders from textile companies is still lower than expected, and the overall wait-and-see atmosphere is strong. In terms of orders, currently they are mainly small orders ranging from several thousand meters to tens of thousands of meters, with occasional orders of hundreds of thousands of meters appearing, and very large orders of millions of meters almost extinct. It can be seen from the order-taking performance that the polarization among enterprises has become increasingly obvious. Some enterprises are not accepting orders, and are faced with the dilemma of “old orders are completed, but new orders are not yet available.” In order to maintain normal production operations, those weaving companies that are “short of orders” can only be forced to produce some inventory for transition, and conventional varieties with lower prices and lower risk factors have undoubtedly become their first choice.
Monitoring data from Silkdu.com shows that as of now, the inventory of weaving companies in the sample has remained at about 34.2 days, a difference of 1.4 days compared with the previous year. It can be seen from the curve that since February, most weaving companies have been rushing to produce unfinished orders from the year before, so the gray fabric inventory cycle has ushered in a more obvious destocking stage. As the traditional peak season of “Gold, Three and Silver” approaches, driven by strong expectations, many textile bosses began to stock up. Before the previous inventory had time to be digested, they began to produce new inventory. Gray fabric inventory immediately turned into an upward cycle.
From this point of view, under the blind expansion of the textile industry, the problem of overcapacity is becoming increasingly serious. Therefore, the oversupply situation in the textile market will be difficult to alleviate in the short term. Especially for conventional varieties with large volumes, it is easier to start a “price war” during the period of weak demand. Many textile bosses have even fallen into the “as long as it doesn’t roll to death, go ahead.” A vicious market cycle of “death spiral”.
The rise is weak, selling goods at low prices to activate funds
Selling goods, especially selling goods at low prices, has always been a topic that textile people do not want to face. Looking behind the phenomenon of selling goods, it is either that there are not enough orders to maintain operations, or there is a problem with capital turnover. Regardless of the above situation, once the company starts selling goods, it will fall into a passive situation, and the bargaining power will often be transferred to the hands of customers.
The price offered by the company at the beginning of the article can be regarded as a “street stall price”. It seems that in order to quickly sell this batch of gray fabrics, it has no regard for profit or loss.
It can also be found from market research that since the beginning of the year, fabric prices have been generally stable, and there has been no “general rise” or “big rise”. This phenomenon is indeed rare compared to previous years. When asked about the reasons, most fabric manufacturers said that due to sluggish terminal demand, in order to maintain customer relationships and maintain normal shipments, even if the upstream raw materials end increased, the downstream fabrics would still choose to maintain a stable state.
From the profit comparison of the varieties monitored by Silkdu.com, it can be seen that the raw material end was very popular last week. Although the fabric market sales increased, new orders and inquiries were still not very popular, resulting in a decline in the profits of many fabrics.
Faced with the constant accumulation of conventional fabrics, textile companies have no choice but to sell at low prices in order to revitalize funds. In the later stage when the market trend is still unclear, more and more companies are becoming more cautious about stockpiling in order to control inventory risks. Therefore, not all low-price sales can wait for the “takeover”.
Postscript
Whether the market is good or not can be gleaned from the sales of regular varieties. Conventional varieties have low prices and large quantities, and most textile companies in the market are involved. Once the delivery speed of conventional varieties accelerates, we can understand that the market situation is picking up. However, judging from the current market, the situation of domestic sales and foreign trade orders is not satisfactory. Most textile companies in the “Gold, Three, Silver and Four” still maintain a cautious wait-and-see attitude.
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