In the blink of an eye, it has been more than half a month since work and production resumed. Looking back at the same period in previous years, a large-scale increase in gray fabric prices seems to be a regular program at the beginning of the year. Although the reasons behind the price increases are different, sooner or later, it will never be absent.
Looking back on this year, the price increase of gray fabrics seems to have become a bit “big thunder but little rain”. According to feedback from some fabric companies, individual varieties of gray fabrics in the current market have slightly increased. Most of them are still stable, and some varieties have even shown signs of no increase. falling situation.
Everything goes wrong for a reason, so what are the reasons for this situation?
The price is stable and falling, and gray fabrics lack rising momentum.
Generally speaking, the cost side and the demand side are the main factors affecting fabric price changes.
In just half a month, under the background of strong expectations and weak reality, a “roller coaster” market has appeared on the raw material side, from a “good start” to conservative stability and then to a price drop. The polyester fiber market represented by polyester yarn The ester industry chain even experienced its worst post-year production and sales in the past three years. This February is really unexpected!
It can be seen that the cost side of this round cannot provide sufficient upward momentum for gray fabrics, so let’s take a look at the performance of the demand side.
According to monitoring data from Silkdu.com, during the resumption of work and production stage, affected by the acceptance of orders and the arrival of employees, the operating rate of looms in Jiangsu and Zhejiang has experienced a period of slow recovery. As time goes by, the employee attendance rate is gradually guaranteed, and some companies are also receiving new orders. The increase in the start-up rate of weaving companies in the sample is slowly expanding. Looking back at the startup performance over the years, the current startup rate data of less than 50% is still not optimistic enough compared to previous years.
A weaving company revealed that the factory’s current operating rate remains at around 85%. If orders are maintained well, it will reach 100% in the future. Although the order-taking performance after the resumption of work and production is almost the same as in previous years, there are cases where the price is reduced when negotiating with customers, and the price reduction range of individual products is even close to 0.8 yuan/meter. Affected by this, profitability pressure will further expand.
It can be seen from the description of the above companies that the demand side has not been able to effectively boost the price increase of fabrics. On the contrary, because customers have lowered prices, the quotations of fabrics have steadily declined.
Withdrawal of funds while detachment is still in progress
Over the years, fabric companies have not only faced the continued weakness in demand brought about by the epidemic, but also faced the overcapacity crisis brought about by industrial transfers. I don’t know since when, high inventory pressure has become the “mantra” of many fabric merchants. Especially in the conventional fabrics sector, high inventory has become the biggest obstacle to corporate development.
In this context, in order to effectively remove inventory, most fabric companies are forced to continuously involute prices, resulting in “clearance” and “disposal of goods at a loss” in the fabric market from time to time.
According to monitoring data from Silkdu.com, before the Spring Festival holiday, the textile market experienced a small “off-season” peak, and gray fabric inventory dropped significantly, from a high level (39 days) to a neutral level (35.5 days). After the holiday, the initial performance of the textile market was mediocre. As the traditional peak season is approaching, companies need to withdraw funds to actively prepare for war, and gray fabric inventories have once again dropped significantly.
A weaving company said that according to market practice, no weaving company can escape the pressure of payment collection brought by accounts receivable, so payment arrears are still the biggest problem we face. Our best selling product has always been a relatively low-priced Oxford fabric. If the price is increased rashly, customers may not buy it. Moreover, the current inventory of gray fabrics in enterprises is relatively high (roughly estimated to be more than 45 days). In order to ensure the normal turnover of funds, as long as the gray fabrics can be shipped stably, price increases will not be considered.
Judging from the current market situation, the volume of conventional fabrics in the market is very huge. Under severe overcapacity, orders can usually only be obtained through “price wars”. It is not easy to increase prices.
Postscript:
Under strong expectations, the market is relatively optimistic about the later supply and demand side. It doesn’t matter if the price of gray fabrics cannot rise now. With the arrival of the “Gold, Three and Silver”, it is only a matter of time before demand is released, and then price increases will naturally occur. At present, maintaining profit maximization is the last word.
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