Recently, I was chatting with a salesman from a dyeing factory about the market situation. He shook his head repeatedly and sighed, saying that one workshop in our factory has stopped working with more than a dozen dyeing vats. Now we can’t even schedule a workshop schedule. If this continues, I’m afraid the holidays have to be put on the agenda. How can we agree on this market situation? The sense of powerlessness revealed between the lines, as the “wind vane” of the textile industry, the current situation of the dyeing factory makes people sigh.
The “money tree” of the past is no longer the same as it used to be.
I think back on the days when dyeing factories lived in a time when “the sound of a machine brought a million taels of gold”. However, with the sharp decline in profits in the printing and dyeing industry, the period when companies could make money “with their eyes closed” is gone forever.
According to data from the National Bureau of Statistics, from January to August 2022, the output of printed and dyed fabrics by enterprises above designated size in the printing and dyeing industry was 36.098 billion meters, a year-on-year decrease of 8.34%, and the decline was 1.51 percentage points larger than that from January to July. From a month-on-month perspective, the output of printed and dyed fabrics by printing and dyeing enterprises above designated size in August was 4.622 billion meters, a decrease of 1.44% from July, and the monthly output continued to hit a new low for the year.
Why does this happen? The main reasons may come from two aspects: First, on the demand side, due to continued weak demand, the production capacity utilization rate of the entire printing and dyeing enterprise continues to decline. Coupled with the frequent occurrence of epidemics, the accelerated tightening of monetary policies in Europe and the United States and other countries, and the continuation of geopolitical risks and other uncertain factors, consumer demand for textiles and apparel in the end market, especially the domestic market, has been recovering slowly. Second, on the cost side, affected by the sharp rise in energy prices such as oil and natural gas, the main economic indicators of the printing and dyeing industry are obviously under pressure, the total profits have declined significantly, the total losses are still growing, and the pressure on the production and operation of printing and dyeing enterprises continues to expand.
The expectations are not optimistic, how can printing and dyeing companies survive alone?
The “Golden Nine and Silver Ten” have come to an end, and this traditional peak season has come and gone quietly. Looking back on last year, at the same time point, there was an endless stream of news such as the warehouse explosion of gray fabrics in the dyeing factory and the rapid recovery of the operating rate. For a time, there was a mountain of gray cloth at the entrance of the dyeing factory, and the information such as the warehouse explosion causing the suspension of embryo collection, etc., flooded the circle of friends.
But this year, conversations with the dyeing factory salespeople have shown that warehouse explosions have basically not happened. In early November, the dyeing factory was faced with no shifts to schedule, and the workshop even stopped a dozen vats.
It can also be seen from the feedback from fabric companies that the number of gray fabrics entering warehouses in dyeing factories has shown a steady and downward trend since October compared with September. The delivery time of orders from dyeing factories has become shorter, and there is basically no queue waiting for goods. It takes about 3-5 days. It can be shipped, and the overall efficiency is very high.
Taking stock of this phenomenon, the main reason may be that the consumption situation on Double Eleven was cooler than expected, which caused a lack of new orders in the market, resulting in insufficient actual order volume. In this case, the quantity of gray fabric entering the warehouse is average, so the dyeing factory basically has no schedule and can produce goods as they are produced.
Is it inventory eating up orders from dyeing factories, or is it?
Dyeing factory orders are the most intuitive reflection of the order trend in the textile market. In previous years, due to the expected boost in demand during Double Eleven and the Christmas season, dyeing factories were either rushing to make orders or on the way to make them. But now the orders in dyeing factories have basically turned into real-time transactions. Is it because there are fewer orders?
According to monitoring data from Silkdu.com, starting from late October, the printing and dyeing operation rate within the sample began to decline. From the end of October to the beginning of November, due to slightly poor market conditions, the number of dyeing factories entering warehouses declined, and the operation rate dropped to 56.8%. The entire decline is visibly increased.
The person in charge of a weaving company said that at this time in previous years, the factory was already busy catching up on orders for the Christmas season. However, this year, due to the foreign epidemic and the increasingly severe economic situation, which has triggered sluggish foreign demand, the factory has no plans for the Christmas season, but it is the holiday. It may be put on the agenda.
If the weaving enterprise is like this, then the dyeing factory will not be in any better situation if there is no blank stock in the warehouse. The performance of the textile market is uneven, and the overall orders of many spot fabric companies have not decreased but increased. Many fabric companies said that the current inventory of fabrics on the market may not be able to be digested in three years, resulting in serious overcapacity.
Generally speaking, the current printing and dyeing industry is still facing many unstable and uncertain factors, and printing and dyeing enterprises are still facing relatively large phased difficulties in production and operation. The size of the traditional market has undergone qualitative changes, and dyeing factories also need to adapt to the changes and adjust their business models in a timely manner to survive better…
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