July is coming to an end and August is coming. The market is currently in the off-season, and the lack of orders is obvious. But with the arrival of August, will this lack of orders gradually disappear or become more obvious?
Orders have dropped significantly, and the market is generally not as good as last year
Unexpectedly, epidemics broke out in many places in the country in the first half of this year, causing some orders to be suspended and the economy to decline again. The textile market was actually worse than in 2020, when the epidemic was the worst. Orders did not increase but fell. On the one hand, this was due to severe inflation in the global economy and shrinking demand in the entire textile industry. On the other hand, the impact of the epidemic has a certain lag. The impact of the epidemic in 2020 is currently being fermented. This year, it was hit again by the epidemic, and domestic textile orders began to take a hit.
Mr. Sun, who owns 400 looms, said: “Our company mainly sells imitation silk fabrics, and orders this year are 30% lower than last year. Both domestic and foreign trade orders have decreased.”
“Our company’s main business is chemical fiber, cotton and linen. The market situation this year is not good, and sales are 40% lower than last year.” Manager Chang said.
The off-season continues and we still insist on production
The reduction in orders is quite painful for most weaving companies, because even if there are no orders, most looms have to keep running. According to market visits, the current operating rate of many weaving companies is around 70% or 80%, and some even maintain this full operating rate. Of course, some companies are only operating at half capacity and some are even on holiday. However, the vast majority of the companies surveyed this time maintain an operating load of 70-80%.
Such a high operating rate in the off-season must mean that inventory is getting higher and higher. However, the factory has not further reduced its operating rate due to the current reduction in orders. Most of them have no plans to stop production in the future. Many weaving companies said that despite the off-season, they still had to feed their workers. In addition, companies always have hopes for the autumn and winter market in the second half of the year.
Manager Gao, who specializes in mid-to-high-end fabrics such as acetic acid and rayon, said that the factory’s inventory is around 4 million meters, which is similar to the previous period, but there are currently no plans to reduce production.
Manager Chang also said: “The factory has at least 30 days of inventory, and all regular varieties are in stock. Now is the off-season, and the inventory is increasing, but there are no plans to reduce production.”
Mr. Sun said: “Currently, there is one month’s inventory in the factory. We are mainly stocking up, but it has definitely increased compared with the previous period. The current operating rate is 70%. If the inventory continues to increase in the future, we will consider reducing the operating rate, but It won’t go down too much.”
The off-season isn’t over yet, but there are signs of improvement
Although the off-season is not over yet, with the arrival of August, the market conditions have changed slightly. Some new orders have begun to be placed, including orders for autumn and winter fabrics, and foreign trade orders for spring and summer fabrics for next year are also starting. Many companies have improved as new orders have been placed one after another, and they have good executable orders on hand.
Manager Gao said: “The order situation on hand is very good. Recently, we have received many orders of more than 100,000 meters. At present, the orders for autumn and winter fabrics are good, with more acetic acid fabrics. The orders are for domestic sales and exports to Europe and the United States.”
Mr. Lu said: “Currently, the orders on hand are quite good and remain at the same level as last year. Our company mainly places foreign trade orders. Autumn and winter fabrics are currently being sampled. There are orders placed but not in large quantities. They are mainly sold to Japan.”
At present, Douyin and Taobao live delivery orders are relatively large, but they are all small orders of several kilometers. Mr. Sun said.
In order to break through the “involution”, companies vigorously develop new products
When it comes to the varieties of the list, textile companies have said that conventional varieties are no longer easy to produce, and they have to develop mid-to-high-end products. It is no longer feasible to just rely on old varieties to rest on one’s laurels, so all the energy is spent on development. .
Mr. Sun said: “This year, the company’s main focus is on developing customers, so it has been developing new products. There are currently a lot of prototypes, but most of the actual orders placed in the future are small orders.”
Manager Chang also said that the company develops new fabrics all year round and invests a lot of money in research and development every year. At present, we are mainly developing cotton and linen fabrics. On the one hand, these fabrics are relatively high-end. On the one hand, there are few such enterprises in the local market and they have a competitive advantage.
Although they are all making new products now, the market involution continues. This year’s textile companies are fighting a price war without smoke. In the price war, whoever has the lower price will sell better. In other words , Whoever has lower profits will do better business, and they have to bear high raw material prices, so the profit compression of textile companies is very obvious.
Postscript
Regarding the market outlook, most companies are not optimistic, saying that the “Golden Nine and Silver Ten” may bring a boost to the market, but it will not last too long and the degree of boost is limited. It will be a problem to develop new customers in the future.
</p
