RMB appreciation puts pressure on textile foreign trade
On May 26, the onshore RMB quoted 1 US dollar To RMB 6.38, a decrease of 156 basis points from the previous trading day. The RMB has appreciated rapidly, hitting a new high in the past three years!
As we all know, RMB appreciation is conducive to imports but not conducive to exports. For our exporting textile foreign trade companies, this mountain has pressed down and business has become more difficult. Since April, the RMB exchange rate against the US dollar has continued to strengthen, and the RMB exchange rate rose sharply again after May Day. Many textile foreign traders did not settle foreign exchange in time and missed the opportunity. They wanted to wait for the RMB exchange rate to correct before settling foreign exchange. Who would have imagined that the RMB exchange rate is soaring. Looking back, the foreign traders who did not settle foreign exchange at that time are now so regretful that their intestines are green. At the same time, the appreciation of the RMB has reduced my country’s competitive advantage for the global textile industry, and the export situation has deteriorated slightly, adding some pressure to the originally weak textile foreign trade market. Since last year, the foreign trade market has been slightly sluggish, and many customers have been waiting and watching for a long time, hesitating to place orders. Now the appreciation of the RMB has once again aggravated the wait-and-see mood. Manager Bao, an old master of a foreign trade company, said that after May Day, after the sharp appreciation of the RMB, customers placed fewer orders. Many of them were waiting and watching, feeling that the price quoted at the current exchange rate was not appropriate, so they did not place orders yet.
Sea freight has soared, and the profits of textile companies have been diluted
At the same time, this year’s sea freight has also soared to the edge of getting out of control. After the second wave of the COVID-19 epidemic broke out in India, ports in many places around the world turned away ships carrying Indian seafarers or passing through India. According to United Nations data, 80% of global trade relies on shipping, and 240,000 of the world’s 1.6 million seafarers are from India. The epidemic situation in Malaysia, Taiwan and other places has worsened again. Singapore, as a shipping hub, was forced to ban the entry of seafarers from India and other South Asian countries. Seafarer rotation has once again fallen into crisis, adding to the already tight global shipping industry.
Highseafreighthasputanotherlayerofpressureonforeigntradecompanies.Thecostsofforeigntradecompaniesthatbearfreightareconstantlyincreasing,andprofitsareseriouslydiluted.Foreignbuyerswhobearthefreightwillslowdowntheirorderingspeedandevenreducetheorderquantityduetotheexpensiveseafreight.Bothaspectshaveexposedtextileforeigntraderstoadouble-layeredattack.Notonlyhavetheordersbeenreduced,butprofitshavealsobeenreduced.Itisnoteasytosurviveinthecracks.AstheCOVID-19epidemicspreads,ordersarestillatriskofcancellation
Thisyear,itisnotonlytheexchangeratethathastroubledforeigntraders,butalsotherepeateddeteriorationoftheglobalCOVID-19epidemic.TheepidemicinIndiahasthreatenedneighboringcountries,andall12countrieshavesufferedhugeimpacts:
NewcasesinLaossoaredby22,000%;newcasesinNepalandThailandincreasedby1,000%;Vietnamincreasedby131%;Malaysia’snewcasesinasingledayThereare3,807confirmedcases.
The epidemic in Europe has generally improved compared with the peak period, but the number of confirmed cases in some countries still remains high position. The epidemic has not dissipated in many places around the world, and the situation in some areas is worsening, and orders are still facing the risk of being canceled at any time.
The wait-and-see sentiment in the market is strong, and the performance of weaving trading companies is weak
Judging from the above three events, they all have a great impact on my country’s textile industry. The overall global economic situation is still weak, and domestic textile and foreign trade orders have always been tepid. Mr. Wang, who exports to Japan, said that since the epidemic, the entire order-taking rhythm has completely changed. Customers spend most of their time waiting and watching, and very few actually place orders. Recently, the epidemic in Japan has intensified, and the wait-and-see mood has intensified. With the advent of the off-season, orders have gradually decreased. In addition to directly affecting the foreign trade market, the domestic trade market is also being affected subtly. The severe epidemic situation abroad is like a time bomb, making people panic all the time. The textile market is also cautious. Orders are mostly placed in the “small batch, multi-batch” mode. The number of stockpiles in the past has also been reduced. Therefore, the downstream weaving market lacks highlight products and the goods are generally sold. Domestic clothing companies are also in a wait-and-see mood. After proofing, they either have nothing to do or wait for a long time for small batch orders.
Thesituationoftradeordersisaverage,andweavingcompaniesarenaturallyfacingdisaster.Grayfabricsofmostspecificationsarebeginningtoaccumulateininventory,andtheoperatingratehasalsodroppedslightly,andtheatmosphereofgoodstakinghascooleddown.Althoughsomevarietiesaresellingwell,itisstilldifficulttostimulatetheoverallsalesatmosphere.Theprintinganddyeingendhasalsograduallycooleddown,withtheoverallavailabilityrateatabout81%andthedeliverytimeshortenedtoabout8days.
Postscript
This year’s textile foreign trade is indeed a bit difficult. The most important thing is that the profits are also limited due to the lack of orders.�Continuously being squeezed, the operating pressure of enterprises is slightly greater. Fortunately, the exchange rate is also highly volatile. If there is a correction in the later period, the pressure on enterprises will be slightly relieved.
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