Towards the end of the year, the number of orders began to decline, but the loom operation rate of weaving companies remained high.
Mr. Wang, the person in charge of a weaving company engaged in the production of polyester taffeta, said that the company has a total of 500 looms, of which 100 are owned by itself and 400 machines are purchased from outside. Now The number of orders in the market has decreased, and a lot of work is done in inventory. The inventory of gray fabrics has exceeded 10 million meters, but the machines are still running at full capacity.
Mr. Wang gave the reason for doing this
Raw materials are cheap
The current price of raw materials is still relatively low compared with previous years. According to Mr. Wang, even if the price of raw materials is There is no loss in stocking market goods, and the risk is relatively small.
Sunk costs
And there is a cost to package the machine. Even if there is no production, you will have to pay every month. You still have to pay, and the self-owned machines are about the same. Although the rent of the machines is not included, the rent, plumbers, workers’ wages, etc. are also a large expense.
Optimistic about the market outlook
The economic environment cannot continue to be so bad. Vaccinations are now beginning to be administered around the world. Well, when the “black swan” of the new coronavirus epidemic passes, the market will definitely rebound, and the fabrics stocked will naturally be valuable by then.
Problems of habit
Not cutting prices to start work has been the company’s habit for so many years, and it has also encountered bad market conditions before. , when the cloth cannot be sold, but it can be sold after a year or two of stocking up, the workers in the factory are used to running the machines at full capacity, so even if the market is so bad this year, the operating rate has always been high.
Of course, Mr. Wang also admitted that weaving at full capacity would still put a lot of pressure on funds. He didn’t want to sell everything in a short time. He thought about selling it slowly in the future. Well, they can always be sold.
After getting to know the market, I found that there are many textile companies like Mr. Wang with high inventories and full machines. There are also many weaving companies with gray fabric inventories of more than 1 million meters. , even companies like Mr. Wang, which has 500 machines but has an inventory of more than 10 million meters, are not high. There are also companies with only 60 machines in inventory but an inventory of more than 3 million meters.
This leads to a question: Will there be a serious surplus of gray fabrics after the beginning of next year, thus suppressing the prices of conventional products? Even if demand improves, when competition is too fierce, gray fabrics will It’s hard for prices to go up. However, if you want to consume the huge amount of inventory this year, it cannot be achieved with the arrival of one or two waves of market conditions. It may take several years to slowly digest it.
But the bad news is that the time left for textile companies to destock may not be as much as imagined.
Looming machines expand, production capacity soars
Since the rectification of water-jet looms in Jiangsu and Zhejiang regions in 2017, the production capacity of gray fabrics in northern Jiangsu, Anhui, Hubei and other places has begun to grow “explosively”. From 2017 to 2019, water-jet loom renovations reduced production capacity by about 100,000 units in Jiangsu and Zhejiang regions, while in peripheral areas, the increased production capacity exceeded 200,000 units. So much production capacity has been increased, but demand has been reduced due to the impact of the epidemic. Even if the epidemic can be controlled in the future, under the global economic downturn, the global demand for textiles and clothing will most likely shrink within a few years, which will also set up obstacles for textile companies to destock in the future.
Enter the giants, intensifying competition
In addition, recently chemical fiber giants have begun to enter the weaving industry, striving to open up the The whole industry chain.
Different from ordinary textile companies, the giants are very generous from the beginning, with investments in the tens of billions and tens of thousands of looms. There is a concept in economics that when producing a specific product, the more output, the lower the average cost. The giants use their own raw materials, adopt large-scale, clustered production models, and adopt the most advanced intelligent and modular management. The final production cost will inevitably be lower than that of ordinary textile companies. In order to digest the huge production capacity of tens of thousands of looms, these machines will inevitably be involved in the production of conventional gray fabrics.
When these industrial parks officially start production, these gray fabrics on the market will naturally compete, and it will be difficult for the price of gray fabrics to rise.
Therefore, for textile companies, they cannot hope to accumulate excess inventory and wait for the future to slow down as they did in the past. Slow digestion: On the one hand, we have never seen such a market situation this year in the past. Many companies on the market have a large inventory of conventional products, which together amounts to an astronomical figure. This situation has never happened before; on the other hand, In recent years, the production capacity of water-jet looms hasIt is growing rapidly, and chemical fiber giants have entered the weaving industry, which will inevitably intensify competition in the weaving industry, especially for some conventional “volume-moving” products. The oversupply situation will become more serious. Some textile companies that have accumulated a large amount of inventory may be in trouble. It is difficult to have a few years to slowly digest these excess inventories as before. For some textile companies, it may really be time to “change”. </p
