Not long ago, there was news in the textile industry that “fabric prices have been moved abroad, and the average export price is only US$1.19/meter!”
From January to May this year, my country exported fabrics worth US$1.372347 billion to the 27 EU countries. In terms of quantity, my country provided 1.148557 billion meters of fabrics, with an average price of approximately US$1.19/meter, slightly lower than the US$1.20/meter in 2022.
Data shows that it has become a fact that the export volume and price of fabrics have dropped. So what is the current situation of textile companies?
Foreign trade is not strong, and some of it has begun to be sold domestically.
Whenever asked about the current situation of the textile and garment industry this year, difficulty in foreign trade and reduced orders are the most common problems reported by textile companies. The severe foreign trade situation has also become the biggest obstacle to the performance growth of listed textile companies.
Recently, the semi-annual reports of listed textile companies have been released one after another, and it is not an isolated case that net profits have experienced a double-digit decline. Even industry leaders cannot withstand the impact of shrinking external demand. One can imagine the plight of small and medium-sized textile companies.
In order to save themselves, some textile companies have gone abroad and actively expanded overseas customer sources; others have turned their attention to the domestic market and begun to expand the domestic market.
An industry and trade enterprise said, “Since foreign trade orders shrank by 50% in the first half of the year, we were forced to adjust our business structure from focusing on foreign trade to focusing on domestic sales. In order to develop domestic customers, salesmen will go to major clothing stores Clusters are connected. For example, if you make an export order for the same fabric, you can get 14 points of profit, but if you sell it domestically, it may only be half, and the account period is relatively long. There is no way, having an order is better than not having an order.”
Raw material prices rise, fabric prices are unable to keep up
Since July, driven by the cost side, the price of polyester yarn has risen unexpectedly. Although the price increase of polyester yarn in this round is not large, it is very sustainable. The price rises by 100 yuan/ton today and 50 yuan/ton tomorrow. The price increases from time to time make it difficult for textile companies to resist.
As of August 1, the average prices of mainstream polyester products in Jiangsu and Zhejiang are as follows: polyester FDY150D is reported at 8,350 yuan/ton, an increase of 370 yuan/ton from the beginning of July; polyester POY150D is reported at 7,680 yuan/ton, an increase of 340 yuan/ton from the beginning of July; polyester DTY150D It was quoted at 9,225 yuan/ton, an increase of 375 yuan/ton from the beginning of July.
For textile companies, continued price increases of raw materials are not a good thing. Generally speaking, in order to absorb the cost pressure brought by rising raw materials, textile companies need to simultaneously increase fabric quotations.
Unfortunately, market research results show that due to the pressure of the off-season, most textile companies have no expectations of price increases. In order to keep their machines running, some weaving companies even buy high-priced raw materials and produce the most conventional varieties. When this batch of products enters the sales stage, if the raw materials are still at a high level, then the gamble has won. On the contrary, it may make the profit margins that are not rich even worse.
Roll and roll, colleagues are rolling and customers are also rolling
It is reported that major brands have successively started preparations for autumn and winter ready-to-wear. Therefore, August may become an important node for stocking up autumn and winter fabrics.
Judging from the order receipts, traders have already stocked up on a lot of fabrics, but the ability to undertake current orders is generally insufficient. Faced with limited orders, the polarization among companies has become increasingly obvious, and some companies have been forced into endless ” “Involution” situation. Part of this involution is driven by peers, and the other part is caused by customers’ price reductions.
A trading company said: “In the past, it was rare to lower prices for foreign trade orders, but now lowering prices has become a routine practice for customers. The advent of the information age has gradually made fabric prices more transparent, and customers will lower prices by at least 2-3 points during negotiations. For some products with acceptable profits, it is normal to lose 5 points.”
Through research, we found that the current fabric prices are generally easy to fall but difficult to rise. Orders are mostly “small batches and multiple batches”, and the price competition for large-volume orders is extremely fierce. In the future, price advantage and delivery speed may become the key to receiving orders.
Taken together, in the context of overcapacity that is difficult to alleviate, the situation of not having enough cake will continue. Profit losses caused by factors such as rising costs, low-price competition, and price reductions by customers will also be unavoidable.
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