On July 20, some polyester manufacturers offered profit promotions, which stimulated a wave of centralized purchasing by downstream weaving companies. The average production and sales on that day reported 100.9%.
Polyester yarn has maintained a continuous rise since July, causing resistance among downstream weaving companies. Recently, as the time approaches the end of the month, this resistance has become more amplified because the procurement node is coming again.
Promotional effect is getting worse and worse
Although production and sales increased slightly yesterday, it is obvious that the effect of promotion is not as good as before. Let’s take a look at the production and sales in the recent days when production and sales have increased.
First of all, we pay attention to the time in the above table. At each time point when production and sales increase, we still follow the normal procurement node of about 15 days, and the weaving factory just needs to purchase.
Secondly, let’s look at production and sales. Compared with previous times, production and sales on July 20 seemed a little weaker, falling nearly 4 times compared with mid-June.
What is the reason for the deteriorating effectiveness of promotions? This may be divided into two aspects. On the one hand, it is now the off-season, and weaving companies are not strong in purchasing; on the other hand, polyester factories are still not strong enough in reducing prices.
It’s understandable that the market is off-season
At present, July is almost coming to an end, and weaving enterprises are still in the off-season. The problems of overcapacity and excessive inventory that they face all year round have also been exposed recently.
Similarly, polyester factories are also facing this problem. Recently, the market is in a deep off-season period. The reduction in orders has not only caused the weaving manufacturers to have idle hands, but also the raw material manufacturers.
Some larger manufacturers may have less inventory pressure, but for small and medium-sized manufacturers, production inventory will undoubtedly block their way forward. Small and medium-sized raw material manufacturers have no advantage in terms of price, and they cannot compare with large manufacturers in terms of customer base.
They only need to hold on to the old customers in their hands, but the old customers are idle and will not eat up these inventories because they are long-term partners.
Price reduction is not strong enough
Although there was a profit promotion yesterday, the overall profit margin was not large, only about 50-100 yuan/ton. Such a profit margin was not attractive enough for downstream weaving companies, especially in the current off-season market.
From the perspective of polyester factories, they may be worried that excessive price cuts will damage profits, and in the off-season market, even price cuts may not be able to stimulate enough demand. However, at this stage, deeper price cuts may be necessary to boost sales.
But from now on, although international oil prices have maintained a volatile pattern this week due to insufficient directional driving, the supporting role of raw materials is still there. After the centralized purchasing period of weaving companies, polyester factories are more willing to raise prices.
After all, the current inventory of polyester yarn is still within the controllable range. Most of the overlay weaving companies mainly purchase rigid needs. The inventory of raw materials in the weaving market is low. Against this background, the price of polyester yarn is relatively strong, and the profits of various specifications of products can be restored to varying degrees.
To sum up, polyester factories have now grasped the urgent purchasing psychology of downstream weaving companies and are confident. Therefore, they have changed from the previous weekly promotions or large-scale promotions. With the support of the cost side, it is expected that polyester filament yarns will still be sold next week. It shows a stable and rising trend, but as weaving companies have concentrated purchases this week and have covered their positions in Wangcheng, polyester production and sales may remain sluggish.
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