Along with the rainy season, textile bosses bid farewell to the “tepid” June and welcome July full of unknowns.
Looking back at the textile market in June, some textile companies were unable to receive orders and their confidence was somewhat loosened. The traditional off-season is deepening day by day, and the textile market is about to face a big test.
Insufficient follow-up of new orders, order volume stable but declining
As we all know, the textile market is obviously cyclical. From June to August every year, the demand off-season comes, and textile orders are often prone to significant shrinkage at this time.
The survey results show that the textile market is currently in a critical period of fabric season change from summer to autumn. Orders are mostly based on development and proofing and bulk order replenishment, and the polarization among textile companies has become increasingly obvious. Overall, textile orders showed a steady but declining trend in June.
Mr. Gao, who specializes in Oxford cloth:
“Our company takes care of both domestic and foreign trade. The order volume in June is basically the same as that in May. Overall, the number of orders received by the factory is acceptable, but the orders from the trade department are very few, and there are no hot-selling products.”
Mr. Huang, who specializes in nylon spinning:
“We mainly sell domestically. Since June, the total order volume has been almost the same as in May. Trade orders have been placed intermittently, mainly 480T nylon spinning. The main reason is that the downstream has entered the autumn and winter fabric stocking cycle.”
Mr. Shen, who specializes in pongee fabrics:
“We do both domestic and foreign trade. The current operating rate of the factory remains at about 90%, and the total order volume has decreased significantly compared with May, by about 30%. The order composition is mainly small orders, and high-elastic fabrics are doing well. .”
Monitoring data from Silkdu.com shows that as the textile market enters the off-season mode, some companies have insufficient follow-up on new orders, and there is a shortage of order maintenance. As of June 30, the operating rate of weaving enterprises in the sample dropped to 70.5%, a decrease of 4.5% compared with the beginning of the month.
The textile industry pays attention to “three points depends on domestic demand and seven points depends on exports.” Although the 618 mid-year promotion brought a wave of consumption and boosted the domestic demand market, this wave of benefits was short-lived. Against the background of insufficient foreign trade orders and slow recovery of foreign demand, the lethality of the traditional off-season to textile companies cannot be underestimated.
Guaranteed orders, how can we talk about profits if there are no orders?
Halfway through the year, the biggest problem encountered by the textile industry at this stage is overcapacity. When the off-season arrives, some textile companies that are short of orders have no choice but to keep their machines running by producing inventory. As inventories become increasingly high, in order to effectively destock, these companies have reduced their profit margins and used low-price competition to seek orders. This is particularly obvious in the conventional fabrics sector.
Regarding the multiple-choice question of whether to protect orders or profits, the answers given by these textile bosses were surprisingly consistent.
Mr. Gao, who specializes in Oxford cloth:
“Since this year, although fabric prices have been basically stable, profits are really low. The main reason is that foreign trade orders are not strong. In order to protect orders, we will reduce profits. After all, there is no profit without orders.”
Mr. Shen, who specializes in pongee fabrics:
“Looking back on the first half of the year, fabric prices are quite stable. The phenomenon of goods sold at low prices is extremely common, and profits have naturally shrunk a lot. In order to maintain production, reducing profits to protect orders is a routine operation.”
Although this is the norm in the market, it is not without exception. For example, the profit situation of fabrics with a high degree of differentiation is optimistic.
“The price of fabrics has not changed in the first half of the year. We only deal with regular customers, and the overall profit situation is still good. Moreover, the products we involve are all custom-woven fabrics, so we have more say in the price.” Mr. Shen, who specializes in woven fabrics said.
As they said, fabric prices fluctuate less now, and it has become very difficult to increase prices. Even some popular fabrics have fallen into the vicious cycle of “no profit without price increase, and no sales without price increase.” Most of the popular scenes such as “fabrics are hard to find” and “cash delivery” are niche fabrics. When they are out of stock, the price increase of such fabrics is extremely alarming, but the duration is relatively short.
Regarding the market outlook, textile bosses have different opinions. Those who are optimistic believe that the second half of the year will be their home field and are already gearing up; those who are not optimistic are not optimistic about the next market trend and just want to survive safely; those who are neutral say they want to settle down, plan well and prepare hard… No matter you No matter what choice you make, it is always right to make a plan in advance. After all, opportunities tend to favor those who are prepared.
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