It’s mid-March, but it seems like the traditional peak season has missed its promise again.
Recently, during a market visit, I came across a truck driver loading fabrics. After chatting with him, I learned that the current order situation in the textile market does not seem to be optimistic. He even said that this was the “worst” year for the market in the ten years he has been in the industry!
So, is the truth really what he said?
Orders are polarized and it will take time to pick up
As we all know, my country’s textile and apparel industry has a saying of “three points depends on domestic demand and seven points depends on exports.” Although in recent years, with the continuous development and growth of the domestic consumer market, the proportion of domestic demand has been effectively improved, but the export share still exceeds 60%. .
The latest data from the General Administration of Customs shows that from January to February, my country’s textile and apparel exports were US$40.84 billion, a year-on-year decrease of 18.5%. Among them, textile exports were US$19.16 billion, down 22.4% year-on-year; clothing exports were US$21.68 billion, down 14.7% year-on-year.
From this point of view, the textile and apparel market as a whole has been operating at a low level recently. Affected by factors such as last year’s high base, sluggish overseas demand, and reduced order quantity, the growth rate of foreign trade exports in the textile and apparel industry has slowed down. The recent news of “mountains of containers at domestic ports” has also frequently appeared on the hot list, and the shortage of foreign trade orders has become a fact. .
The truck driver said that the last two types of loading were 210T polyester taffeta and twill four-way elastic. In terms of quantity, 210T polyester taffeta was about 100,000 meters, and twill four-way elastic was only more than 10,000 meters. According to him, during the three years of the epidemic, although road controls and closures occurred from time to time, the frequency and quantity of truck loading were far higher than in recent times.
Through market research, we found that in March, the polarization of orders among various companies became increasingly obvious. Different from the large-scale recovery in previous years, only some fabrics in the textile market can be classified as hot-selling varieties. Either the inventory of such fabrics is still low, or the products are non-conventional. Therefore, due to the high degree of differentiation in the fabrics produced by some weaving companies, orders can be extended until April and May when the machines are fully operational, while some companies can only maintain their orders until the end of March.
Inventory suppression, fabric price increase is not easy
Generally speaking, to judge the trend of the textile market, we need to look at the orders received by enterprises on the one hand, and the fluctuations in fabric prices on the other hand.
Judging from market feedback, fabric prices have been generally stable since March. Most fabric merchants said that prices will follow the market. Only when the market improves will there be room for price improvement.
In recent years, the textile market has been in a state of blind expansion for a long time, and today’s overcapacity is the hidden danger planted at that time. This is particularly prominent in conventional varieties, which are low-priced and large-volume, and are involved in most textile companies on the market. Due to the lack of technical content of the products themselves, the differences between merchants are basically minimal. Therefore, in the context of high inventory, in order to obtain more orders, companies will inevitably fall into an endless “price war”.
The truck driver also lamented that the current fabric prices are not the lowest, only lower. Taking the 210T polyester taffeta loaded this time as an example, the fabric company that ordered the truck quoted a little more than 1 yuan per meter, but a certain company in the market The early selling price has fallen below 1 yuan/meter.
Judging from the current order reception situation, domestic orders have performed well, and are basically small and medium-sized orders. Many customers have not placed orders this year for the varieties that they repeated in previous years, and the number of orders placed has also decreased year-on-year. Whenever an order reaches a certain volume, customers will lower prices, and a price tug-of-war will ensue.
From this point of view, it is expected that the textile market will sell goods at low prices due to the “difficulty in receiving orders”. In order to revitalize cash flow and cope with later changes in the market, textile companies can only achieve the goal of rapid cash realization at the expense of profits.
Postscript:
The truck driver’s statement may be one-sided, but postponement of the traditional peak season is inevitable. Many fabric manufacturers no longer even expect much improvement in the “Golden Three”, and directly turn their attention to the “Silver Four”. They said that the next month will be a critical period for the textile industry.
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