The most exciting thing in the textile circle recently is undoubtedly the news of price increases of various raw materials. Stimulated by the rebound in international oil prices, PTA and ethylene glycol have increased to varying degrees. Under the strong support of the polyester filament raw material end, after the price reduction promotion last Tuesday, there have been three consecutive days of increases, and the price adjustment range At 200-300 yuan/ton. The rally continued this week, with many raw material factories in Jiangsu and Zhejiang regions raising prices again by 50-100 yuan/ton on Tuesday. The raw material price reduction promotions that have been held for 10 consecutive months will most likely be ended this week.
After a wave of increases in February and March at the beginning of the year, raw material prices returned to the upward trend again at the end of June. This is not good news for textile companies struggling in the off-season. Especially under the overseas epidemic, orders from most textile companies are still in a recovery stage.
Orders are not as good as in previous years and are still in the recovery period
Last year, especially in the second half of the year, the textile market had very high expectations for 2021. Almost everyone felt that with the use of vaccines and the control of the epidemic, 2021 would be a year of explosive orders. But in fact, 2021 is already halfway through, and the hot situation we expected has not appeared. It was only at the beginning of the year that there was a rush to buy gray fabrics due to rising raw material prices, but the actual and effective order volume is generally limited. Even this year, when the epidemic situation has improved significantly, many textile companies are still not as good as last year.
According to an employee of a textile company, they mainly make functional fabrics. Last year, because their products included epidemic prevention-related fabrics, although the order volume was very Good, but this year’s market is far less than last year, and it’s not even comparable to the year before. Some customers and textile companies whose orders come from overseas epidemic outbreak areas have felt it more clearly. It is very common to see a drop of 20%-30% year-on-year. However, compared with the decrease in orders, more textile companies in the market are in a “healing” stage, and the order volume is slowly picking up.
A person in charge of a textile foreign trade company in the market said that their fabrics are mainly exported to European and American countries. Last year, due to the severe epidemic in the United States, their export volume to the United States decreased. It fell by more than 90% in the first half of the year, but their orders have improved significantly this year and have now reached about 70%-80% of 2019. Although there is still a gap compared with previous years, it is still gratifying to have so many orders despite the overseas epidemic.
Overall, there is still a certain gap between the current textile market and normal years. While orders are still in the recovery period, raw material prices have been soaring. , will inevitably seriously affect the market recovery.
Costs have risen seriously, accelerating customer churn
When the market conditions are not good, textile companies are also very It is difficult to have excessively high profits. Many market orders are made close to the cost line, and you may lose money if you make a slight mistake. In particular, the recent rapid increase in raw material prices has significantly increased the operational risks of textile orders. There is a certain time difference between the quotation and operation of most textile orders. The orders currently being made or about to be made may be quoted one month ago. Faced with the current increase in raw material costs, either profits will shrink or costs will be damaged.
According to the person in charge of a weaving company, they have not had many hot-selling products recently, and only some stretch fabrics are relatively good. However, the recent increase in spandex prices has left him at a loss. Normally, for every 500 yuan/ton increase in spandex, they will raise the fabric price. Take 40D spandex as an example. The price has increased by 5,000 yuan/ton since June. However, they have not raised the fabric price yet and have been holding on. The main reason is that they are worried that the price they have negotiated with customers in the early stage will be caused by the later price increase. Customer churn.
Of course, everyone in the textile market knows that although their orders are currently less than in previous years, the trend of rising raw material prices is difficult to shake. Any quotation now may be the cost price in a few months. On June 30, there was anotherThe spandex factory issued a notice and planned to raise the price of spandex again by 2,000-3,000 yuan/ton. For this reason, some textile companies began to cautiously accept orders, and even directly rejected old customers.
“We have an old customer who has been making a product for six or seven years, but recently they have started to reduce the price of our fabrics due to the increase in other costs. Now their psychological price is only our cost price. We can’t make a penny now, and will fall into a state of continuous losses as the price of raw materials increases later. For this reason, we rejected this customer, and they now also We are looking for other suppliers. Although it is a pity, the current price of raw materials leaves us with no choice.” A textile trader said.
The current rise in raw material prices is mainly due to the upward adjustment in upstream costs, but there is still a big question whether the downstream textile industry, which is still in the recovery stage, can accept and digest this part of the increase. After all, some weaving companies in the market have taken the initiative to reduce and suspend production due to rising raw material costs, and the shrinking demand will have a backlash on upstream raw materials.
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