“Buy up and not down” has always been a very common purchasing method in the textile raw material market. Last year, due to the global epidemic, the raw material market has been “falling and falling.” Downstream weaving companies have always purchased raw materials for immediate use. Hoarding of raw materials is very rare, and the performance of “not buying or falling” is very obvious. However, due to the rise in international oil prices later in the year, raw materials began to enter the upward channel, but downstream companies did not seem to buy it at all, and the “buy up” mentality did not appear. The production and sales of raw materials have been hovering below 50% in the past week.
In normal years, top-down price increases can almost be regarded as the arrival of the peak season. But this year, even during the traditional peak season months of “Gold, Three and Silver”, the peak season atmosphere was not strong, and the market performance was even worse than before.
Price increases, epidemics, and order cancellations are coming
It is no longer news that fabric market prices have increased across the board. However, for weaving and trading companies, price increases are mostly just to balance the rising cost of raw materials. They do not bring any substantial benefits to them. On the contrary, they dampen their customers’ enthusiasm for placing orders.
“Because the price of raw materials has increased, downstream fabrics can only follow the price increase. Customers basically cannot accept it. Many orders have been cancelled, making it impossible to continue.”
“Raw materials have increased. Fabrics can only follow the increase, but downstream customers do not accept it, and many orders have been cancelled.”
“Recently, fabrics have been raised appropriately, ranging from 0.5 to 1 yuan. Some customers accept it, but many customers cannot accept it.” p>
Similar to the beginning of the epidemic last year, a large number of foreign trade export orders were canceled and delayed. The recent textile market has also encountered the same situation, except that this time the “culprit” is raw materials and fabrics that have risen too fast and too much. However, the negative factor of the epidemic has not completely disappeared.
The French General Directorate of Health announced on the 16th that it had discovered a new mutant coronavirus that may be able to evade nucleic acid detection. According to news on the 19th, the French capital Paris will enter a month-long lockdown, and 15 other regions across the country will also implement the same lockdown measures starting at midnight local time on Friday. In addition to France, European countries such as Germany, Italy, Hungary, Poland, and the Czech Republic have also entered a new round of blockade.
Demand weakens, raw materials and fabrics are shorted
Although the prices of raw materials and fabrics are inseparable from changes in upstream costs, if terminal demand does not improve, blind price increases will not only fail to stimulate the market, but may also severely damage market enthusiasm. The current overseas epidemic is still raging, and global demand has not substantially recovered. At this time, the price increase of raw materials and fabrics will only stimulate the market to sell goods in a short period of time, which is completely overdrafting the market outlook. And this kind of price increase that is divorced from reality is difficult to obtain support from the market.
From the recent changes in the production and sales of raw materials, we can actually see the market’s attitude towards price increases.
“I am not optimistic about the price increase of raw materials. There will be no orders in the future. No one will buy the raw materials if the price of raw materials increases.”
“I have not stocked up on raw materials so far this year. I am not optimistic about the future.” It will rise because the increase after the year is too fast and the market does not recognize it at all.”
“We only buy 30 days of raw materials at a time and will not buy more. We are not optimistic about the subsequent rise in raw material prices. Raw materials should be maintained at the same level. changes, instead of rising as fiercely as now.”
Not optimistic about the market of raw materials and fabrics, in fact Not optimistic about the market outlook. According to a textile trader, his foreign trade customers told him that there were no big orders this year, and some were only small orders of several kilometers. Relying on these small orders, it will be difficult to make a difference in the market later.
At the same time, due to the epidemic and the continuous increase in U.S. crude oil inventories, international oil prices have fallen sharply recently, and the pressure on downstream polyester raw materials has suddenly increased. When raw materials rise, the market is still indifferent. When it falls, production and sales may become even more sluggish.
The operating rate is still at a high level, and inventory may rise sharply
Although there is currently a lack of confidence in the current market due to price increases and epidemic problems on the weaving and trade side. However, most of the opening rates remain at a high level.
According to the person in charge of a weaving company, their factory is full of new machines, and because the workers are relatively stable this year, the operating rate has reached 100%. Another weaving company also said that although fabric orders have dropped significantly due to rising raw material prices, the looms are still running at full capacity.
Due to the impact of celebrating the Chinese New Year on the spot this year, the weaving start-up rate after the New Year rebounded rapidly.��. In addition, there was a period of rush buying in the fabric market after the year, which further stimulated the opening rate to rebound and continue to remain at a high level. However, because last year’s relatively popular low-priced inventory has been sold out recently, the market for high-priced raw material gray fabrics after the new year is difficult to accept. Sales of this part of fabrics began to fall off a cliff.
On the one hand, the operating rate is still high, and on the other hand, the sales of gray fabrics are shrinking. Therefore, the decreasing inventory after the year began to bottom out, and many weaving companies in the market have once again sold goods. If the market outlook continues to be sluggish, there will be further room for growth in gray fabric inventories.
March, which was supposed to be the peak season, did not see many promising trends. The hot sales in the fabric market at the beginning of the year were short-lived, but they invested in the market outlook. In the absence of terminal recognition and lack of confidence in trade, the market may repeat the same mistakes as last year and continue to accumulate gray fabrics further and further. </p
