Looking back on the first half of 2020, it is not difficult to find that both the upstream raw material market and the downstream weaving market are doing the same thing, that is “Price reductions, preferential promotions”. In the past June, there were 5 discounts on polyester!
“Preferential promotions” in the weaving market are even more common:
Since the outbreak of the new coronavirus epidemic Since then, the global demand for clothing has decreased, and terminal orders have shrunk. This has led to a lack of orders from weaving manufacturers. They have no bargaining power, and even take the initiative to make price concessions, just asking customers to get some goods. This is reflected in the price of gray fabrics, which is that prices continue to fall. Lower again.
210T polyester taffeta has dropped from 1.30 yuan/meter at the beginning of the year to the current 1.10 yuan/meter, a decrease of 15%;
75D glossy satin dropped from 2.30 yuan/meter to 2.10 yuan/meter, a drop of nearly 10%;
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A textile boss said: “It is precisely because of the long-term lack of confidence on the raw material side and the weaving side that large-scale price cuts, preferential promotions, and loss-making sales have occurred.” But the intensity of the discounts It is already so big, and it is difficult to drive the entire market to start buying and buying. Why is this?
Terminal demand has decreased, and polyester yarn production and sales have been flat
First of all, let’s take a look at the polyester yarn market. Since the first half of this year The price of polyester filament fluctuates significantly. In addition to the price fluctuations of crude oil, PTA, and ethylene glycol, the main reason is that the shrinking demand for end-use clothing has made it difficult for the fabric and gray fabric market to improve, causing polyester filament prices to be affected. Although some countries in Europe and the United States have resumed work since May, the epidemic has severely suppressed the economy and it is still difficult to recover demand.
“Our order volume this year has decreased by 70%-80% compared to last year. Foreign trade orders have not been started from mid-March to now. Now we can only make bulk orders. For raw materials You can buy and use as you go.” said the person in charge of a company that accounts for 80% of foreign trade.
On the whole, the textile market is currently tepid and lacks support from orders. The decrease in terminal demand has made it difficult for polyester filament production and sales to be flat. Only when the crude oil market is strong or there are price cuts and promotions can a wave of polyester goods be driven. The rest of the time, production and sales are relatively flat, around 50%.
The weaving market has high inventory and high pressure on payment
From the perspective of the downstream weaving market, as domestic trade improved in May and some foreign trade orders were placed, many manufacturers increased their start-up rates accordingly. A manufacturer of pongee peach skin said that in April, the operating rate was only 50%. By May, after receiving an order for pongee conductive fabric, all the machines were fully operational. This has also led to another rebound in the supply of gray fabrics on the market.
In June, most textile workers said there was a lack of orders. Compared with May, the decline in orders was more obvious. I originally thought that during the Dragon Boat Festival, there would be widespread long holidays. However, in fact, not many companies plan to take a long holiday. Most companies take about 3 days of holiday. It can also be seen that it is not common for textile companies to further reduce production and stop production. However, due to the gradual decline in shipments, the comprehensive inventory of textile companies has increased slightly. At the end of June, the inventory of weaving manufacturers was about 44 days, an increase of about 3 days compared with the end of May. With orders in the off-season in the textile industry sluggish, many manufacturers may start making holiday arrangements in July.
Nowadays, many companies have inventories for more than 2 months, which has also caused manufacturers to have more cash on hand. The market is getting more and more tense. Raw materials are usually traded in cash, but in the weaving market, cash transactions are really rare. Especially in this year’s situation, everyone has no money on hand, and it is even more impossible to pay off all in one go. Moreover, the debt is owed. Most of them take more than 3 months. “Currently, when customers take gray fabrics, we usually require them to pay a 30% deposit, and the remaining 70% will be paid within 3 months. There are also some customers who want to take the fabrics without paying a deposit. , We don’t do this kind of thing. The 30% deposit is our bottom line. These days, when selecting customers, the payment method is very important.” The person in charge of an industry and trade enterprise revealed. When everyone is short of money, it is not surprising that weaving factories sell goods in order to collect funds.
It is still unknown when demand will recover
July is the traditional off-season for the textile market , the high temperature season and the off-season of the market, textile people generally lack confidence, their enthusiasm for production and purchasing has weakened, and they have become increasingly cautious about the procurement of raw materials and fabrics. This also reflects the current status of the polyester and weaving markets. Affected by the epidemic, domestic External orders are often stagnant, and demand recovery is difficult, resulting in polyester and gray fabrics being unsatisfactory in terms of price, production, sales, and inventory. Judging from the latest news, the global epidemic has spread seriously, and the United States is in danger of a second outbreak. Some states have given up on restarting their economies. It is still unknown when foreign trade demand will recover. What companies have to do now is to ensure their cash flow until the epidemic is over!
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