A few days ago, many printing and dyeing factories in Hebei issued dyeing fee price adjustment notices, deciding that starting from December 15th and 16th, the dyeing fee will be increased by 400 yuan/ton, mainly involving warp knitting and weft knitting fabrics.
For textile companies in 2020, price reductions are nothing new, but price increases are relatively rare. . At this time, what is the company’s reason for the increase in dyeing fees? Could it be that as the end of the year approaches, the fabric market is getting better again?
Natural gas price increases
Northern printing and dyeing companies increase dyeing fees
It can be seen from several dyeing fee adjustment notices that the reason for this price increase is mainly due to the increase in natural gas prices, which has led to a significant increase in production costs. It is understood that as 2020 is coming to an end, LNG gas shortages have occurred in North China, East China, South China, and Northwest China, and downstream transaction prices have soared in one month.
According to SunSirs monitoring data, as of December 7, the average price of domestic liquefied natural gas was 5,043.33 yuan/ton. It increased by 17.29% from the previous trading day, increased by 23.81% from 5043.33 yuan/ton at the beginning of the month, increased by 36.43% month-on-month, and increased by 10.28% compared with the same period last year. On December 21, the latest news released by Business News showed that the domestic liquefied natural gas market was affected by gas restrictions, causing liquid plants in many regions to reduce production and suspend shipments. On-site supply dropped sharply, quotations fluctuated significantly, and most liquid plants suspended operations. Quotation and actual transaction are mainly based on negotiation.
Generally speaking, due to the surge in demand during the northern heating season in winter, rising natural gas prices are market rules. In addition, in recent years , a large number of industrial enterprises switched to natural gas, which increased the demand for natural gas. However, such cost pressure is indeed difficult for dyeing factories to digest at once, and the increased costs will undoubtedly affect the company’s operating profits.
Data from the National Bureau of Statistics show that from January to October, 528 of China’s 1,578 printing and dyeing enterprises above designated size suffered losses. , the loss area reached 33.46%, a year-on-year increase of 12.19 percentage points, and the growth rate narrowed by 1.86 percentage points compared with the first three quarters; the total loss of loss-making enterprises was 2.001 billion yuan, a year-on-year increase of 49.54%
“The overall situation of the textile market this year can be summarized as ‘the off-season is lengthened and the peak season is not prosperous’. Under such circumstances, business operations will inevitably be at a loss, so choose It is understandable to increase the unit price of products to maintain its own survival. Moreover, the price increase this time is not large, and it can only be regarded as a test of the market.” Analysts from the industry said. Others in the industry bluntly said that the price increase a year ago was a “routine operation” in the industry and a normal phenomenon.
The operating rate has declined
The industry as a whole lacks motivation to increase prices
Of course, the increase in dyeing fees this time is only a relatively isolated phenomenon, and most printing and dyeing companies are still standing still. In fact, looking back on the past two years, starting from 2019, the dyeing fees of printing and dyeing factories have almost never been adjusted on a large scale and have been in a relatively stable state.
The most direct reason is naturally the price of dyes. Since the beginning of 2019, although dye prices have fluctuated to some extent, they have been on a downward trend throughout the year. Therefore, the cost pressure on dyes in printing and dyeing factories can be slightly released, and naturally there is no need to increase dyeing fees.
However, some people in the industry have different views on the cost issue. “Apart from some production costs such as dyes and natural gas, under the same production conditions, the saturation of orders has a great impact on costs. During the peak season, as long as the output is large enough, even if some materials are wasted, production costs can be reduced . But in the off-season, customers will have stricter quality requirements, not only in terms of color, feel, width, weight, etc., but also if there are slight defects, they may be returned. During the off-season, the dyeing factory will repair and return the goods. The rate is usually higher than the peak season.”
There are different opinions on whether the costs of printing and dyeing enterprises will be stable or increase, but at present, printing and dyeing factories It is obviously recognized that the number of orders has declined and that the company has been in a state of “not having enough to eat” for a long time.
Since 2019, there have been relatively few periods when the operating rate of printing and dyeing plants is at full capacity. Especially this year, testing data from relevant platforms show that the average operating rate of printing and dyeing enterprises in Wujiang District, Suzhou City, Jiangsu Province is only about 60%. In such a situation of long-term lack of orders, it is conceivable that printing and dyeing factories may increase their external quotations for dyeing fees, and some companies have even launched preferential policies. Industry insiders said that in the situation of “more monks and less rice”, the competitive pressure of printing and dyeing enterprises is increasing. In order to retain customers, the only way is to squeeze profits.
“This year, the company’s development philosophy is to prioritize maintaining good customer relationships while striving to ensure product quality. Although Production costs remain high now, but if dyeing fees are raised at this time, it is very likely that fabric manufacturers will transfer orders to printing and dyeing factories with lower dyeing fees. This will cause us to lose customers and the gain will not be worth the loss.” A Guangdong man The person in charge of an enterprise in Shantou area said.
According to the statistical report released by the China Printing and Dyeing Industry Association, in the first half of this year, the total profits of printing and dyeing enterprises were compared with the same period last year. , only 2.63% of sample companies��Slightly increased; 7.89% of enterprises were the same as the same period last year; nearly 90% of enterprises had decreases to varying degrees. Among them, the highest proportion of enterprises decreased by 10% to 30% compared with the same period last year, at 31.58%; secondly, decreased by 50% For the above enterprises, it is 26.32%. It can be seen from the statistical data that due to the impact of the epidemic at home and abroad, the profits of my country’s printing and dyeing enterprises have declined significantly this year.
According to data from the National Bureau of Statistics, from January to October, printing and dyeing enterprises above designated size achieved a total profit of 8.511 billion yuan, a year-on-year decrease of 23.27%; cost and expense profit margin was 4.62%, down 0.51 percentage points year-on-year; sales profit margin was 4.34%, down 0.47 percentage points year-on-year.
Hard to get off to a good start?
Domestic demand is expected to continue to pick up
In 2020, the epidemic will hit the textile market hard. Now, 2021 is coming, where will the printing and dyeing industry go?
In the eyes of some companies, the possibility of a “good start” next year is not high. Some small and medium-sized enterprises Textile companies will even face the crisis of production reduction and shutdown again.
Recently, the news that Zhejiang Province has implemented power and production restrictions due to environmental protection management has been in the circle of friends of textile practitioners. can be found everywhere. On December 15, Fujian Hongshan Thermal Power Co., Ltd. also issued the “Notice on the Time to Stop Gas Supply During the Spring Festival in 2021”, both of which will result in the inability to produce a large number of textile orders or delay in production and delivery.
“Judging from the order situation this year, customer stability has become worse. The company’s monthly shipment volume and It has also decreased compared with previous years. Now that power rationing has begun again, we cannot predict the situation in 2021.” A person in charge of a relevant company complained to reporters.
However, the production of enterprises in Zhejiang and Fujian is restricted, which also means that there is a strong willingness to transfer such orders . At present, many printing and dyeing factories in the Jiangsu market have begun to see significant growth in their orders. “The incoming warehouse volume of our factory was only about 500,000 meters per day on Monday this week, which was completely insufficient to absorb the 700,000 meters of production capacity. But starting from the past few days, the incoming warehouse volume suddenly increased rapidly, reaching 1 million meters per day. . This volume has only appeared this year when work was resumed at the beginning of the year and there was a large backlog of orders.” said a person in charge of a dyeing factory in the region.
Yang Jingyi, general manager of Suzhou Bianduo Textile Co., Ltd., said that recently, the order volume has improved compared with the end of last month, ” In early December, the company moved about 20,000 meters of goods per week, and now it moves about 40,000 meters.”
Regarding the market conditions in 2021, the heads of many textile companies expressed cautious optimism. “Now that many countries have announced vaccination plans, we hope that the market will be able to prosper.” “The general direction is generally good, but there will be a large gap in the performance of each company.” , polarization may intensify.”
The judgment from the China Printing and Dyeing Industry Association is that currently, the foreign epidemic is still continuing. With the spread of the epidemic and the superposition of unilateralism, trade protectionism and other factors, China’s printing and dyeing industry’s foreign trade market is still facing more uncertainties. The foreign trade pressure of the printing and dyeing industry is still difficult to be significantly relieved in a short period of time, and exports still need to return to pre-epidemic levels. longer time. However, it is worth noting that the effective prevention and control of the domestic epidemic has provided a strong guarantee for the industry to achieve sustained recovery. Domestic demand has further strengthened its support for the steady development of the industry. The overall capacity utilization level and order situation of the printing and dyeing industry are expected to continue to recover.
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