The impact of the epidemic and other adverse factors on the textile industry is intensifying. Recently, Jiangsu Sanfangxiang Industrial Co., Ltd., one of the top 500 Chinese enterprises – a local cotton spinning, printing and dyeing backbone enterprise under the Sanfangxiang Group – announced on August 17 that it would suspend production in the compact spinning production workshop. Once the news was announced, One stone stirs up a thousand waves.
The chemical fiber leader cannot hold on: if the compact spinning production workshop continues to produce, losses will further expand
Sanfangxiang stated in the announcement that due to the continued sluggish demand for domestic and foreign textile consumer goods markets, the textile industry has been greatly impacted. Some upstream and downstream manufacturers have insufficient operating rates. At the same time, textile exports continue to decline. The company’s spinning products are manufactured by downstream customers. After being made into gray cloth, it is mainly exported directly or indirectly. Downstream orders are difficult to support the normal production of the factory, and the company’s spinning business has been greatly affected. At the same time, the compact spinning production workshop was built early and the production scale is small. After many years of operation, the energy consumption of the equipment is relatively high and the competitiveness is not strong. Affected by the above factors, the production and operation of the compact spinning production workshop have been greatly affected this year, and the income of the spinning business has dropped significantly, resulting in losses. As of the end of June 2020, the net book value of the compact spinning production workshop equipment was 17.6973 million yuan. From January to June 2020, the cotton yarn sales volume of the compact spinning workshop was 1050.22 tons, a year-on-year decrease of 38.63%. The sales revenue was 25.1683 million yuan, a year-on-year decrease of 42.77%, and the gross profit was -2.9886 million yuan. Yuan, a year-on-year decrease of 153.90%.
“If the compact spinning production workshop continues production, the losses will further expand.” Sanfangxiang said that taking into account the market environment and the company’s operating costs, the company expects the compact spinning production workshop to be short. It will be difficult to resume normal production and turn around losses within a short period of time. In order to avoid further losses, the company decided to suspend production in the compact spinning production workshop. The company emphasized that the suspension of production will reduce the company’s operating income. At present, the workshop’s revenue is small, and the suspension of production will not have an adverse impact on the company’s normal production and operation activities and continued operating capabilities.
It is difficult to revive demand under the weak market recovery, and companies are tightening their grip
Recently, it has been reported that domestic and foreign sales orders have been placed in small batches in both Jiangsu and Zhejiang clusters. However, the market has begun to release signs of recovery. Orders have improved, dyeing factories are busy, and products such as T400, T800, polyester and cotton are selling well, but after all, there are limited orders. Not all manufacturers can be satisfied, so the manufacturers that have received orders are firing on all cylinders. Some, and most, manufacturers say that recent orders are still not good, and there is no sign of improvement. The largest products in the textile market are always the conventional and ubiquitous fabric varieties, such as polyester taffeta, pongee, imitation silk, etc. Due to the shrinkage of overall foreign trade orders in the textile market this year, the supply of these fabrics exceeds demand. Many manufacturers can only compete for these limited orders, and the actual quantity in the hands of each textile person is also very limited.
As foreign trade orders in coastal areas such as Guangdong, Jiangsu and Zhejiang have picked up compared with May and June, the consumer demand for high-end yarn has shown a slight and phased increase. The digestion and acceptance capacity of high-grade lint cotton such as 29″ has been significantly improved compared with May and June, but the lack of large orders, long-term orders, and high value-added orders worries textile companies.
Under the double blow of price reduction and payment delay, the profits of weaving and trading fell sharply. Many weaving companies’ gray fabric sales profits are only a few cents per meter, and many even ship at breakeven or at a loss. It is common for profits to fall by 50% year-on-year.
The suspension of production in the leading chemical fiber workshop may be the last straw that triggers the start of a wave of textile companies suspending production and taking holidays
At present, cotton yarn products continue to downgrade. A large textile company in Ningbo said that except for some profits from special yarns, organic cotton yarns and new fiber yarns, almost all combed yarns of 50S and above and high-end carded yarns are at a loss. Therefore, the factory has experienced high counts since July. Spinners only accept “customized spinning” orders to reduce the risk of high-count yarns tying up funds and making it difficult to collect payments. Under the pressure of the current epidemic, both large-scale enterprises and small and medium-sized enterprises have chosen to hold on in the early stage. But today, the leading chemical fiber company has exposed the current status of the industry to the public because its listed companies must publish corporate news. , may become the last straw that triggers the start of a wave of production shutdowns and holidays for textile companies in the later period.
It is understood that the phenomenon of small yarn mills and cloth mills in major textile provinces such as Shandong, Hebei, Henan, and Hubei reducing production due to lack of additional orders due to high temperatures has become increasingly prominent. However, in sharp contrast to the withdrawal of small factories, large factories are expanding and quickly occupying the customers and markets that small factories have given up.
This year’s textile market has been in a “slow peak season and very weak off-season”. The production load of the weaving manufacturers itself is higher than last year. During the same period, it decreased by 10% to 20%, but this did not reduce the gray fabric inventory of gray fabric manufacturers. On the contrary, during the off-season of June and July, manufacturers have been in the stage of overstocking. Therefore, when the high temperature is approaching, many manufacturers provide workers with additional inventory based on the actual situation. Take a vacation or take a rotational vacation. In the current textile market, not only prices are not rising, but inventory pressure has not been alleviated either. The increased volume of autumn and winter fabrics is nothing more than a drop in the bucket, and the inventory of weaving companies is as big as…Still unmoved. According to data monitoring, the inventory of water-jet and air-jet gray fabrics in Jiangsu and Zhejiang is still around 45 days old.
Many cloth bosses who produce conventional products said that so far, sales have dropped by more than half year-on-year. It is normal to have inventory for more than 2 months. And as time goes by, there is still a risk that inventory will continue to rise, which also means that inventory is difficult to liquidate and takes up a lot of funds. Once the funds are broken, it will easily be lost in the upcoming peak season.
The dividends of textile and apparel development are no longer there, and there are also uncertainties in the second half of the year
From the future In terms of changing trends, the export demand of the upstream textile manufacturing industry is subject to the uncertainty of foreign epidemic prevention and control. Since the second quarter, the impact of the fermentation of foreign epidemics has been greater than that of the first quarter. The expected performance pressure is still not optimistic, and there is also uncertainty in the second half of the year.
Industry insiders said that the upstream textile manufacturing industry has been affected by domestic and overseas epidemics. Currently, foreign epidemics continue to spread and external demand remains uncertain, so caution is needed for the time being. In the medium to long term, as the international competitiveness of the textile industry gradually weakens and production capacity is transferred outwards, leading companies with strong bargaining power and global layout will have a growth rate that is better than that of the industry and a stronger ability to resist risks.
For the textile and clothing industry, the industry development dividends brought by the previous domestic clothing consumption branding trend and export boom are no longer, and the industry has become more mature and faster. Slowing down, competition intensifies. At the same time, the industry has gradually differentiated, and development opportunities have emerged in some subdivided areas. Generally speaking, enterprises in the downstream brand apparel industry and upstream textile manufacturing industry need to improve their operating efficiency and comprehensive competitiveness in order to face a more severe industry environment and competition.
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