Foreign trade orders decrease, textile enterprises’ operating rate decreases

On July 17, the reporter continued his trip to Shandong to investigate the production and operation of downstream textile enterprises. On this day, domestic cotton prices continued to fall sharply as expected, and the textile industry continued to be under pressure. Since the implementation of the U.S. policy banning Xinjiang cotton, the pressure on foreign tradeexport companies has become even greater. Big, what is the actual situation?

Today I came to a company that specializes in foreign trade exports. It has a large scale and excellent product quality. It mainly sells bedding. I remember I visited once a few years ago. At that time, the workshop was busy with production. When it was time to eat, I saw many employees rushing to the cafeteria in the park. It was common for companies to work overtime on weekends. It cannot be said that the profits of the products were high, but production never stopped.

This time the scene is a bit desolate. The park is less noisy with machines and more quiet. In the past two weeks, the cotton circle of friends has been discussing the topic of the United States reducing tariffs. However, after on-site visits, it was found that the impact of tariff reduction on enterprises is not as positive as everyone imagined. The director of the purchasing department of this company said that the normal tariff imposed by the United States on Chinese exports was 9.6%, and later it was increased by 7.5%. Even if the 7.5% was canceled, it would still be higher than the tariff on U.S. goods exported by Vietnam and other countries. If the tariff is cancelled, The positive impact has been limited.

It is understood that 70% of the company’s products are used for export and 30% are used for domestic sales. Among them, the production line operation rate of export products has dropped to about 90%, and the production line for domestic sales has dropped to 70%. The domestic sales situation Worse than exports. The reason why all production lines have not been opened is that after the cotton price fell, downstream orders decreased significantly, long-term and large foreign trade orders gradually disappeared, and customers placed more orders for short-term and small orders. The entire industry is currently in a state of panic, even more so than during the 2008 financial crisis. Due to the formal implementation of the Xinjiang cotton ban in the United States, companies no longer dare to use Xinjiang. Some of the previously effective countermeasures are no longer taken by companies, because once discovered, the products will be destroyed. This is a domestic export Common problems faced by large enterprises.

This company now uses all foreign cotton to produce foreign trade products. The current price of foreign cotton is 2,000 yuan/ton higher than that of Xinjiang cotton. The use of foreign cotton means a significant increase in the company’s production costs. Coupled with the additional tariffs imposed on product exports, ultimately After settlement, the price of one ton of products was significantly higher than the price in countries such as India and Vietnam. The competitiveness was weakened and orders were reduced accordingly.

Nowadays, cotton prices at home and abroad have fallen sharply. According to the price comparison between cotton and yarn, the product seems to be profitable, but the actual situation is not like this. According to the company, cotton prices have fallen very quickly this time. The average cost of cotton inventory of many companies is around 20,000 yuan/ton. Although the company has made a profit if settled according to the real-time price, but including the inventory cost, the company still has a profit. Loss, it will take about two months to digest this wave of inventory, and the obvious lack of orders has further troubled the company. Now it can only reduce production capacity and reduce inventory. Regarding the strategy of converting exports to domestic sales, companies believe that it is currently unrealistic because domestic consumption cannot accommodate such large production capacity. What enterprises can do now is to reduce inventory and production costs, continue to compress various expenses, and wait for the day when the rain passes and the weather clears up.

Despite this, there is no need to worry too much, the company’s resilience is still there. For companies with low raw material inventories, the problem is not big in the short term, because the high profits in the past two years have accumulated a lot of funds for the company. For companies with excessive inventories of raw materials and products, the pressure is relatively greater.

AAA

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