The textile market where flour is more expensive than bread is back! Polyester filament had a good start on the first day of April, with production and sales reaching about 160%. At the same time, the upstream aggregation cost PTA has risen strongly and continues to rise.
Polyester yarn rises driven by cost
First of all, at present, the main reason affecting the price of polyester yarn is the cost. The cost side experienced an overall rise on April 3 due to the impact of international oil prices. Saudi Arabia and other oil-producing countries have intensively stated that they will voluntarily carry out additional production cuts, which will continue until the end of this year, leading to a sharp rise in international oil prices. Crude oil-producing countries simply do not expand production capacity and firmly hold the price advantage in their own hands. Therefore, the collapse of crude oil prices in the short term is likely to be very small.
Under the continuous price increase on the cost side, the price increase of polyester yarn can only be said to be involuntary. We can see that although the production and sales of No. 3 have surged, even with the price rising, the profit of polyester yarn is still at a loss. According to the data monitoring of Silkdu.com, the profits of the three conventional polyester yarns are: 150D FDY -166 yuan/ton, 150D POY -241 yuan/ton, and 150D DTY 175 yuan/ton. From the profit comparison chart with the previous working day, we can see that the profit of polyester yarn has not been significantly improved after the price increase, but the loss of DTY specifications has expanded. Although the current losses are still able to bear the pressure on large manufacturers, there may not be enough room for further profit concessions.
Gray cloth prices fell but did not rise
However, looking at the downstream weaving industry, the increase in polyester yarn has not driven up the price of gray fabrics. On the contrary, many cloth owners are selling goods at reduced prices. In the circle of friends, you can see textile bosses announcing sales at reduced prices everywhere, and there seems to be a feeling that they will not stop until they sell out. During the survey, we also learned that although the current market situation is relatively stable, the vast majority of orders are sold by cloth bosses at reduced prices and profit. Once the discount is cancelled, it will affect the quantity of gray cloth sales. It can be seen that today’s weaving industry is on thin ice, and quantity is determined by price.
It is not easy to increase the price of gray fabrics. Price changes of raw materials are indeed an important indicator of whether weaving companies will raise prices, but more importantly, it depends on whether orders are sufficient and whether inventories are too high. As Mr. Wang, who specializes in women’s clothing fabrics, said: “It is difficult to increase. The international situation is not good. The industrial chain in Vietnam is developing rapidly. Coupled with political factors, orders are being placed there.”
First of all, as we all know, after weaving manufacturers purchase raw materials, because the production of gray cloth takes time, there is a delay in the price increase of polyester filaments being transmitted to the price of gray cloth. Assume that the raw materials for a piece of cloth were purchased at a time of high prices. If the price of raw materials for this piece of cloth drops during the weaving period, when production is completed, even if everyone knows that the price of raw materials was high before, the cost support has been lost. It will be more difficult if prices rise.
Secondly, gray fabrics are currently facing the problem of overcapacity. Without the support of raw material costs, it will be very difficult for prices to rise in this era of involution. Therefore, the slow rise in polyester prices may have a certain boosting effect on the industry as a whole.
Flour in the textile market is more expensive than bread. After the price increase of raw materials, it is still unknown how much money textile workers can make. Profits are constantly losing money. No one can bear this! Selling at a loss can be tolerated for a month or two, but no one can afford it if things continue like this!
In the absence of orders from textile companies, the factory can only be in a state of production inventory. After experiencing inventory backlogs and tight liquidity last year, most companies need to be more cautious this year. In the absence of a significant improvement in orders, we are still unwilling to accumulate too much funds on raw materials or fabrics. Buying on demand and using as needed is a common practice among weaving companies. Otherwise, it will just bear inventory and cost pressure for the polyester factory.
Cloth bosses are also worried about how they will receive orders if polyester raw materials continue to rise. In the editor’s opinion, the trend of PTA this month may follow the trend of crude oil and continue to reach high levels, and the current inventory of polyester factories has indeed eased and is within an affordable range, so in the short term, polyester prices will still rise. Therefore, prices can be adjusted appropriately for new orders.
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