On August 14, Suzhou Meteorology continued to issue high temperature red warnings. It is expected that the maximum temperature in streets (towns) in most areas of Suzhou will reach 40~41℃. This is the sixth high temperature red warning issued by Suzhou this year. Among them are The fifth high temperature red warning started on August 10.
It is the off-season for the textile market. What impact will the continuous high temperatures have on textile companies?
Hindered in accepting orders, loom operating rate hits record low
“The order situation is not good. Only half of the machines are needed for production, and the other half is for inventory. It has decreased by at least 30% year-on-year, and the market in August is weaker than in July.” Mr. Wang, the person in charge of a weaving company said.
What Mr. Wang encountered is a common microcosm of textile companies today. The COVID-19 epidemic is now in its third year this year, and the global economy has been hampered by the epidemic. After the Russo-Ukrainian War, the European region was affected by the energy crisis and the economy further declined. The exchange rates of the euro and the yen will fall by more than 20% in 2022, which has also significantly restricted the purchasing power of consumers in these originally major export markets for Chinese textiles.
However, although purchasing power has declined, with foreign supply chains affected by the new crown, the total domestic textile exports have declined instead of increasing. In July, textile and clothing exports were 224.12 billion yuan, an increase of 23.6%, and a month-on-month increase of 6.5%. Among them, textile exports were 91.64 billion yuan, an increase of 22.1%, and a month-on-month increase of 1.8%. Clothing exports were 132.48 billion yuan, an increase of 24.6%, month-on-month. Growth of 10%. However, many of the shares transferred from Europe and the United States have much higher requirements than traditional export products, so only a small number of leading companies can undertake them.
Looking only at the conventional products with the largest shipments, the involution among textile companies has become increasingly serious. Some textile companies have accumulated a large amount of inventory and have begun to reduce their operating rates as a last resort. At this time, the high temperature struck again.
Can you turn on the loom? This is a question
I remember when I was young, due to power shortages, there would be power outages for a few days every summer. However, with the development of domestic power infrastructure becoming more and more complete, and with the priority given to ensuring residents’ electricity consumption, power outages in residential areas have become very rare. Of course, summer is the peak time for electricity consumption, and as the country’s economic development requires more and more electricity, it will still have a certain impact on production of enterprises.
However, when inventories are too high and the operating rate of looms is already at the lowest level in five years, suspension of operations for a few days due to power shortages plays into the hands of textile companies to some extent.
Manager Wu, the sales manager of a lining production company, said: “Due to orderly use of electricity, the company’s factory in Zhejiang has been shut down for three days, but now the inventory in the warehouse has reached 10 million meters, and there are no urgent orders. The production needs to be paid, so it is acceptable to suspend production for a period of time.”
In addition to causing industrial power shortages, high temperature has a greater impact on enterprises on workers. High temperatures approaching or even exceeding 40 degrees Celsius are very unsuitable for workers’ normal work. Not only will it affect workers’ enthusiasm for production, but in more severe cases, it may affect workers’ health and even endanger their lives.
In addition, the original inventory of gray fabrics is relatively high, so a considerable number of weaving companies choose to go on holiday directly. Mr. Wang said: “There are still quite a lot of weaving companies on the market who are on holiday. Most of these weaving companies have relatively high inventory pressure and generally take at least a week off. Some companies with less inventory pressure will choose to rest during the day and start work at night. Such high temperature will cause The impact will be smaller.”
Of course, there are also some weaving companies that do not have such great inventory pressure and choose to insist on operating at full capacity.
Mr. Shi, who is mainly engaged in pongee production, said: “In the first half of this year, orders exported to Southeast Asia increased by more than 20%, so the inventory is very low. Although the temperature is very high now, we have installed water air conditioning in the workshop, which can To ensure a cool working environment for workers, the current operating rate is still 100%.”
Mr. Jin, the person in charge of another textile company that produces high-end pongee, even said: “Now the orders are almost received at the end of September, and the delivery time is too late. It is impossible to take a holiday.”
From what we have learned, since conventional products that account for the majority of production capacity in the market are clearly oversupplied, a relatively higher proportion of companies choose to take advantage of the high temperature to take holidays or reduce operations.
At this stage, the two-level differentiation of the textile industry is very serious. For textile companies that produce conventional products, market productsOvercapacity, severe involution, and generally high inventories reduce the operating rate and make it difficult to survive. High temperature is just another reason to reduce production capacity;
However, due to the impact of the global epidemic on the industrial chain, some high value-added orders have been transferred from overseas to domestic. Textile companies that can undertake these orders have shown that they are even busier than in previous years. Even the high temperature exceeding 40 degrees Celsius has prevented Can’t stop their production pace.
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