In the first few weeks after the beginning of this year, the circle of friends of textile people are basically flooded with various news of price increases:
One day it is a polyester factory, one day The price was raised three times; one time it was the price quoted for gray fabrics in the morning, and updated in the afternoon; the other time there were all kinds of jingles about price increases…
In short, the polyester factory sells silk. I am very happy, and the weaving companies are also very happy selling cloth, but this situation obviously cannot continue forever.
Upstream crude oil prices cannot keep rising. This week, after international oil prices reached a high of 70 US dollars, they finally lost the motivation to continue rising and began to fluctuate back. Crude oil prices continued to rise. After rising, the prices of polyester raw materials such as PTA and ethylene glycol could no longer sustain and began to retreat rapidly.
On March 10, PTA futures fell to the limit, and ethylene glycol futures fell sharply;
On March 11, PTA and ethylene glycol futures prices Falling again…
The spot price has also dropped significantly. In just 3 days, PTA fell by more than 300 yuan/ton, and ethylene glycol fell by more than 700 yuan/ton.
Compared with upstream raw materials, the price of polyester filament is relatively firm and has not dropped significantly. However, weaving companies obviously no longer buy it, and production and sales continue to be sluggish.
There is a saying in the market that “only when the tide goes out will you know who is swimming naked”, and the price of raw materials has increased. At that time, everyone was complaining and “buy, buy, buy”. Once the price stopped rising, the market would no longer be as hot as before.
Mr. Jin, the person in charge of a weaving company: “Our company mainly produces conventional gray fabrics such as polyester taffeta and pongee. Before the Chinese New Year, we stocked nearly two Months of gray fabrics. As a result, the price of raw materials increased after the Chinese New Year, and some old customers almost sold them out. It is understood that they did not receive orders. Many times the fabrics were bought directly to the dyeing factory without any production. Just hoard it.”
Mr. Jin’s experience is not unique. The beginning of the Chinese New Year is not the normal peak season for gray fabric sales. In previous years, the market was only hot because some of the orders accumulated before the year were to be sold in the market. Deliveries will be made after the year, but this year’s situation has changed due to the rise in raw materials. There is no problem for traders to stock up in advance to avoid risks, but this will lay some “pits” for the subsequent market…
First of all, in terms of total volume
The cloth on the market has only been transferred from the hands of weaving companies to the hands of traders, but it has not continued to move downstream. Traders There is no shortage of cloth in hand now, and it is unlikely that we will place new regular product orders for weaving companies in a short period of time.
Secondly, in terms of price
After the sharp increase in raw material prices, the same gray cloth in the hands of traders is higher than that newly produced by future weaving enterprises. It needs to be lower, especially for some conventional products with high sales volume, which everyone can make. Price is one of the most important factors that determine competition, and its own profit is also very thin. The competition between “old cloth” and “new cloth” will became very unequal.
Third, in terms of funds
Traders who purchase gray fabrics in large quantities often have a longer debt period because of their “big family and big business”. The sales of this part of gray fabric are blocked, and payment may also be delayed.
Finally, in terms of demand
Recently there has been a lot of “side news” in the world about vaccine circulation and vaccine effectiveness. There are also reports about mutated viruses. There has been news that Hans Kluge, an official at the WHO European Office, predicted that the new coronavirus may end in early 2022, which is several months later than originally predicted. At present, there are no concentrated overseas orders in the market, so it is difficult to say what the final performance of terminal demand will be in 2021.
Postscript
After the price of raw materials no longer rises, Traders have also stopped large-scale purchases. At this stage, gray fabric inventories are concentrated in the hands of traders, and the cost of these gray fabrics is generally lower than the price of new gray fabrics produced by weaving companies in the future. With the performance of terminal demand in doubt, this part of gray fabric inventory may become the biggest “pit” for textile people in 2021. </p
