The jump from commodity to currency is a thrilling one. If it falls, then not only the commodity will be broken, but also the owner of the commodity
——Marx “Das Kapital”
Commodity is never produced, production can only make it become ” Product”, and if you want to make it truly a “commodity” and generate profits, the most important step is to sell it. However, due to the COVID-19 epidemic and some irrational operations in the first half of the year, this step has become increasingly difficult for some weaving companies and polyester factories.
Weaving Enterprise
Once: The price of polyester yarn was “really fragrant”, and weaving companies took the opportunity to “buy the bottom”
This year In the first half of the year, polyester filament prices fell sharply, almost reaching the lowest point in history.
The price of such a “fragrant” polyester yarn is just Some weaving companies have a mentality:
Buy more raw materials while they are cheap. You can always use them in the future anyway, and the fabrics produced are all relatively cheap. Normally, the epidemic will definitely be controlled in the future and the market will definitely improve. By then, the profits of fabrics made from cheap raw materials will become very high.
Therefore, until mid-June, even if there were no orders, the operating rate of weaving companies was not low, with an average operating rate of more than 70%.
Moreover, not only weaving companies think so, but traders also think so. The editor has heard more than once that traders took the opportunity to stock up on gray fabrics in the first half of the year. , news of hoarding raw materials, some people even judged that the price is now the lowest in history and directly “studied the bottom”.
Now: Cash flow is tight, warehouses Too much to pile up
To a certain extent, this idea is not wrong. Buying low and selling high is the essence of doing business, but Accounts are often not calculated this way.
The situation in the first half of the year is like the editor’s usual shopping on Taobao and Pinduoduo when he sees some things on sale, thinking that he can always use them in the future, so he just whims. I placed an order and bought it, but after I got it home, I left it at home to gather dust. I don’t know that it would have to wait until the Year of the Monkey to make it really useful.
Although the gray fabrics produced by weaving enterprises have a wider range of applications, in the short term, they can still only be piled in warehouses as inventory, resulting in gray fabric inventory more and more. When the funds are occupied to a certain extent or the warehouse cannot be piled up, there are only two options left for weaving companies – to stop production or “dispose of goods”.
Polyester Enterprise
Once upon a time: Profits rebounded, inventories fell, and it was time to expand production
In the first half of 2020, due to the huge fluctuations in international oil prices, the profits of polyester filament experienced twists and turns. Since weaving companies were recovering production capacity before April, At this stage, production and sales have basically remained at 20-40%. After April, as international oil prices rebounded and polyester prices rose, polyester profits began to rise again, returning to a pretty good situation.
As mentioned above, because it is almost the lowest in history As for the price of raw materials, some weaving companies and traders have chosen to buy a lot of bargains. Judging from the inventory map of polyester yarn in polyester factories, the time should appear in the period between the end of March and the beginning of April.
Downstream purchases large quantities of raw materials and polyester filaments in a short period of time Rising profits have given polyester manufacturers the urge to continue to release production capacity. It just so happens that 2020 is the time for another major expansion of polyester production capacity.
In the first half of 2020, the total new domestic polyester production capacity was 2.93 million tons, of which 1.2 million tons of new polyester filament production were put into operation, accounting for 1.2 million tons of new polyester filament production capacity. The total production volume is 41%.
New polyester production capacity has been put into production one after another. This can be regarded as an effort by leading polyester companies to increase market share, but the polyester startup rate is somewhat unreasonable.
Now: Inventories continue to rise and promotions are useless
�It can be seen that from March to now, the operating rate of polyester factories has shown an upward trend. This seems to be explained by “being happy when seeing profits”.
And this eventually led to the polyester factory polyester Silk inventory has once again skyrocketed. According to statistics from China Silk Capital Network, the overall inventory in the polyester market is now concentrated at 27-37 days. In terms of specific products, POY inventory is at 8-14 days, and FDY inventory is at 19-26 days. Nearby, while DTY inventory is around 27-38 days.
The polyester factory saw that the inventory was high again and chose to promote it. However, this time the weaving company showed an “indifferent” attitude towards this.
Weaving production has been reduced, polyester Can it be far away?
The polyester filament on sale is no longer fragrant, and the reason is very simple: inventory is increasing, but demand shows little sign of improvement. Many weaving companies could not withstand the dual pressure of inventory and capital and began to reduce production. At present, the operating rate of water-jet looms in Jiangsu and Zhejiang markets has dropped to about 60%.
Weaving enterprises operate less machines and have no extra funds. Naturally, they have no desire to buy silk. At this time, polyester production and sales cannot increase. It’s normal. But when the promotional routine is useless, will the next step for polyester manufacturers be to reduce production? let us wait and see.
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