We are all witnessing history these days. First, the May contract of U.S. WTI crude oil futures fell 300% in the early morning of the 21st, with the settlement price closing at -$37.63/barrel. Then on the evening of the 21st, the WTI crude oil futures June contract fell nearly 70%, falling below $6.6 per barrel, hitting a record low in the session.
The successive plummets in crude oil futures, especially the sharp plunge in the June contract, illustrate that the market is extremely lacking in confidence in the immediate and future period. Although oil prices rebounded on the 22nd and 23rd, they are still at historically low levels. Of course, the plunge in crude oil is largely due to the sharp shrinkage in demand caused by the COVID-19 epidemic, which also includes the chemical fiber raw materials we need for textiles. Therefore, this lack of confidence is also spreading to our textile industry. The unprecedented off-season market seems to give no one hope.
Lack of confidence and dare not take orders if they have them
The biggest problem leading to the current textile dilemma is the lack of orders, but it is impossible to have no orders at all. , but there are still situations in the market where customers are afraid to accept orders due to lack of confidence in customers.
According to a foreign trader, their customer is an Indian company. There is never a shortage of orders, and the quantity is very large every time. However, there are also many suppliers, and they want to “occupy a share” of this company. There is a lot of competition for a place. In the past, they had to rush to fill orders, but recently they did not dare to accept orders from this customer because they were worried that it would be difficult to get payment.
India is still in a state of lockdown, and all previous fabric orders have not been processed and produced in time for sale to Europe and the United States. Unable to convert fabrics into cash, customers naturally lack liquidity and cannot pay upstream textile companies on time. Normally, as long as India lifts the blockade and starts to resume work, funds will definitely flow back gradually, and this company has never had a precedent of withholding payment from suppliers before, so all traders can relax.
But now they have no plans to take any orders from this customer until the epidemic shows no signs of improvement and the previous payment has not been returned. There are many suppliers with similar ideas to them, so now there are some orders from customers that no one is willing to take. The lack of confidence makes traders no longer trust the old customers who used to “covet” them.
Don’t seek breakthroughs and profits, but seek stability and not lose
One of the most important manifestations of lack of confidence in the textile market is that many textile companies now dare not seek breakthroughs and solve the current difficulties, but seek stability. Not willing to seek more benefits, but to avoid greater losses!
Recently, some conventional fabrics on the market have become loose, and some dyeing factories have become busier than before. Among them, products such as 190T pongee and polyester taffeta have been in great demand recently, but some companies are unwilling to join in the fun.
According to the person in charge of a weaving company, their factory We are currently producing pongee, but the specifications are all above 300T, and there are no low-density pongee such as 190T or 210T. Although these low-density products are selling like hotcakes recently, they have no plans to adjust their machinery and equipment to follow suit.
Because he feels that the market situation is not good, it is abnormal for these products to be popular and they will not last long. Even if they turn around and produce these products, the gust of wind in the market may have passed, and expanding new types of customers will also require a process, and in the end it is likely to be the result of accumulated inventory. Rather than doing this, it’s better to just sit back and make products that you are familiar with.
In fact, there are many companies like them. Refusing to try, fearing that they will fall into a more passive situation is also a reasonable way for textile people to stop losses. It’s just that everyone is content with the status quo and concentrates on producing the familiar and conventional market varieties, which will inevitably lead to a substantial increase in the inventory of related products. Even if the market fully recovers, the oversupply of fabrics will continue, and low-price competition will follow.
The lack of confidence in the present and future of the textile market has caused most textile people to be more conservative. Even if there are orders, they are not willing to take them, and if there are profits, they are not willing to fight for them. Only when the overseas epidemic reaches an inflection point and the resumption of work and production is fully launched, can market confidence gradually recover and burst out with vitality again. </p
