Since last Thursday, as oil-producing countries restarted negotiations on production cuts, international oil prices have rebounded sharply, and the prices of polyester products have also started to rise from the bottom. rebound. Recently, there has been news of production reduction negotiations among various oil-producing countries, and raw material prices have begun to fluctuate. Under such circumstances, whether weaving companies should buy raw materials and whether to bargain hunting has become a very tangled issue.
Similarly, in this wave of market conditions, polyester factories are also entangled. Under huge pressure, what kind of business strategy should be formulated? It is also a process worth pondering.
Inventory, Weaving and Polyester Forever The pain
In 2019, both weaving companies and polyester factories are having a hard time. Sino-US trade friction and the transfer of water-jet looms The resulting overcapacity has caused the entire weaving market to be flooded with a large number of gray fabrics for conventional products. The fabrics produced by weaving companies cannot be sold, and their enthusiasm for production has been reduced. This in turn has affected polyester factories, and ultimately led to the conflict between polyester factories and weaving companies. Inventories all rose.
After the beginning of 2020, due to the impact of the new crown epidemic, the start of work of weaving companies was delayed. Polyester factories first accumulated a large amount of inventory. When weaving companies gradually resumed work, foreign The epidemic has begun to break out again, and weaving companies have re-entered the inventory accumulation cycle.
Look specifically;
In terms of polyester factory inventory, statistics from China Silk Capital Network According to the data, the overall inventory of the polyester market is now concentrated at 32-43 days; in terms of specific products, POY inventory is around 26-33 days, FDY inventory is around 27-34 days, and DTY inventory is around 32-43 days .
In terms of gray fabric inventory, the current gray fabric weaving in Shengze area The inventory is about 41-42 days old. Market orders have not improved and there will still be an upward trend in the future.
Inventory issues, in the final analysis, are still demand Problem
The inventory problem of polyester factories and weaving companies is ultimately a problem of end demand.
According to real-time statistics from Johns Hopkins University in the United States, as of 5:47 on April 9, Beijing time, the cumulative number of confirmed cases of new coronary pneumonia worldwide The number of cases exceeded 1.5 million, reaching 1,504,971, and the cumulative number of deaths reached 87,894. The United States has the largest number of confirmed cases of COVID-19 in the world, with more than 420,000 cases, reaching 424,945, and 14,529 deaths.
In 2019, my country’s textile and apparel exports amounted to US$271.5 billion. When the foreign trade market is hindered by the epidemic, the textile industry will inevitably encounter a worse situation than in 2019. Serious overcapacity problem.
The psychology of weaving and polyester companies
The relationship between polyester factories and weaving companies is actually not harmonious. What impressed me most was the third quarter of 2018, because PX, PTA and polyester filament prices surged across the board, with PTA prices even quoted as high as 10,000 yuan/ton when the spot price was at its highest. This kind of price increase is also unbearable for weaving companies. They may have just received a new order. As soon as the price of raw materials increases, the order changes from making money to losing money. Therefore, many weaving clusters have issued joint production suspension initiatives. books to resist such a drastic price increase.
But in fact, polyester factories and weaving companies are in a relationship where both prosper and lose. After the market market in 2018, the weaving industry was greatly overdrawn. The vitality of enterprises is also one of the reasons for the “cold winter” of the textile industry in 2019.
In the “cold winter”, not only weaving companies are having difficulty operating, but also when weaving companies are forced to reduce their loads and purchase raw materials due to inventory pressure, Polyester raw materials also quickly fell into a cycle of price reduction and inventory accumulation.
Returning to the current market situation, affected by the foreign epidemic, weaving companies cannot receive enough orders, and the inventory of gray fabrics has increased instead of decreasing. The future is very promising. The operating rate of looms may continue to be reduced, but in the face of rising prices of raw materials, they are trapped in the dilemma of buying raw materials and not buying raw materials; polyester factories are affected by huge inventories. On the one hand, they want to reduce inventories, but on the other hand, they also Want to take advantage of the opportunity to increase prices and obtain higher profits.
From their respective perspectives, these ideas are understandable, but from a higher level perspective, weaving companies and polyester factories are actually ” A grasshopper on a string.”
Now that there are insufficient orders in the market, the survival of weaving companies is already very difficult. If the liquidity is suddenly drained by raw materials at this time, the future may only be production reduction or even suspension of production, whileAlthough the polyester factory can take advantage of this wave of market conditions to remove part of the inventory, the part removed now can only be a drop in the bucket in the face of the huge amount of inventory accumulated in the early stage. How to maintain a “long flow of water” is the real focus, but now, weaving companies and Polyester factories are caught in an atypical prisoner’s dilemma.
Prisoner’s Dilemma:
Two people who conspired to commit a crime were imprisoned and could not communicate with each other. If neither person exposes the other, each person will go to jail for one year because the evidence is uncertain; if one person exposes the other and the other remains silent, the one who exposes will be released immediately for meritorious service, and the one who remains silent will go to jail for ten years for not cooperating; If they expose each other, both of them will be sentenced to eight years in prison because of the solid evidence. Since prisoners cannot trust each other, they tend to expose each other rather than remain silent together.
The current situation is that weaving companies and poly The ester factory has always chosen a method that is beneficial to itself, and finally achieved a result that is relatively beneficial to both parties. Although this result is not good, it is not the worst.
But the current environment has changed. In the storm caused by the global epidemic, this “fighting on their own” model may no longer be able to make some companies To survive well, it’s time to consider another way…
There are many similar examples in nature: the toothpick bird picks teeth for the crocodile, the crocodile Protect it; woodpeckers catch pests on the big trees, and the big trees provide them with habitat…
According to Darwinism, this mutually beneficial relationship does not It’s not innate, but because races that don’t do this may not survive a certain crisis and disappear in the long river of history. For today’s textile industry chain, it is also suffering from a crisis related to life and death, which requires the upstream and downstream of the industry chain to work together to deal with it.
Today’s epidemic is a crisis, but it is also an opportunity ! If polyester factories and weaving companies can establish a buying and selling model that is beneficial to both parties during the development of the epidemic, then when the epidemic passes, this mutually beneficial and symbiotic model will definitely play a very good role in the recovery and development of both parties. enhancement.
The above is the editor’s opinion, but I also sincerely hope that the upstream and downstream of the industry chain can work together to overcome today’s difficulties!
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