After the National Day, the prices of raw materials such as cotton and cotton yarn rose rapidly due to factors such as the return of orders and the recovery of downstream demand. Recently, after experiencing a sharp rise, the yarn market has begun to “dissipate” and return to rationality. At present, the wait-and-see sentiment in the textile market is rising, and both textile mills and traders are basically cautious.
So, with orders shifting domestically and yarn prices rising, how is the current operating situation of yarn companies in various places?
01 The rise in cotton prices brings good opportunities for destocking
The reporter learned that before the National Day, most cotton spinning mills had relatively high stocks of cotton yarn. The minimum is more than one month, and the maximum is more than two months of production. High cotton yarn inventories have put great pressure on corporate capital turnover, but the skyrocketing prices of cotton and cotton yarn futures after the long holiday have given cotton textile companies a good opportunity to destock.
It is understood that although some companies have not achieved much profit, most companies have achieved the purpose of destocking and withdrawing funds. At present, whether it is a large factory or a small factory, whether it is pure cotton yarn or polyester-cotton yarn, product inventory is generally low, and some factories even reach zero inventory.
A cotton spinning mill in Anhui Province is in good operating condition. Its products are not worried about sales and there is no product inventory pressure. However, due to the uncertainty of cotton prices in the later period, local companies are cautious in signing orders. They must comprehensively consider factors such as actual lint cotton inventory, cotton purchase costs, and profit targets to choose orders that are sure to be profitable.
Most of the cotton textile companies producing pure cotton yarn in Henan currently have no or low inventory of yarn, with firm prices and full orders, mainly domestic demand. The person in charge of some companies said that it is profitable to accept current orders based on the price of cotton in stock in the early stage, and the price of new orders will be adjusted based on the current cotton price. It is expected that if there are no major market fluctuations, the production situation before the Spring Festival will be optimistic, the increase in new orders will slow down, and the cotton mills will not make price concessions for the time being. If cotton prices fluctuate greatly, profits will be affected in the future.
A company in Shandong that specializes in differentiated yarn said that the price of its main products has recently increased by 2,000 yuan per ton, and orders have been scheduled until the end of the year. The inventory has decreased compared with the first half of the year, and the operating rate has reached 100%. In order to open up the domestic market, companies have adjusted product prices, resulting in lower profits. It is predicted that due to the cold winter, orders in the downstream thermal insulation market may increase.
02 Short-term orders are sufficient, but the future market is unclear
Driven by the return of orders and the “Double Eleven” shopping carnival, the order situation of yarn companies It has improved significantly compared with the previous few months, which has also been confirmed by spinning companies in various places. However, regarding the future market conditions, most spinning companies said that there is still great uncertainty.
A company in Jiangsu that specializes in vortex spinning yarn said that the yarn market was good from September to October. It is expected that orders will begin to decrease after the “Double Eleven” and the market will weaken. Recently, the prices of viscose and polyester have increased significantly, and the prices of yarns have also increased accordingly, which is generally accepted by downstream customers. At present, the overall operating rate of downstream enterprises is relatively high. But we are not optimistic about the future market.
Orders for a textile company in Jiangsu that specializes in high-count yarns began to gradually recover in late July, with operations at full capacity, reaching a high level by mid-October, with tight delivery times. Regarding the increase in yarn prices some time ago, companies believe that cotton prices have returned to normal, yarn prices have also returned to normal prices, and profit levels have rebounded, but not as much as the same period in previous years. Currently, the downstream market is relatively optimistic. However, due to the uncontrollable epidemic situation abroad, companies are worried that it will affect the supply of imported raw materials and the continuity of foreign high-count yarn orders, and companies are unclear about the later market forecast.
The market price of viscose yarn in Peixian County has stabilized in the recent stage after rising for a period of time in the early stage. At present, corporate orders are relatively sufficient, inventory is small, and the operating rate is close to 100%. Most local spinning companies have turned losses into profits, and downstream companies are actively purchasing. Spinning enterprises said that prices are expected to stabilize over a period of time in the future. After several years of downturn, the price of core-spun yarn suddenly surged this year, which also indirectly caused the shortage of viscose yarn in the market.
Currently, a certain colored spinning enterprise in Jiangsu has good orders, mainly domestic orders, with an operating rate of 100%. According to reports, orders can be extended until the end of this year. The product price has increased by more than 2,000 yuan/ton, and there is no inventory, but the product has low or even no profit. For the later market, companies believe that it is difficult to predict and there are many uncertain factors. It is expected that orders and product prices will decline in the later period.
Xinjiang pure cotton yarn manufacturers currently have sufficient orders and relatively high gross profit margins. Some varieties are in short supply. They remain profitable and product inventories have dropped significantly. Enterprises expect that the overall market will stabilize and improve before the Spring Festival, and product inventories will remain at a low level. If the epidemic does not rebound, the situation in the fourth quarter will be significantly better than the third quarter. At present, cotton prices in Xinjiang are at a relatively high price, with a further downward trend, and uncertainty is high.
A cotton yarn company in Hubei currently has orders scheduled for a month later, and its operating rate is 90%. The person in charge of the company said that originally it was the company looking for orders, but now it is customers rushing to place orders. However, this situation only lasted for 20 days after the National Day, and now the order placing speed has slowed down significantly. Due to financial pressure before the National Day, corporate raw materialsThe inventory is small, and there is no profit in purchasing raw materials at current prices, just maintaining the operating rate. It is expected that the market will pick up around the Spring Festival, and the gross profit margin may be better than now.
03 Downstream price transmission is not smooth, and the market may become sluggish in the future
For fabric companies, there is no doubt that the price of cotton, yarn and other upstream raw materials will rise. The production cost has increased, but the fabric price has not increased with the increase in raw material prices.
According to a denim manufacturer in Guangdong, its price has been raised by 0.5 yuan/meter to 1 yuan/meter. The current order is maintained for one month, and the yarn and product inventory has one month’s turnover. The start-up rate above 95. The market is recovering, business confidence has increased, and profits have increased slightly compared with March and April.
However, companies are cautious about market recovery. First, the epidemic situation in Europe and the United States is still severe; second, the problem of not being able to supply certain brands using Xinjiang cotton; third, the domestic market needs to be cultivated. It is expected that the prices of raw materials and products will decrease steadily before the Spring Festival, orders and inventories will maintain the status quo, and the clothing market will tend to be moderate.
The price of yarn-dyed fabrics in Jiangsu has basically remained stable, with some increases. Local textile companies said that orders from Europe and the United States have not improved due to the epidemic, while orders from Southeast Asia, Japan, South Korea and domestic markets have increased significantly. Before and after the National Day, the company’s operating rate increased, profits fell by about 20% compared with the same period last year, and orders were queued until the end of November. Since most spinning companies arrange production according to orders, there is less inventory. There are currently many uncertainties, customers are cautious in placing orders, and subsequent orders are relatively weak.
Lanxi fabric companies said that yarn prices are rising and fabric price increases are not being transmitted smoothly. At present, the inventory has begun to increase to about one month’s production, and the machine is at full capacity. If there is no yarn prepared in the early stage, profits may not rise but fall in the past month, and the downstream consumption of fabrics is not as good as external publicity. Domestic “Double Eleven” and foreign holiday stockings are coming to an end, and the end of the year is the off-season. It is not expected to be too optimistic, and the market may not restart until after January next year.
According to the person in charge of the main knitted fabric enterprise in Guangdong, there was a short-term market situation after the National Day. The supply of yarn exceeded the demand. Affected by factors such as the rebound of the epidemic, production and sales weakened, inquiries decreased, and profits fell. Downstream distribution shipments have slowed down, inventory levels have begun to rise, and prices have stabilized. Although some factories have strong quotations, actual transaction volumes are scarce. It is predicted that with the correction of Zheng cotton futures, the market will tend to rational purchasing, and some weaving factories will mainly adopt a wait-and-see attitude.
Sure enough, the rise in raw material prices before and after the National Day can be said to come and go quickly. From mid-to-late October to the present, half a month ago, cotton yarn futures prices fell all the way from 22,260 points to 20,630 points, falling to 1,630 points. points, a decrease of 7.32%. The sharp drop in futures prices has had a serious impact on spot sales of cotton yarn. Not to mention the drop in spot sales prices, sales slowed down significantly, goods were not shipped smoothly, cotton yarn began to accumulate in inventory, and textile enterprises’ inventory turning point appeared.
As of November 5, China’s yarn inventory index has closed for 12 days. The overall cotton yarn inventory of textile enterprises is still not high, and there is no operating pressure for the time being. However, inventory is an important factor affecting the mentality of textile enterprises. The quotations of textile enterprises in various regions currently vary greatly. One of the factors causing this phenomenon is that some textile enterprises currently have low inventory and are unwilling to sell at lower prices. However, most textile companies are still producing pre-orders, and many are still producing at full capacity. As for the later stage, although there are some orders, the downstream is also very demanding on price.
Some heads of textile companies have revealed that the crazy market in October may pay a heavy price after the “Double Eleven”. That is to say, the sales of winter clothing are not good, and clothing customers are difficult to pay the balance, and the arrears are extended or the clothing is in debt.
Other industry insiders have analyzed that most of the products currently on the market are “market orders”. The characteristic of market products is that they do not last long, and not all manufacturers can receive hundreds of thousands of meters. , large orders of several million meters. At the same time, market orders are very sensitive to price, but the requirements for fabrics are not strict. </p
