After the National Day, the prices of cotton, cotton yarn and other raw materials rose rapidly. Recently, the yarn market has begun to “dissipate” after experiencing a sharp rise. Regarding this wave of market boom driven by domestic demand and overseas orders, industry insiders generally believe that as Double Eleven fades away, the market’s wait-and-see sentiment may increase. How is the current operating situation of yarn companies in various places?
Rising cotton prices bring good opportunities for destocking
Before the National Day, most cotton spinning mills have relatively high stocks of cotton yarn, but after the long holiday, cotton yarn stocks The skyrocketing futures prices have brought good opportunities for cotton textile companies 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, companies generally report that product inventories are generally low, and some factories even have zero inventories.
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 based on 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.
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 is higher than before The situation has improved significantly in a 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. Enterprises believe that the current downstream market is relatively optimistic, but due to the uncontrollable foreign epidemic situation, they are worried that it will affect the supply of imported raw materials and the continuity of foreign high-count yarn orders, and the enterprise’s prediction of the later market is unclear.
The market price of viscose yarn in Peixian County has stabilized recently 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.
The order situation of a certain colored spinning enterprise in Jiangsu is good, mainly domestic orders, with an operating rate of 100%. According to reports, 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. The order can be extended until the end of this year. For the later market, companies expect order volumes and product prices to 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, and customers rushing to place orders after the National Day. However, this situation only lasted for 20 days after the National Day, and now the ordering speed has slowed down significantly. Due to financial pressure before the National Day, enterprises have low raw material inventories. There is no profit in purchasing raw materials at current prices and they only maintain operating rates. It is expected that the market will pick up around the Spring Festival, and the gross profit margin may be better than now.
Poor downstream price transmission may weaken the market in the future
For fabric companies, the rise in upstream raw materials such as cotton and yarn prices will undoubtedly make them Production costs have increased, but fabric prices have not increased along with 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 the 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 prices of Jiangsu yarn-dyed fabrics were basically 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 abroad, 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.
The market comes and goes quickly. The crazy market may pay a heavy price after Double 11
The rising prices of raw materials around the National Day can be said to have come and gone quickly. It went away quickly. In the past half month since mid-to-late October, cotton yarn futures prices have dropped from 22,260 yuan/ton to 20,630 yuan/ton, a drop of 1,630 yuan/ton, 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 level 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.
In the early stage, the market was hyping up the topic of some Indian textile orders flowing back to China. In fact, the orders transferred to China are mainly concentrated in the home textile industry. Among them, the orders for towels and bed sheets are relatively large, adding to the post-holiday market situation. However, in the eyes of industry insiders, this trend will not last long. The industry believes that first, the transfer of Indian orders to the country is mainly due to the effective control of the domestic epidemic, and second, the domestic cotton price is relatively low, but in the next few days, the cotton price As prices continue to rise, orders transferred from India cannot continue. Now due to the second outbreak of overseas epidemics, foreign trade demand has also been affected. If the overseas epidemic cannot be effectively controlled for a long time, global economic recovery will be hindered and China’s exports will once again face downward risks.
From 0:00 on November 1 to 0:30 on November 11, the real-time transaction volume of the 2020 Tmall Double 11 Global Carnival Season exceeded 372.3 billion yuan. With the departure of the “Golden Nine and Silver Ten”, Double Eleven, an important node for domestic demand, is gradually moving away, and the textile industry will usher in the traditional “winter”.
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. </p
