Textile orders are returning!
In recent months, my country’s domestic home textile orders have recovered from the “cold winter” in the textile and apparel industry in the first half of the year and ushered in a new round of boom. Directly reflected in the stock market, on Wednesday, October 14, the Shanghai and Shenzhen stock markets opened lower and consolidated weakly. Only the GEM index once turned red and approached 2,800 points in early trading. As of the close, the Shanghai Index fell 0.56%, the Shenzhen Component Index fell 0.78%, and the GEM Index The index fell 0.74%, and the total transaction volume in the two cities for the whole day was 827.646 billion yuan.
In terms of sectors, wind energy, textile and clothing, liquor and other sectors were active throughout the day. In the afternoon, registration-based new stocks, securities firms, photovoltaic and other sectors took turns to exert their strength. At the same time, sectors such as Apple Concepts and Online Travel were among the top decliners. It is worth mentioning that after the National Day, the textile and apparel sector has been positive for four consecutive trading days, with a cumulative growth of nearly 8%. The recent boom in textiles and apparel is due to two major aspects: strong domestic demand and restored external demand.
Picture source: Printing and dyeing people
In recent months, many large-scale export-oriented textile companies in India have Companies are unable to guarantee normal delivery due to the epidemic, and many orders originally produced in India have been transferred to my country for production, among which the orders for towels, bed sheets and other products are relatively large. Regarding the fact that many export textile companies in India were unable to guarantee delivery due to the epidemic, and many orders were transferred to my country for production, Li Xingqian, Director of the Department of Foreign Trade of the Ministry of Commerce, said: He sincerely hopes that India can contain the epidemic as soon as possible and resume normal production and life. Each of us is a consumer. Faced with diversified market supplies, we will shop around when purchasing to choose high-quality, low-price, and reliable merchants and products. The same is true for international trade. It is normal market behavior for multinational companies to adjust production orders globally and for international buyers to select suppliers based on production capacity.
Why did the textile market explode?
1. From the perspective of domestic demand, the increase in market sentiment is mainly divided into two parts: First, the impact of the COVID-19 epidemic in the third quarter gradually disappeared, and market liquidity and consumption levels have basically recovered. Second, winter is approaching, which is the traditional peak season for textile manufacturing. At the same time, the “Consumption Promotion Month” activity has further released consumer demand.
Shenzhen data shows that the year-on-year decline in clothing consumption in April and May was revised upward by more than 15 points, and this trend showed a slowdown in June and July. In August, Clothing consumption has turned positive, with a year-on-year growth of 4.2%; online cumulative sales continue to pick up, while the year-on-year growth rate has slowed down from June to August. Third-party Alibaba online data also showed a similar trend. The year-on-year growth rate of sports shoes and clothing slowed down in July and August, but the growth accelerated in September.
At the same time, in September, the Ministry of Commerce and the China Central Radio, Television and Television organized various regions to use the “Golden Nine and Silver Ten” “During the traditional peak consumption season, the 2020 National “Consumption Promotion Month” event will be held. According to monitoring by a third-party payment platform, in the two weeks before the September event, the total consumption of goods and services nationwide was approximately 1.9 trillion yuan, an increase of 7.4% month-on-month; the total consumption in the third week of the event was approximately 990 billion yuan, an increase of 8.5% over the pre-event period.
In addition, the National Day Golden Week coincides with the National Day and Mid-Autumn Festival, which accelerates the increase in consumer demand. In addition to festival factors, cold air will also promote clothing consumption. On October 5, the China Meteorological Administration stated that a La Niña event is expected to form this winter, which refers to a cold water phenomenon in which sea surface temperatures in the central and eastern equatorial Pacific Ocean are abnormally cold in a large area and the intensity and duration reach certain conditions.
With the improvement of the epidemic situation and the resumption of work and production, clothing exports have turned from falling to rising, and the PMIs of major clothing exporting countries have returned to prosperity. level. In terms of China’s textile and apparel exports, textile exports fell slightly in August. Clothing exports rebounded in August, with year-on-year growth of 3%. This month’s year-on-year data has been significantly reversed from the low of -30% in April, and overseas demand has improved. From the perspective of PMI, China’s new export orders PMI was 50.8 in September, a significant rebound compared with April and May.
2. Outbreaks of epidemics in India and Sri Lanka, cotton spinning industry orders Recovery
Due to the spread of the epidemic in India and Sri Lanka, many orders have returned to China. The price increases of bulk commodities such as cotton and chemical fibers in the upstream have driven up the prices of yarns. Since September, cotton/viscose staple fiber/viscose filament/polyester staple fiber/polyester filament have increased by 4%/9% respectively. 0%/1%/3%, yarn up 3%). The capacity utilization rate of many OEM companies has rebounded from the lowest 50% in April and May to 80-95%, and the recovery trend is obvious.
3. It should be noted that most external orders are emergency orders. Once the epidemic situation improves, Domestic factories may lose these additional orders.
India is the world’s largest cotton producer and the world’s largest cotton producer.A jute-producing country and the second largest silk producer in the world, its yarn production capacity accounts for 22% of the world. Textile revenue has always been one of the main pillars of the Indian economy and one of India’s largest sources of foreign exchange earnings. The textile industry accounts for about 15% of India’s total export revenue. The large outflow of orders here is due to the shutdown of the textile industry due to the impact of the new coronavirus.
The transferred orders are mainly concentrated in the home textile sector. There are two reasons for this phenomenon. “First, China has strong control over the epidemic. Compared with other countries, it has the ability to resume work and production. Secondly, the price of domestic cotton is relatively low, which has the price advantage brought by low cost.”
In addition to home textile orders, some other foreign orders in the textile industry have also been transferred to domestic production. Luo Liangzhen’s company mainly produces handbags, luggage, belts and other products. Around August, a customer suddenly gave the company many orders that were originally in India, mainly wallets and handbags.
So, what is the impact of some foreign textile and garment industry orders returning to China on domestic textile companies?
In the first half of this year, the domestic textile industry was basically at a standstill, especially in the area of foreign trade orders. Inventories in the textile industry continued to accumulate. For downstream factories, both capital and inventory costs brought relatively high costs to the enterprises. Under great pressure, with the restart of the European and American economies, the transfer of these orders to the country is a great benefit for downstream companies. According to their research on some downstream companies, the demand for home textiles in large supermarkets in Europe and the United States is very large. Yes, because there was no replenishment during the epidemic, the inventory of these household items in the supermarket was exhausted, so the replenishment effort was very strong.
However, most of these orders are emergency orders. Once the epidemic situation in India improves, domestic factories may lose these additional orders. At present, orders are returning and factories are increasing part of their production capacity and adding some special skilled workers. However, The overall level of order saturation is not very high. </p
