According to feedback from cotton textile companies in Shandong, Jiangsu, Anhui and other places, inquiries and shipments of high-count pure cotton yarns, polyester-cotton yarns, etc. have been smooth in the past week or so. C40S and below ring spinning and OE yarns are being consumed at the terminal Driven by the “Golden Nine and Silver Ten” market, the market is recovering in stages (demand for 40S yarn continues to improve), and most yarn mills are accelerating destocking.
From the perspective of the chemical fiber polyester market, the number of orders in the market has indeed increased after September. According to what we have learned from the market in the past two weeks, the order situation of textile companies in September has improved significantly compared with August. Mr. Yang from a company that specializes in chemical fiber and rayon fabrics said that after entering September, the number of foreign trade orders increased significantly. The orders were mainly used to make some fabrics for coats and down jackets in autumn and winter, including elastic materials such as T400 and cool silk cotton. product.
It can also be clearly seen from the aspects of weaving inventory and operating rate. After September, the operating rate of weaving enterprises continues to increase, while the inventory of gray fabrics begins to gradually decrease.
Although downstream weaving, clothing, foreign trade and other enterprises mostly pay for goods with an account period of 1-3 months, There are signs that the entire textile industry chain is up and running and slowly accelerating. With the domestic epidemic under full control, production, life, economic activities, income, etc. have gradually returned to normal, and buyers and retailers have begun to place orders for the spring and summer of 2021. The confidence of yarn mills, cloth mills, and textile and clothing companies continues to rise as terminal companies receive orders and stock up.
However, judging from the survey, textile companies have some concerns about whether terminal consumption after October will be “strong”. Yarn, weaving and other production capacity has been reserved, and the equipment load is generally maintained at 75-85%, and “quick orders, quick processing, and quick delivery” are achieved as much as possible. “Deleting finished product inventory and accelerating capital flow” is still the general direction .
Xinjiang cotton ban alarm sounded
According to reports, members of the U.S. House of Representatives voted overwhelmingly on Tuesday Passed a bill that would effectively ban imports of U.S. products from China’s Xinjiang Uyghur Autonomous Region over alleged use of government-backed forced labor. Different from previous statements by Trump and the White House, the products banned from import include all or part of products produced in Xinjiang, not just cotton and tomato products. Some export-oriented textile and garment enterprises and trading companies have analyzed that if the bill finally takes effect, most of China’s cotton products exported to the United States will be banned.
Once the U.S. bill “banning the import of products from China’s Xinjiang Uygur Autonomous Region” is passed and implemented, it will have a greater impact on the consolidation and development of Xinjiang’s cotton industry, cotton textiles, clothing, etc. Destruction and suppression: First, according to calculations by some institutions and investment banks, China’s annual exports of textiles, clothing, etc. to the United States use about 700,000-800,000 tons of cotton, of which more than 70% use Xinjiang cotton. On the surface, it seems straightforward It will affect the consumption of Xinjiang cotton by about 500,000-600,000 tons; secondly, in addition to all-cotton products, textile and clothing exports to the United States also include polyester-cotton, cotton viscose, cotton ammonia and other series of products. If the Xinjiang Cotton Products Ban Act is implemented, it will have a negative impact on domestic cotton textiles. The impact on textiles, clothing, and foreign trade companies is “divergent” and large-scale. Chinese textile and clothing products can only passively “decouple” from the US market.
Meager profits were eaten up by the exchange rate
After the outbreak of the new crown epidemic in the United States, the Federal Reserve was unruly After releasing the water, the flood finally came. As the U.S. began printing money, the U.S. dollar index entered a downward trend since late March and has shown no signs of reversing so far. The RMB has continued to appreciate since the end of May, with the USD/RMB exchange rate continuing to appreciate from 7.17 at the end of May to currently exceeding 6.8. The RMB exchange rate has appreciated by nearly 5% since the year’s low at the end of May! If the profit of an export company is less than 5%, then it is possible that they are working for free or even working for a fee. Especially for low-profit, labor-intensive enterprises, orders have dropped sharply due to the impact of the epidemic, and then the meager profits will be eaten up by the exchange rate. The continuous sharp appreciation of the RMB against the US dollar has not only benefited the import of cotton and cotton yarn, but also significantly weakened the competitiveness of my country’s textile and clothing exports.
The capital chain is tight, and some small and medium-sized manufacturers are at risk of financial rupture at any time
From the current market situation In terms of inventory, some manufacturers’ inventories have decreased since September, but the inventory of the entire industry is still at a high level, and the recovery of foreign trade demand is not as expected. There is a possibility of a second outbreak of the epidemic. Many clothing and home textile brands are reducing stores and adjusting Production planning and fabric procurement are also more cautious. Therefore, there is still a big doubt whether the next inventory can be converted into funds.
In addition to the fact that inventory is difficult to cash out in the short term, cloth bosses generally reported that this year the bill period has become longer and there are arrears. A trader revealed: “The accounts are in arrears.” The period is now 3-6 months, and it is not uncommon to default on payment. At present, 30% of the receivables have not been received. Although customers do not intend to default, if customers default like this, our capital flow will be in trouble. Difficulty. It is very likely that we will face suspension of production and bankruptcy.” This year due to the epidemic,For this reason, the entire industry chain will suffer both when it prospers and when it loses. Both weaving mills, traders and clothing companies are very short of money, which has also resulted in this year’s payment period being longer than in previous years. It is understood that downstream weaving mills, clothing factories and trading companies generally implement 1- The accounting period is 3 months, and raw materials are purchased in cash. Therefore, the overall cash flow of enterprises is tight, and some small and medium-sized manufacturers are at risk of having their funds cut off at any time.
It is difficult to support orders until December
Orders have begun to increase recently, and the weaving operation rate has gradually increased. , but the follow-up of downstream orders is insufficient and the overall order quantity is lower than in previous years. September improved with the improvement of the domestic sales market, but it was also due to seasonal orders for autumn and winter fabrics. However, the continuation of the overseas epidemic has had a great impact on the demand for clothing, and the order volume was limited, so it only lasted for just half a month. According to feedback from companies, foreign trade orders in the second half of the year usually fall between the end of September and before Christmas. The second outbreak of the epidemic overseas has forced some companies to close their operations, which has obviously affected the demand for clothing, resulting in fewer foreign trade orders. In addition, domestic orders have generally declined by more than 20% compared with the same period in the previous two years, and from the perspective of delivery time, it is difficult for orders to last until December.
The epidemic is like a mirror. It has exposed some problems rooted in the company. At present, many small and micro textile companies say that their lives are not satisfactory, especially this year, many large companies Enterprises can reduce costs and occupy the market in large quantities by virtue of their refined management. The market space of some small enterprises will be squeezed, and the pace of survival of the fittest in the market is accelerating.
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