Recently, the National Bureau of Statistics released my country’s economic data for the first half of the year. Some of the data have clearly begun to improve, but the data about our textile and apparel industry is not optimistic. Among them, fabric production in the first half of the year dropped as expected, with a drop of 25.9%; per capita clothing consumption expenditure was 611 yuan, a drop of 16.4%, accounting for 6.3% of per capita consumption expenditure; the textile industry capacity utilization rate was 70.3%, a drop of 16.4%. by 7.9%; fixed asset investment in the textile industry fell by 22.4%…
The bleak state of the textile industry has begun to take shape since the COVID-19 epidemic raged overseas. The lack of overseas markets throughout the first half of the year has made competition in the domestic market with “limited cakes” more intense. Various textile data have also Extremely poor performance. But the pessimistic situation goes far beyond the surface of the data, or not just in the first half of the year. Recent market risks still exist!
The suspension of sailings and the rebound of the epidemic have brought congestion to ports
As European and North American societies reopen, Due to lockdowns and increased activity, ports in these areas are facing increasing traffic congestion.
According to the latest Covid-19 Port Barometer report recently released by the International Association of Ports and Harbors, due to the impact of the wave of sailing suspensions, the world’s major container ports have had to Faced with more cabinets than ever before.
Although shipping companies have canceled a large number of sailings over the past few months, the rebound in demand has meant higher utilization of ships sailing, which has created a sudden spike in activity in ports.
According to reports: Major container ports in Europe and North America have reported significant increases in the average cargo volume of ultra-large container ships (ULCS) per call, with some hubs reporting Up to 10,000 teu.
This has brought terminal and yard operations to a peak and has begun to affect land operations, especially trucks entering and leaving the port. Some ports reported that docks and terminal gates were taking days to return to normal, and the number of lost cargoes was rising.
The downturn in economic activity caused by the COVID-19 epidemic has exacerbated market turmoil around the world and led to a contraction in global trade. The International Monetary Fund said in June that international trade flows fell about 3.5% year-on-year in the first quarter due to weak demand, a collapse in tourism and supply disruptions related to shutdowns.
The COVID-19 pandemic is likely to be deeper than any other recent crisis, McKinsey said in a report titled “Global freight volumes after Covid-19: What next?” , impacting the global logistics and trade industry for a longer period of time.
The report shows that global unrestricted trade demand may fall by as much as 13% to 22% in the second and third quarters of 2020. By comparison, the worst quarterly decline in trade volumes during the global financial crisis in 2008 was about 5%.
Citing various scenarios, McKinsey said it would take 15 to 48 months for trade volumes to return to fourth-quarter 2019 levels, and the value lost would be equivalent to total trade in 2019 8% to 49% of the amount.
The situation of “no-shows” on orders still exists, and textile and clothing companies still lack confidence in the market!
According to the practice in the textile industry, customers will predict the next order volume. After all, it will take at least three or four days from order placement to shipment. Customers want to Customers who get the goods early usually go to the manufacturer to place an order early.
According to related reports, because shoppers are still worried about being exposed to the new coronavirus when shopping in stores, retailers have repeatedly postponed stockings and plan to sell the remaining basic clothing from spring in the fall. . Many well-known brands, such as the American sports giant Nike, the American fashion retail group PVH, and the American fashion luxury goods group Ralph Lauren, have stated that they will cancel some autumn orders. In fact, this phenomenon still shows that everyone has a strong interest in textiles. The lack of confidence in the market in the second half of the year directly led to the cancellation of orders!
Due to the special circumstances of the epidemic, the order volume has been reduced by more than half compared with previous years, and large orders of hundreds of thousands of meters or millions of meters are very rare. It is precisely because of this that the risks in the textile industry will be greater this year!
“We have a customer who placed an order for 500,000 meters of composite yarn four-way stretch from us some time ago. He originally thought he had received a big order, but he waited until the fabric was woven. We only took 100,000 meters from the customer. The key is that we also paid half of the 100,000 meters. If the customer doesn’t want the remaining 400,000 meters, we can only treat it as inventory. We don’t want to sell the freshly woven gray fabric at a low price. What a loss!” A textile boss in Shengze area said helplessly.
Abnormal port congestion and orders being “no-showed” from time to time are not only direct feedback on the current and past poor textile market, but will also severely impact the market’s future textile market. Confidence that the entire textile industry will be more difficult to face the changing market in the future.
It is difficult to sell the overstocked inventory, and competition will still be fierce in the future
“The deserted market conditions in the first half of the year caused Before the various backlogs of inventory and canceled orders have time to be digested, the brutal market competition in the second half of the year has begun.” This is what almost all textile people are saying.To face.
In the International Textile Federation’s survey on the impact of the new crown epidemic on members, affiliated enterprises and associations of the International Textile Federation, we can see that 20% Textile companies believe that it will take until the fourth quarter of 2020 to return to pre-crisis levels, while 23% and 21% believe that recovery will take place in the first and second quarters of 2021 respectively.
Even based on the most optimistic estimate and including the time for advance stocking, such a lackluster market will last at least three months, and before the market improves , to what extent the inventory will increase, and whether the capital chain can be maintained has become a huge challenge for textile companies. </p
