Since late March, foreign orders have been canceled and postponed one after another, and domestic textile companies are facing the pressure of suspending production and reducing production for the second time. At the same time, the deserted market and sluggish downstream procurement have made spinning companies not optimistic about the business situation in the second quarter or even the whole year. It can be said that the current yarn market has not yet fully recovered, and companies must get out of the “cold winter” of the epidemic. It will still take some time.
The market is deserted and cotton yarn traders are sluggish in procurement. High pressure
Recently, the yarn market has become more deserted, with fewer orders than in March, making the already sluggish enterprises even worse. In the Guangdong Foshan market, according to a company, 26-count yarn and 40-count yarn, which were originally well sold in February and March, have become flat as early orders are gradually completed. In the Jiangsu Shengze market, except for C32S and JC40S, which are mainly used in the air-jet nylon series, the demand for other varieties is relatively light. The pure cotton yarn market continues to be weak, downstream procurement is sluggish, and combed varieties are significantly worse than other varieties. .
Due to the cancellation of a large number of foreign trade orders, many foreign trade companies have switched to domestic sales, and domestic orders have become extremely popular. Some spinning companies said that in order to grab orders, they did not hesitate to reduce prices significantly. Most manufacturers reduced prices by as much as 1,000 yuan/ton to 2,000 yuan/ton. Even so, most textile companies said that it is difficult to grab orders, and raw materials are purchased according to the orders, and they dare not stock up. Some companies with large raw material inventories reported serious losses. Currently, spinning mills and downstream cloth lines mainly use The main focus is on clearing inventory and selling goods, and the mentality of shipping is relatively strong. There are no new orders from the downstream, and various cost expenditures such as labor, factory buildings, raw materials, etc. have caused companies to be eager to ship goods to collect funds, so they repeatedly cut prices and sell, and the market price war has intensified. , causing a vicious cycle in the market. Some textile factories simply limit production, take shifts or take holidays to relieve operating pressure.
The sales situation of imported yarn is not optimistic. Cotton yarn trading companies in Ningbo, Qingdao, Shanghai and other places reported that not only the immediate Inquiries and shipments of futures cotton yarns continue to be light, and the “futures yarns” that have just improved in early April can no longer be sold. In particular, the demand for OE yarns and 8S~16S Siro spinning yarns from Vietnam, Pakistan, Thailand and other producing countries is increasing. The weaker.
An import company in Zhejiang stated that currently, except for a small amount of medium- and high-grade C21S~32S in China, Vietnam , India, Pakistan, and Uzbekistan yarns are subject to inquiry and shipment, others including JC20S~32S, OE yarns, and high-count compact spinning yarns have become “hot potatoes.” Since early March, the company has taken various measures to slow down the pressure on the arrival, delivery and sales of imported yarns in some yarn contracts from India, Pakistan and Uzbekistan, such as breach of contract, negotiation to terminate the contracts, and delayed shipments. Otherwise, the cash flow may have been broken long ago. According to the survey, although the volume of Indian cotton yarn arriving at Hong Kong declined from March to April, due to more imports and less exports, cotton yarn inventories at my country’s ports continued to rise, putting some cotton yarn traders under great pressure.
Esquel Group has closed three factories to cut expenses and streamline personnel
It is understood that new orders for textiles and clothing are currently serious Insufficient, original orders have also been canceled or delayed. The textile industry, especially small and medium-sized textile enterprises, generally faces the following difficulties:
First, insufficient demand. Domestically, retail sales of clothing, shoes, hats, and knitted textiles in the domestic market fell by 31% year-on-year from January to February. From an international perspective, since March, a large number of export orders have been delayed or canceled, and new orders have also decreased significantly. According to the latest survey results of more than 100 key enterprises by the China Cotton Textile Industry Association, the proportion of enterprises reporting insufficient orders reached 63.6%.
Second, the pressure on the industry to stabilize employment is increasing. The pressure of reduced orders is being transmitted upstream along the industrial chain, which will have an impact on the normal operation of the textile industry chain, and the employment situation in the industry is becoming more severe.
Third, enterprises reported financial constraints. Affected by the decline in orders and refunds, textile companies have increasing inventory backlogs of raw materials and finished products. They are facing great inventory pressure and occupation, and the amount of funds is also increasing.
Therefore, the contradiction between enterprises’ capital and production has become more and more prominent. In the process of reducing orders and accumulating product inventories, In order to reduce expenditures, companies can only be forced to reduce production and limit production.
Many spinning companies said that starting from late April, business pressure has gradually increased. According to the development of the epidemic abroad, It is expected that external demand will drop to a low point from April to May, and the test will be even more brutal. In response to the severe market situation, many spinning companies have to cut expenses, control costs, and even shut down part of their production capacity in order to maintain operations. Even Esquel Group, one of the world’s leading manufacturers of high-end cotton shirts, is also cutting operating expenses.
Recently, Esquel Group announced on its official website that it has decided to close three factories one after another before the end of July. Esquel Group stated that the global spread of the epidemic has caused supply chain companies in the global textile and garment industry to experience a storm. Everyone is under tremendous pressure, and some companies are even struggling to survive. In order to control the spread of the epidemic, many countries have forced stores to close, economic activities have come to a close, and the retail industry has almost come to a standstill. The above measures have also caused the Esquel Group, which is in the upstream of the textile and garment supply chain, to suffer unprecedented consequences.impact.
In order to ensure the sustainable operation of Esquel, the Esquel Group has taken a series of actions, including adjusting business scale, significantly To reduce operating expenses and streamline personnel, we decided to close the following factories one after another before the end of July this year: On April 30, 2020, Esquel’s factory in Fenghua was closed; on June 12, 2020, Esquel Malaysia’s factories in Penang and Kelantan were closed. Two factories of Mauritius; on July 31, 2020, Esquel Mauritius’s factory in Flacq was closed.
Esquel Group admitted that in the coming months, the company will try its best to ensure that all affected employees receive appropriate and fair transition arrangements. .
It is understood that Esquel Group produces more than 100 million products for world-renowned brands such as Ralph Lauren, Tommy Hilfiger, Nike, etc. every year It has 57,000 employees worldwide, with its main production bases in China, Malaysia, Mauritius, Sri Lanka and Vietnam, and sales offices around the world. Due to the impact on garment orders, its factories have switched to producing masks. Zhang Yunxiang, general manager of the garment factory of Guangdong Esquel Textile Co., Ltd., said that 80% of the employees in the garment factory have stopped garment production and are urgently processing masks. Due to the development of the global epidemic, garment orders have to be postponed and production has to be postponed. The factory’s highest production capacity can produce 700,000 to 800,000 masks per day, and it has already received orders for more than 10 million masks.
Some experts said that the textile and clothing market environment is relatively sluggish. Among the major clothing consumer markets, Japan, South Korea, and Europe The epidemic is spreading in China and the United States. Local consumers’ clothing demand may decline in the short term due to the epidemic. In addition, the cancellation or postponement of orders by European and American clothing brands has directly affected the production rhythm of enterprises related to the industry chain. Esquel Group must not Not closing factories is also expected. In recent times, cutting expenses and maintaining production have been the primary goals of textile companies.
During the epidemic, online healthy consumption has entered public life
Although the epidemic has posed considerable challenges to the production and operation of my country’s textile enterprises, some textile enterprises are still flexible and have launched new online sales models in receiving orders. Ruyi cowboy. According to the relevant person in charge of Ruyi Group, Ruyi Denim has adapted to the times and local conditions, proactively adapted to the new situation, and created the “Excellent Pants” WeChat mall. The mall includes best-selling products such as super-soft and super-elastic women’s clothing, double-elastic business men’s clothing, etc., all at cost prices. Sale. Ruyi Denim strives to explore and create a new order for economic operation under normalized epidemic prevention and control, thereby stimulating the production and innovation vitality of enterprises and moving towards the comprehensive normalization and orderliness of production. Shandong yarn companies have promoted local yarns through online platforms, accelerated information circulation, realized information sharing, and promoted accurate docking of upstream and downstream industrial chains, production, supply and marketing.
From the perspective of consumption trends, experts said that under the stimulation of the epidemic, products with higher quality and environmental protection concepts and Functional products that organically integrate advanced concepts such as antibacterial concepts, energy concepts, skin-friendly concepts, warmth concepts, and softness concepts are more likely to win the favor of consumers. This is also the focus of terminal brands and companies in the industry chain.
From a business perspective, future development should pay more attention to three points:
First, insist on making distinctive and cost-effective products to build the company’s own core competitiveness.
The second is to vigorously develop online sales channels. At present, online sales are developing relatively well, but the problems of supply chain docking and information asymmetry are also prominent. Customers generally require delivery within 15 days, and returns without reason within 7 days are a test for manufacturing companies. How to connect the traditional industrial chain and e-commerce well and increase the symmetry of data information is the direction that companies should think about later.
Third, the demand for functional products and comprehensive health products is increasing, which is what enterprises should focus on in the future. category.
Faced with the pessimism from export companies, experts believe that the cancellation of orders is only temporary. The epidemic broke out in India and some Southeast Asian countries. Textile and clothing orders from European and American brands will flow back to China. If India’s lockdown is extended to May 3, there will be large-scale shutdowns of yarn mills, cloth mills, and garment factories, as well as the shutdown of major ports. The order-taking capacity and delivery capacity will drop off a cliff. In addition, textile mills in Pakistan, Bangladesh, etc. The epidemic situation in major countries is not optimistic either. Therefore, once international demand starts, buyers and retailers from Europe and the United States may choose China for orders. </p
