After the first ten days of March, the domestic epidemic situation was alleviated, and the textile industry resumed work and production smoothly under a controllable situation. However, the overseas epidemic broke out, and in a precarious situation, domestic textile companies successively received notices of delayed delivery and order cancellations. , Europe and the United States have successively blocked their borders. One can imagine the bleak situation at the ports. After mid-term, foreign trade export quotations stagnated, and companies turned to the domestic trade market, setting off another round of bloody chaos.
Domestic and foreign trade have the same root: If one leg is lame, how can I walk well with the other leg?
Since April, the entire domestic trade market has performed poorly, causing textile bosses to have orders on hand that are only decreasing but not increasing. If we compare domestic trade and foreign trade to two human legs, if one leg is lame, how can the other leg walk well?
Therefore, many domestic traders, clothing factories and brands are cautious in placing orders and will not place orders in advance unless they are strictly needed. “We only deal with the domestic trade market. Although we still have orders, we have been worried that our customers’ customers will cancel their orders, causing our orders to be canceled without reason.” said Mr. Wang, a textile owner in Wujiang area.
Faced with this worrying market situation, many textile bosses began to take the initiative to offer profit-making sales. “Under the current market situation, we take the initiative to give bargain-price knives to customers. As long as they place an order, the price can be negotiated.” said Mr. Yang, who mainly sells imitation silk in the market.
The lack of terminal orders has caused the contradiction of overcapacity to ferment again. After experiencing the great leap forward in production capacity in the past two years, The supply of conventional products in the market is relatively abundant, but downstream demand is still weak. In addition, the price of raw materials has dropped by nearly 2,000 yuan/ton since the Chinese New Year, which has caused fabric market prices to fall again and again. “We make conventional polyester taffeta, and now the price has dropped by more than 2 cents compared with before, and some even more. If it falls further, there will be no profit.” said the person in charge of a textile company with hundreds of looms.
At present, most textile company owners are caught in a “dilemma”: on the one hand, the market trading atmosphere continues to weaken and the process of new orders is slow; on the other hand, the inventory of gray fabrics continues to rise. The proportion of working capital occupied increased. Reducing work hours has become the most direct and effective way for textile bosses.
“During the Qingming Festival holiday, we stopped more than 90 looms, and we should increase the number of downtime machines in the future.” A company that has been tired of gray fabric inventory for more than a month Boss Wang said helplessly. At present, more and more weaving manufacturers have begun to take turns, stop production, and take holidays, and the market operation is also plummeting.
It is understood that the current operating rate of Jiangsu and Zhejiang regions has dropped to about 60%, the operating rate of water-jet looms in Shengze has dropped to about 60-70%, and the operating rate of Xiaoshao circular knitting machines has dropped to about 30%. -40%, Haining warp knitting operating rate is around 60%, Changshu warp knitting operation rate dropped to 40-50%.
Overall, the start-up status of major clusters has been declining, although some manufacturers have started operations during the holiday after the Qingming Festival. has rebounded, but many manufacturing companies still plan to reduce operations.
“At present, everyone is still in a wait-and-see mode. We have purchased a batch of raw materials for production in the early stage. If there is a holiday all of a sudden, workers will be exhausted. However, if this market continues, by 4 More and more people will take holidays at the end of the month,” said a Changxing textile boss.
Not only these traders who make “orders” of fabrics feel that orders are shrinking, but also customers who place orders for professional “market goods” fabrics in some large domestic spot markets because of their confidence in the market. In short supply, it is difficult to stock up on various types and large quantities as in previous years. The entire domestic trade market is already in a state of abnormal shortage of orders for “market goods”.
Domestic demand and exports: the underdeveloped industrial chain suffers from mutual dependence
In the early years, the textile industry was prosperous due to stable domestic demand growth and booming foreign trade. However, in recent years, the domestic economic growth has slowed down, especially after 2016, which dropped from 6.9 to 6.1. In addition, with the outbreak of shortcomings after the rapid expansion of production capacity in the textile industry and the disadvantageous situation brought about by successive trade disputes, my country’s textile and apparel industry is walking on thin ice, and it is difficult to conceal the uneasiness in the hearts of industry insiders. This time, under the influence of the epidemic, textiles and clothing have fallen into a quagmire, just like a cold wave is coming. Regardless of domestic demand and exports, the underdeveloped industrial chain is suffering from mutual dependence.
1. Domestic trade: Domestic clothing sales are shrinking
According to data from the National Bureau of Statistics, clothing sales have declined to varying degrees from the first to the fourth quarter since 2016, with 2018 being the most severe year. It can be seen that in recent years, the demand for clothing has gradually shrunk, and the support of domestic demand has declined, making the operation of the textile industry more difficult. Among them, in 2018, the cumulative sales of clothing were 21.97 billion pieces, -22.45% year-on-year; in 2019, cumulative exports were 23.8 billion pieces, +8.33% year-on-year.
2. Foreign trade: textile and clothing exports decline
According to data from the General Administration of Customs, my country’s textile and apparel exports reached their peak in 2014, reaching US$298.3 billion. Since then, demand in Europe and the United States has declined, trade disputes have broken out between China and the United States, and pressure from countries in South Asia and Southeast Asia has made the foreign trade shipping environment increasingly worse. Among them, Vietnam’s textile and apparel exports have maintained positive growth for 21 consecutive years, while India’s textile and apparel exports have remained at a high level.
Since the outbreak of the epidemic, India has been closed down, and the situation in Southeast Asia is not optimistic. From January to February, my country’s textile and clothing exports fell by nearly 20% compared with the same period, and Vietnam It fell 3.5% from the same period last year.
3. Textile industry start-up: The start-up of textile companies is higher than that of weaving factories, and supply pressure is highlighted
According to Longzhong’s research, the overseas epidemic continues to ferment, and internal demand has not yet opened up. After the Qingming Festival, it has entered the off-season in the traditional sense. As a result, in an environment of internal and external troubles, refunds are common in textile mills, and domestic trade orders are difficult to find. In order to ease operational pressure, taking advantage of the Qingming Festival, corporate holidays in some areas have been extended to 7-10 days. Considering the trend of the operating environment, Due to the deterioration, the start of construction will continue to be postponed. Although yarn companies have entered a period of accumulated inventory, with early orders, the overall operating capacity is still higher than that of weaving companies. Currently, the yarn industry operating capacity is at 60%, while the weaving operating capacity has dropped to 41.39%.
Taken together, the epidemic has not yet reached an inflection point, terminal demand is shrinking, but market competition pressure is increasing. In the sequential bidding process, the profit margins of spinning and weaving companies are bound to continue to be squeezed. Companies in some areas are withdrawing funds, but in fact they have shipped goods at a loss. It is expected that the textile industry will continue to be under high pressure from May to June. Among the basic rules of survival in market competition, who dares to claim to be invincible?
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