Last week, the International Textile Manufacturers Federation (ITMF) recently conducted a second survey (March 28 to April 3) of its members and their affiliates and associations to understand the impact of the COVID-19 epidemic on the global textile industry. chain impact. About 700 companies participated in the survey.
The second survey shows that the world Companies everywhere are canceling and/or postponing orders en masse. Globally, current orders are down an average of 31%, with declines ranging from 20% in East Asia to 41% in South America. Companies around the world expect turnover in 2020 to be significantly lower than in 2019. On global average, turnover in 2020 is expected to be 28% lower than in 2019, with South Asia expected to see a 15% drop in turnover, while companies in Africa are expected to see a 45% drop.
Previously, ITMF’s first survey (March 13-25, 34 companies and 2 national textile associations) showed that companies in all regions of the world have suffered There were a lot of cancellations or postponements, and orders dropped by an average of 8%. Order declines ranged from 4% in South America to 13.3% in Africa. The average decline in North America is expected to be 7.5%, and companies in Europe are expected to lose 17.5%.
It should be noted that three weeks ago, some areas were not completely affected by the epidemic. New figures for orders and turnover show the dramatic impact of this demand shock on the textile industry around the world. Uncertainty about the duration of the crisis is weighing heavily on the industry.
Companies around the world have highlighted that the main current challenge is the lack of current demand and/or the fear of a significant decline in future demand and lack of liquidity. Companies producing fibers, yarns, fabrics and end products with health and protection functions will see new opportunities.
Although, after more than two months of continuous fighting, my country has achieved a staged victory in the fight against the new crown epidemic, and all walks of life in the country have gradually resumed work and production. However, due to foreign The further spread of the epidemic has brought greater uncertainty to the domestic textile industry, which mainly focuses on foreign trade exports. At present, as the WeChat circle explodes and is affected by the continued spread of the epidemic abroad, corporate orders are currently decreasing, and even faced the dilemma of having no orders to fill in April.
What is the real situation?
According to the domestic resumption of work and production in the fifth week coordinated by the China Cotton Bank, from March 30 to April 5, affected by the global epidemic, the operating confidence of cotton textile enterprises It suffered another setback and various operating indicators declined. The proportion of companies in operation in the cotton textile industry, the number of workers who have resumed work as a proportion of the number of workers under normal production conditions, and the production capacity utilization rate have declined compared with the fourth week. The expectations for revenue in the first half of 2020 are still not optimistic, and corporate operating confidence is being tested.
Figure 1 Cotton textile enterprises start-up and personnel arrival situation
Figure 2 Recovery of orders from cotton textile enterprises
Figure 3 Prediction of changes in sales revenue and export volume in the first half of 2020 compared with the same period last year
Table 1 Capacity utilization rate of cotton textile enterprises
Table 2 The resumption of production in the cotton textile industry cluster
According to the above chart: the operating rate of the industrial cluster dropped by 5 percentage points from last week, and enterprises below the designated size were more affected than those above the designated size. The operating rates of enterprises fell by 3 and 5 percentage points respectively from last week.
80.0% of cotton textile companies said that insufficient orders are the main problem faced by companies in the process of resuming work and production, and 62.9% of companies said that they are facing customers canceling or suspending orders. Among them, 75.0% of enterprises’ export orders were less than half of the normal level.
Companies believe that the negative impact of the epidemic on the cotton textile industry’s sales revenue and exports in the first half of the year will be more serious than in the first quarter, and market confidence has dropped significantly. 50.5% of companies believe that sales revenue in the first half of the year will decrease by more than 20% compared with the same period last year, and 61.8% of companies believe that exports will decrease by more than 20% compared with the same period last year. The global epidemic tension is expected to last for 3-4 months. Affected by this, foreign trade companies may face a difficult period of at least 4-6 months.
Affected by the global epidemic outbreak, order problems spread rapidly in the industrial chain. At first, only foreign trade orders were affected. Some enterprises have switched from export sales to domestic sales, and the domestic demand market has also been rapidly saturated. Enterprises’ production and sales have been hindered, and they face the risk of broken capital chains. The main aspects are as follows:
1. There is a serious shortage of orders, and export orders have been severely affected. The impact of the epidemic and exchange rates is basically temporaryMost of the domestic sales orders were signed at the end of last year. Due to the recent sharp drop in the prices of raw cotton and chemical fiber, the overall market sentiment is heavy and there are basically no substantive orders. The degree of resumption of work in the upstream and downstream industrial chains is inconsistent, which affects the operating rate of downstream enterprises and makes it difficult for enterprises to continue normal production;
2. Inventory has increased significantly. Due to insufficient orders, many companies choose to produce conventional varieties in order to ensure normal production and operations. However, the competition pressure of conventional varieties in the sales process is high, which has caused the yarn and cloth inventories of various textile companies to rise rapidly recently. Some companies can only shut down some equipment again. Choose to limit production;
3. Shortage of working capital. Due to the long holiday due to the epidemic, orders have been slow to recover after resumption of work, resulting in a backlog of inventory. Textile companies have no input income and a serious shortage of working capital. Some companies are no longer able to guarantee normal production and operations;
4. The implementation of support policies varies. According to the companies participating in the survey, the implementation of the national preferential policies by banks is not ideal, and some even temporarily fail to implement them. Loans are withdrawn and suppressed from time to time. Principals and interest rates are required to be returned on schedule. In terms of interest rates, only some banks in some areas have Small discount. Textile companies have neither sales revenue nor financing funds, which may exacerbate the situation of some textile companies resuming and suspending work. </p
