Affected by the recent black swan incident, the cotton yarn market transactions have dropped again. Textile people said, “This year’s life is really difficult. As long as you can survive this year, you will be the winner.” It is true that since the outbreak of the public health incident in China, the market has been put on pause. Due to delays in the start of construction, some orders have been transferred externally. With the slow start of the textile market in mid-to-late February, the market has slowly recovered. However, a public health incident broke out abroad around March, triggering a sharp drop in the financial market. The sharp drop in raw materials coupled with a sharp drop in orders caused market transactions to deteriorate again. Some companies reported that the impact of the public health incident was greater than the Sino-US trade war. In March and April The traditional peak season will become the most difficult time.
The loss of 5,000 tons of large customers, and the cancellation of orders caused by overseas epidemics has intensified
As the spread of the new coronavirus pneumonia epidemic intensifies overseas, global panic The number of infections has increased, and large outbreaks of infections have occurred in Europe, North America, Southeast Asia and other places. At present, many countries have declared a state of emergency and introduced a series of measures such as country closures and city closures. Similar to the previous domestic situation, we are bound to enter a state of working from home and some companies semi-suspension to varying degrees.
Of course, this situation will also lead to a sharp reduction in the number of domestic and foreign trade orders, which will suppress the production enthusiasm of manufacturers. Although exports are resumed in the early stage, they will still face the following two problems. First, after the terminal goods are exported to the destination port, the efficiency of customs clearance and transshipment will be greatly reduced, the transportation time will be extended, and a lot of additional terminal storage and other costs will be incurred. Secondly, due to the impact of the epidemic, downstream receivers may not pick up the goods or abandon the goods. So overall, it has caused immeasurable losses to exports.
The domestic market demand is sluggish, and it is difficult to see a significant improvement in the short term. According to data, the current inventory of weaving manufacturers is about 38 days. Although the domestic epidemic has been well controlled, there has been no major improvement in the downstream market so far, and the destocking cycle in the later period is relatively long. Moreover, according to a survey by the China National Garment Association on the resumption of work and production of garment companies, as of March 6, 29.4% of the companies surveyed reported that orders had decreased due to factors such as sluggish market demand, order cancellations, and some companies reported a sharp decline in domestic orders.
Not only chemical fiber weaving companies, cotton spinning companies are also not optimistic. According to research, Sino-US trade relations improved before the holiday, and some foreign trade orders returned. Cotton spinning companies placed orders for about 15 days, and some companies placed orders for 1 About months.
However, the domestic public health incidents around the Spring Festival led to a delay of 7-30 days in the start of textile enterprises after the holiday, and some orders were transferred externally. As textile enterprises fully resumed production at the end of February, orders began to improve. However, due to foreign public health emergencies since March, demand for textiles has been suppressed again. Some companies have reported that foreign trade orders have dropped sharply recently, and domestic trade orders have also experienced refunds. Judging from the situation of some large textile companies surveyed, some companies reported that 5,000 tons of large customers were lost, mainly due to cancellations by foreign fabric customers.
Tsarist Russia’s “price war” is intensifying, and cost collapse has caused enterprises to Increased losses
The crude oil market was thrilling last week, with a weekly decline of more than 20%. First, the non-OPEC production reduction agreement led by OPEC and Russia failed. Coupled with the spread of the new crown pneumonia epidemic abroad, crude oil recorded the largest single-day decline since 2014. Afterwards, Saudi Arabia significantly lowered its official sales price in April and increased crude oil production in April. Superimposed on the increase in U.S. crude oil inventories for seven consecutive weeks, crude oil returned to decline. Although various countries have also introduced corresponding policy stimulus, the market does not buy it and continues to maintain a low oscillation pattern.
On March 18, Saudi Arabia announced that it would increase crude oil exports to a record high of 10 million barrels per day. Goldman Sachs lowered its second-quarter Brent oil price forecast from $30/barrel to $20/barrel. International oil prices fell across the board, with NYMEX crude oil futures closing down 6.17% at $27.21/barrel, and Brent oil closing at $30.5/barrel down 3.76%. Compared with prices in early March, WTI and Brent oil prices have almost halved.
Affected by the sharp decline in crude oil prices, PX also experienced a cliff-like decline. As of the close on the 17th, the closing price of the Asian PX market was US$572.67/ton CFR China and US$554.67/ton FOB South Korea, down 125% from the beginning of March. USD/ton, the declines reached 17.91% and 22.54% respectively. The center of gravity of the PX market has shifted downward, which means that the cost center of gravity of PTA has declined. Judging from the lowest price of the main contract since the beginning of March, the center of gravity of the PTA market has moved down by 674, down 15.67%.
Based on the current PX price and a processing fee of 500 yuan/ton, the cost of PTA should be around 3,570 yuan/ton, which is close to the market price.
Based on the lows of crude oil and PTA prices in 2016, PTA prices have hit a new low since its listing. The crude oil price above is still slightly higher than the low in 2016, and PTA is already in an oversold state. Moreover, the added value of industries above designated size nationwide from January to February 2020 has been further confirmed.
From January to February, the added value of industries above designated size actually fell by 13.5% year-on-year. In February, the added value of industries above designated size decreased by 26.63% from the previous month. Among them, the textile industry dropped by 27.2%, and the manufacturing industry of chemical raw materials and chemical products dropped by 12.3%. From the dataLook, the decline in the textile industry is nearly double that of chemical raw materials, which is at the low point of recent years.
With insufficient cost support, polyester yarn has also fallen into a continuous decline. At this time, many weaving manufacturers expressed losses! “Now it’s like using raw materials bought at high prices to produce low-priced gray fabrics. Customers have been lowering prices. Our twill peach skin velvet has dropped by 1 cent!” said a manufacturer specializing in peach skin velvet.
Coincidentally, another manufacturer that produces memory cloth also has a deep understanding: “Now many manufacturers around us have reduced their operating rates. It is not because of the workers. The workers are basically here now, except for Hubei. The main reason is that the current situation of raw materials is unclear. Our gray fabrics have depreciated in value, and we can’t buy low-price raw materials recently. The salesperson we work with actually doesn’t sell them. I think it’s because the polyester yarn has fallen. It’s too cruel. I want to see if it will go up a bit before selling it.” “The price of polyester yarn has dropped sharply now. If the polyester yarn drops by 500 yuan, the gray fabric will drop by at least 1 wool. The polyester yarn will go up by 500 yuan, but the gray fabric will not rise. So now The price of gray fabric is really low. Last year, T400 cost more than 5 yuan, but this year it is only 4 yuan. There is no money to be made.” A cloth boss said.
Unable to survive, filament weaving companies have also started a “price war”!
In the case of high inventory and low demand, textile bosses generally face inventory pressure and financial pressure. The gray fabrics in the warehouse have taken up a lot of funds, but labor wages, Water, electricity, rent, etc. must be paid in cash. In this case, if the gray cloth is not liquidated, unless the business is large and there is no pressure on funds, the enterprise will not be able to support itself. Sufficient cash can ensure the healthy operation of the enterprise.
With the suppression of these two mountains, the phenomenon of selling goods has occurred one after another in the market, and even the most recently sold imitation silk has not been able to “survive”. A person in charge of a company specializing in the production of imitation silk said that at the end of 2019, the price of 100D chiffon was 2 yuan/meter, but now it has dropped to 1.8 yuan/meter. In previous years, the price of gray fabrics used to increase in March, and people queued up to get the goods. But now, in March, the prices of gray fabrics have dropped, and a large number of goods have been sold.
When the market is sluggish, many manufacturers will consider cutting production and taking holidays. In July and August last year, Many weaving and dyeing factories have put in place high-temperature holidays, but this year the situation is likely to be brought forward. If the next orders are unsustainable, many manufacturers will consider reducing production or even taking holidays. In the short term, it is recommended that varieties with larger inventories be available on the market as the market goes, and profits can be appropriately transferred when transactions are completed; prices of varieties with lower inventories can be temporarily stabilized, and the principles of production to order, procurement as needed, and strict inventory control should be adhered to. </p