As the epidemic has been initially brought under control, the focus of policy has shifted to “two-pronged” prevention and control of the epidemic and the resumption of work and production, and the market’s focus has gradually returned to the short, medium and long-term impact of the epidemic on fundamentals; January economic data The impact of the epidemic is relatively small. The specific extent of the impact will have to wait until various data are released in the first quarter, and policy responses will also undergo a gradual verification process. In the short term, only the resumption of work in various industries is a trackable fundamental indicator; resumption of work means consumption in some industries. The decline in demand, such as remote working and online entertainment, and the rise in consumer demand in some industries, such as protective equipment and industrial raw materials.
Although most companies choose to resume work on February 10, resumption of work is only the starting point for the gradual recovery of economic activities, and specifically involves issues of return rate and resumption rate.
First, look at the national Spring Festival travel data. The current return rate of people returning home during the Spring Festival may be only 20%-30%. From the Spring Festival to New Year’s Eve (January 10th – January 24th), the country’s railways, roads, waterways, and civil aviation carried a total of 1.14 billion passengers. From the first to the 19th day of the Lunar New Year (January 25th – February 12th), a total of There were 258 million passengers. Based on this, it is estimated that the return progress of people returning home during the Spring Festival is 22.6%.
Second, there are no signs of accelerating the return journey in the near future. The progress of return trips from the fifth to the nineteenth day of the Lunar New Year is growing almost linearly, increasing by about 1% every day. Even on the eve of February 3rd, the holiday extension deadline uniformly stipulated by the State Council, and February 9th, the holiday deadline set by most places. There was no obvious pulse-like increase in return progress. For comparison, a total of 1.12 billion passengers were transported from the Spring Festival to New Year’s Eve (January 21-February 4) in 2019, and a total of 1.45 billion passengers were transported from the first to the nineteenth (February 5-February 22). The return journey is almost over.
Third, return does not mean immediate resumption of work. The incubation period of the new coronavirus can reach 14 days, so it will take about two weeks of observation time from return to work (except for telecommuting). This means that according to the current return schedule, the impact of the delay in resumption of work will last until at least early March. , and the current recovery progress is not fast. This result is consistent with subsequent indicators such as industrial production and inventory.
According to the current progress of the epidemic, the country has unified command, joint prevention and control, and takes advantage of the government’s concentrated efforts to do major things. We can optimistically predict that with a high probability, except for some areas such as Wuhan, , the epidemic can end in two to three months, and the country is confident and capable of winning the war against the epidemic.
Under such circumstances, the impact on the polyester industry chain was most serious in February and March, and gradually recovered in April. It is optimistically expected to gradually normalize after May.
From the perspective of the degree of automation of the polyester industry chain, the upstream and downstream are different. The upstream is mostly large-scale refining and chemical equipment, and the downstream is mostly labor-intensive industries.
The further downstream you go, the more labor power you need, and the greater the impact it will be affected by the Spring Festival and the epidemic.
The impact on downstream weaving is mainly the impact on workers’ resumption of work and the increase in loom load. In previous years, downstream companies had difficulty recruiting workers after the Spring Festival. However, due to the need for epidemic prevention and control this year, it may be even more difficult for downstream weaving companies to recruit workers. At the same time, it has also had a certain impact on logistics, making the downstream weaving industry in an embarrassing situation where raw materials cannot be transported in and products cannot be transported out. It will take time to recover.
The impact on polyester is mainly the pressure on inventory and cash flow. The inventory pressure of polyester factories that stopped production late before the Spring Festival has become increasingly prominent. The current inventory of polyester factories with larger inventories has exceeded 20 days, while the inventory of factories that cut production earlier before the holiday still has around 10 days of inventory. As of January 30, The inventory days of polyester staple fiber are 4.96 days, DTY inventory is 24 days, and FDY inventory is 17 days.
As of February 13, polyester staple fiber inventories increased by 8.64 days, DTY inventories increased by 9 days, and FDY inventories increased by 8.5 days. During the epidemic, logistics was hindered, and downstream weaving production was slow to resume production. The inventory pressure of polyester factories will still increase. It is expected that polyester inventories will exceed historical highs. The inventory pressure and cash flow pressure of polyester factories will continue to increase, forcing Polyester factories are reducing and shutting down production.
Impact on PTA. As polyester factories reduce production and stop production, logistics is hindered, freight efficiency declines, and PTA consumption is suppressed. Moreover, before the Spring Festival, Hengli Petrochemical’s 2.5 million tons and Zhongtai Petrochemical’s 1.2 million tons units were put into operation, and the load of the PTA units reached more than 90%. It is expected that PTA output will hit a new high. The PTA output in February is estimated to reach nearly 4 million tons, and the accumulated PTA inventory from January to February is expected to reach more than 1 million tons. The PTA social inventory will also exceed the historical high of 2 million tons.
From a cash flow perspective, the PTA processing gap reached 700 yuan/ton before the Spring Festival. However, with the rapid decline after the Spring Festival, the PTA processing gap quickly compressed and fell to less than 400 yuan/ton, and the cost of PX purchased before the holiday is nearly 800 US dollars/ton, the willingness of PTA factories to start operations is low, and due to logistics obstruction, most of the social inventory is in PTA factories, and the cash flow pressure of PTA factories has increased sharply. It is expected that the load of PTA plants will most likely decline.
The impact on the textile and garment industry can be divided into two aspects: domestic demand and external demand.
The impact on domestic demand is likely to be greater than that in 2003. The textile and apparel industry is facing a “warm winter” in 2019, and domestic demand has been significantly frustrated. This time, in the first quarter�Superimposing Spring Festival orders is originally the peak sales season, but the epidemic is more contagious than in 2003. The epidemic covers most parts of the country and has a greater impact on the Spring Festival, the traditional consumption peak season. At the same time, the epidemic also has an adverse impact on the demand for spring clothing, making the “warm winter” “After that, the “cold spring” reappeared, which even still had an adverse impact on the demand for summer clothes.
In terms of external demand, on January 30, Director-General Tedros Adhanom Ghebreyesus of the World Health Organization announced that the pneumonia epidemic caused by the new coronavirus constituted a “public health emergency of international concern”, but it was not Travel and trade restrictions against China are recommended. There is a possibility of diversion and postponement of orders from overseas. The second round of trade negotiations between China and the United States has not yet begun, and the market’s wait-and-see sentiment still exists. The sudden outbreak of the epidemic will intensify the market’s cautious sentiment.
Impact on domestic clothing consumption demand
Although clothing is a part of life Necessities, but the basic physiological needs of keeping warm and covering the body have weakened. They are more psychological needs, including aesthetic needs, showing off, scene needs, and herd needs. In the short term, clothing consumer demand is declining. After all, if you wear a mask and go out, no matter how beautiful you are, who will you show it to? Not to mention spending more time at home, a set of pajamas is versatile.
Under the epidemic, according to Maslow’s hierarchy of needs theory, short-term consumer preferences are changing, one ebbs and the other ebbs and flows. Safety needs are ranked first. In the short term, safety protection , medical equipment, insurance, and food industries increased consumer spending.
In the short term, it will have a greater impact on tourism, entertainment, catering, hotels, department stores, and traditional manufacturing industries, which will inevitably affect consumer income. Consumer income is expected to decline. For clothing Consumption expenditures will naturally decrease.
Within a cycle after the epidemic ends, consumption will generally rebound with retaliation. According to optimistic analysis, clothing consumption will also rise in stages. Disasters will affect people’s consumption outlook to a certain extent, increasing Consumers’ pursuit of health, aesthetics, and quality life. For example, after the Wenchuan earthquake, the Sichuan market quickly became the focus of all walks of life to seize the market. People who have experienced and experienced the disaster up close are more willing to consume.
Impact on winter inventory digestion
Procurement and sales of clothing The cycle is generally ordering-loading-sales-clearing, and inventory is divided into production-side inventory and circulation-side inventory. The Spring Festival is an important time node for the digestion of winter clothing inventory.
Inventory is profit, and when it is digested, it is cash flow, which is new purchase money in the next quarter.
The increase in inventory will generate time costs and opportunity costs, reduce cash turnover rate, consume manpower and material resources, occupy warehousing, and increase management costs. The depreciation rate of inventory is astonishing, and the value of the goods is less than half of its original value after one year.
Due to the epidemic, the clearance of winter clothing “perfectly” missed the Spring Festival period. Conservative estimates show that in distribution channels, winter inventory in 2019 will increase by more than 10% compared with 2018, and the net profit margin of the clothing industry is only about 10%.
Impact on spring clothing sales
According to regional differences, spring clothing sales The new time is generally from January to March in the south and from February to April in the north. For offline channel merchants, spring clothing is basically put on the shelves before the year; for e-commerce, the pictures before the year are already on the shelves, which means that the inventory has been In our own warehouse, according to Chinese custom, the payment for the goods that year is basically settled before the Spring Festival.
Offline marketing planning and promotion plans have long been made, and a lot of marketing budget has been spent; for e-commerce companies that focus on spring products, large investment in photography and art expenses have been spent , the promotion fee for the main promotion model has been invested. Taking Tmall as an example, the proportion of advertising fees to sales is generally between 10% and 20%.
As for offline channels, from February to March, consumers will basically not go to physical stores to shop before the epidemic is lifted. After the epidemic is lifted, panic will continue for some time. The prime time period for spring clothing consumption is only one month, so the sales of spring clothing will drop sharply.
As far as e-commerce is concerned, before the epidemic is over, they are in the same boat as offline. After the epidemic is over, part of the offline market share will be transferred to online. Compared with offline days, It’s relatively easy, but it’s just a “point”.
The increase in spring clothing inventory will indirectly affect the production and circulation of autumn clothing. The reason is simple: sell spring inventory in autumn.
Impact on summer clothing sales
The core sales time for summer clothing is 4 -Inventories are digested in June and July-August. From a time point of view, the impact of the epidemic on offline channels’ summer sales is mainly in the early stage. However, during the economic downturn and the periodic decline in consumer demand, offline channels’ summer sales are bound to decline. .
The main delay in online channels is shooting work. Many e-commerce summer products are shot in batches, and February is an important shooting period. Under the epidemic, the share of offline products will be transferred to the online part. Coupled with the retaliatory rebound in consumption after the epidemic, summer will be a good period for e-commerce.
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