In 2021, when raw materials are rising, it is commonplace for textile bosses to have low profits and sell at a loss. How to find a breakthrough point? Making yourself some money is probably something that textile bosses worry about every day.
“There are many orders this year, and the factory’s operating rate has remained at 70%. Yes, the profit is too low, so we don’t make as much this year as we did last year.” A textile boss said sadly.
Raw material prices have risen, and even shipping costs are ridiculously high
Filament weaving companies will still face high cost pressure
Since this year, raw material prices have continued to rise, coupled with the impact of the global epidemic, international freight, RMB exchange rate and other factors , the profits of textile companies have been continuously compressed, and some companies said that “everyone is rushing to make orders that make a few cents.”
Since 2021, against the background of demand recovery, inflation expectations, and OPEC production cuts, the commodity market has continued to strengthen, and the price of Brent crude oil has been rising, exceeding before the outbreak of the new crown epidemic. oil price level. As crude oil prices increase, PTA prices also continue to rise, driving up fluctuations in the unit price of chemical fiber filaments. The prices of major chemical fiber filaments were significantly different in the first and second quarters. In the first quarter, under the influence of rising crude oil, liquidity release, increased speculative demand and other factors, the prices rose significantly, reaching the highest point in the first half of the year at the end of February or early March; The decline continued in the second quarter, and prices fell back. At the same time, cotton prices have been rising, reaching new highs. Under dual pressure, the unit prices of major chemical fiber filaments experienced a “tail-up” trend in July.
China’s chemical fiber filament, cotton and Brent crude oil price charts from January 2020 to July 2021:
Due to the sharp rise in raw material prices at the beginning of the year, some filament weaving companies received orders with high costs and were unable to produce normally. Some orders could only be postponed or canceled, and profit margins were further compressed. Although raw material prices fell back in the second quarter, they were still higher than the same period last year. The industry’s operating pressure has increased, and filament weaving companies will still face high cost pressures.
Not only are the prices of upstream raw materials rising, but even shipping costs are ridiculously high. “This year has been too difficult. Orders are not as good as last year, but costs have risen sharply. Before 2020, the price of shipping a container to the UK was US$2,500, but now the quoted price is US$14,000, an increase of more than 5 times. I have been doing this for almost 20 years “I’ve never seen such a high price before.” Xu Dong, manager of a large woolen export factory in Shandong, told reporters helplessly.
The textile and garment enterprises in coastal areas such as Guangdong, Jiangsu and Zhejiang interviewed by the reporter all said that the price of cotton yarn increased sharply in June and July, but the bargaining power of terminal domestic and foreign sales orders was weak and could not Few foreign trade companies are faced with enemies from both sides, and many export orders are faced with the dilemma of working in vain and “making a lonely profit”. Therefore, they are not very enthusiastic about taking orders, arranging orders, and delivering goods.
The loss widened to 19.54%
The credit sales ratio of chemical fiber weaving enterprises above the designated size is too high, and the inventory is high
Recently, the National Bureau of Statistics released data stating that the operating income of my country’s chemical fiber weaving industry above the designated size in the first half of this year was basically the same as that in 2019 remained unchanged, but the total profit dropped by an average of 7.63% in two years. This was because the loss area expanded from 12.88% to 19.54%, and the loss of loss-making enterprises increased significantly by 95.52%. At the same time, the company’s three expenses increased by 6.3%, accounts receivable increased by 7.62%, and finished product inventory increased by 19.5%. The company’s credit sales ratio was too high, the inventory was high, there were financial risks, and profitability was insufficient.
The above data shows that in the first half of the year, the operation quality and efficiency of the filament weaving industry have improved significantly compared with that during the epidemic. The major economic indicators are continuing to recover. However, affected by the epidemic, international situation, etc. Affected by factors such as the recent fluctuations in the RMB exchange rate and skyrocketing sea freight, coupled with rising costs of raw materials and labor, profit margins have been significantly squeezed, and profitability has not yet returned to pre-epidemic levels. Enterprises are facing more challenges, and there is still a certain degree of smooth operation of the industry. pressure.
The epidemic is still raging
The peak season in September and October is unknown
Although the new coronavirus came fiercely last year, after the high summer temperatures in July and August, epidemics all over the world were improved to a certain extent. Thanks to this, the domestic textile market has gained a breather, a large number of orders have been placed, and weaving, printing and dyeing are busy. However, recently, there has been another global outbreak during hot weather. The new delta virus seems to have completely ignored the impact of hot weather. The main infection cases in various countries are also dominated by new strains. Many countries and cities in South Asia, Southeast Asia, Europe and other regions have been locked down again because of this, and the unblocking date is half a month or even a month away.
This is obviously not good news for the upcoming traditional textile peak season. Although August was in the off-season in the past, we were constantly looking for samples and making preliminary preparations for the upcoming peak season.�, but the market seems relatively quiet this year. The person in charge of a textile store in the market said that there are very few people looking for samples in the market recently. They have no source of new customers, and the few orders they make are from old customers for many years.
The European and American markets, which are in the midst of the epidemic, are hard to devote more energy to textile production due to the impact of city closures and production suspensions. Without proofing and setting out in the early stage, it will be difficult to place substantive orders later.
In addition to facing the uncertain factor of the epidemic, the textile market also faces continuous fluctuations in raw materials that will inevitably affect textile production. An important reason for the sluggish peak season at the beginning of the year is that the price of textile raw materials rose sharply and then dropped sharply after the new year. As a result, the cost of orders received before the year increased and normal production was unable to be carried out. Some orders could only be postponed or cancelled. </p
