Various hot events have emerged in the market recently. The global epidemic is getting worse due to the new delta virus. Ocean freight rates are rising every week. Container freight rates on China-US routes have soared five times to US$20,000… In the traditional textile off-season in August, This news is “adding insult to injury” to textile workers. The peak season market in September and October should be one step closer with the arrival of August. The market in August should also be busy with preparatory work, but in fact the market is even more deserted on the eve of the peak season, which may postpone the peak season. Even canceling the peak season posture.
Normally speaking, July and August are the traditional off-season for textiles, and the textile market will not change much in these two months. However, since August is approaching the peak season, the weaving market has always been prepared to stock up in advance, so the weaving market in August will have a clear upward trend compared to July. In 2019 and 2020, the weaving start-up rate in Jiangsu and Zhejiang began to rise sharply at the end of July and early August. However, this trend is not obvious this year, and even the start-up rates of major textile clusters have dropped to varying degrees since August.
Judging from recent surveys of the light textile market and some foreign trade companies in Guangdong, Jiangsu and Zhejiang, etc. , since July, orders have been received relatively smoothly in all aspects of weaving, fabrics, clothing and other terminals, with more than 80% or even full capacity being able to start up, showing a “low but moderately strong” pattern. However, the concerns of some textile and garment enterprises have also increased, and their expectations for the “Golden Nine and Silver Ten” continue to decline.
Many companies have reported that orders received since July and August have been mainly for Christmas and Easter in developed countries such as Europe, the United States, and Canada (particularly the return orders from Southeast Asia are obvious), which is higher than in previous years. Ordering 2-3 months in advance is characterized by large quantity, low grade, and poor profit, but the order arrangement and delivery time are long. Foreign trade and textile and apparel companies have relatively sufficient time to purchase raw materials, proofing, and start production and shipment.
Due to the “Double Festival” orders being overdrawn in advance, the order and export situation of textile and garment enterprises from October to November may be significantly lower than expected. According to feedback from exporters in Shaoxing, Yiwu and other places in Zhejiang, after February and March this year, domestic and foreign buyers began to stock up, and the peak sales season for cotton yarn, gray cloth, fabrics, etc. arrived early. The production load of the entire textile and garment industry continued to be at a high level, but overdrafts were ahead of schedule. The impact of consumption has also begun to be reflected. Since August, the stocking trend of terminal buyers has gradually subsided, and companies in the textile market are scattered here and there.
With no orders and fewer orders, there is no sense in increasing the weaving operating rate. However, the characteristics of weaving stocking in advance determine that the current reduction in the operating rate is obviously not only a manifestation of the current poor market, but also a lack of confidence in the future textile market.
As for the reasons why orders for this year’s “Double Festival” arrived several months in advance, the industry generally analyzed the following:
First, due to shipping As costs continue to rise sharply and containers are “hard to find”, foreign buyers and retailers place orders in advance to ensure that Chinese processing companies can arrange orders, ship and deliver on time, without affecting Christmas consumption and supply;
Second, since 2021, commodity prices have continued to rise, and the cost of textile and clothing has continued to rise. Ordering in advance is beneficial to both buyers and sellers. Foreign retailers and purchasers have locked in supply and cost in advance, while domestic Textile and clothing companies have increased their purchases of cotton, cotton yarn, etc. during dips to weaken the interference from external factors;
Thirdly, they are worried that the RMB exchange rate will adjust significantly, which will be beneficial to domestic textile and clothing companies through export bills. , using financial instruments to lock in exchange rates and profits, shortening the accounting period of foreign trade business, and other methods to avoid the risk of exchange rate fluctuations.
In July, a common argument in the market was that this year’s textile market was “not strong in the peak season and not weak in the off-season.” The performance of the textile market in the past few months makes people mistakenly think that this year’s off-season will have its own height. However, in fact, this wave of off-season orders is likely to overdraw the future textile market. How much can we expect from the traditional peak season in September and October? Woolen cloth? </p
