Today, U.S. inflation remained at 8.6% in May, the highest level in 40 years. Inflation not only causes international oil prices to continue to rise, but also causes global demand to shrink. Therefore, the Federal Reserve has to significantly raise interest rates to suppress inflation, and is also considering removing tariffs to ease inflationary pressure.
It has been four years since the “Section 301” imposed additional tariffs on China. Its impact on the textile industry is still deep in the bones, and the industry’s prosperity has not yet recovered. From the perspective of the U.S. market, my country exports relatively more textiles and daily necessities to the United States. Therefore, as the Sino-US trade war continues, the textile industry will also be affected for a long time.
Since the Sino-US trade war, especially the additional tariffs imposed on China, the inflation problem in the United States has been exacerbated. The global epidemic has lasted for more than two years. It is the main culprit that has caused the industry’s downturn in the past two years, but it also includes the Sino-US trade war and this year’s Russia-Ukraine war.
01
The foreign trade market shrinks and profits decrease
In the first half of this year, the order-taking atmosphere in the foreign trade market was sluggish, with a decline compared with the same period last year, and profits were also not as good as the same period last year. Nowadays, export orders to Europe and the United States have decreased. On the one hand, the market there has shrunk, and on the other hand, customers have severely reduced prices, resulting in low profit margins. Compared with last year, the price of gray fabrics this year is actually basically the same as last year. However, it is still difficult to compensate for the profit compression caused by the increase in raw materials, labor and other costs. The profits of foreign trade orders have been significantly diluted. In addition, there are many uncertain factors in the external environment. The RMB exchange rate also fluctuates frequently, so profit margins are extremely low and traders are under great pressure.
Since this year, the entire textile market has been shrouded in a pattern of “overcapacity”. Even though the upstream raw materials have climbed to historical highs, the prices of most conventional chemical fiber fabrics have still plummeted. Recently, I visited and surveyed some nylon silk, imitation silk and pongee companies and found that the prices of almost all varieties have dropped to varying degrees: for example, 300T pongee was 2.2 yuan/meter at the beginning of the year, and the current price is 1.6 yuan/meter; 75D The price of 24T chiffon dropped from 3.3 yuan/meter in previous years to 2.4 yuan/meter; the price of 380T nylon silk dropped from 3.8 yuan/meter to only 2.3 yuan/meter…
A foreign trade textile person exporting to Europe and the United States said: “Although the market is not good this year and gray fabrics are being sold out, the overall price is not much different from last year. However, customers have seriously suppressed prices, and there is serious competition among peers for orders, resulting in a decline in profits. It was down 3% in the same period last year.”
02
There are positive reports in the foreign trade market, and the second half of the year is expected to
According to data from the General Administration of Customs, from January to May this year, Sino-US trade volume reached 2 trillion yuan, a year-on-year increase of 10.1%. Among them, China’s exports to the United States were 1.51 trillion yuan, a year-on-year increase of 12.9%; China’s imports from the United States were 489.27 billion yuan, a year-on-year increase of 2.1%.
From the above export data, we can see that the trade volume between China and the United States is still growing. In fact, China and the United States are still important trading partners. However, if both sides cancel the previously imposed tariffs, it can reduce the burden on export enterprises and expand trade. Help the economy recover from the epidemic. On the other hand, the elimination of additional tariffs will also help boost global market confidence. Looking back on the past, once there is news about the easing of trade relations between China and the United States, the market often rises in response. Therefore, regardless of whether the items that remove tariffs involve textiles, this benefit can still affect the textile market and alleviate the shrinking order situation.
In addition, there is also good news on sea freight. Recently, inflation has affected consumer demand in Europe and the United States. In the latest week, the Shanghai Export Container Freight Index (SCFI) ended four consecutive weeks of rising trends and turned down again.
On June 17, the Shanghai Shipping Exchange announced the latest SCFI comprehensive index, which fell 0.27% to 4221.96 points. Freight rates for the three major long-distance routes fell across the board. Among them, the freight rate per FEU on the US Eastern Line fell by US$25 to US$10,073, a weekly decrease of 0.25%, continuing to hit a new low since August last year; the US Western Line freight rate per FEU fell by US$141 to US$7,489, a weekly decrease of 1.85%, a record high last year. A new low since late December. The freight rate per TEU on the European line fell by US$50 to US$5,793, a weekly decrease of 0.86%, a new low since June last year; the freight rate per TEU on the Mediterranean line fell by US$70 to US$6,487, a weekly decrease of 1.07%.
The drop in freight rates is undoubtedly the best news for foreign traders in the off-season. The overall performance of the foreign trade market in the first half of the year was mediocre, and the domestic trade market also had no bright spots, leaving many cloth owners to place their hopes on the market in the second half of the year. At present, the second half of the year is full of positive news, and the prosperity of the foreign trade market is expected to increase. In addition, judging from the seasonal demand pattern, the demand that has been suppressed in the past half year may increase to a certain extent in the second half of the year.
Summarize
For the market in the second half of the year, Sino-US trade relations, the epidemic, and geopolitics are the main macroeconomic factors.Factors such as exchange rate, cost, price and other micro aspects are also important factors affecting the foreign trade market.
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