May is approaching, and the textile market is about to usher in the traditional off-season.
“It stands to reason that the market will slowly enter a cold period. But what is gratifying is that the number of people coming to our company for sampling and inquiry this week has increased instead of decreasing, showing a busy scene.” A textile person said to the editor with emotion road.
The “Silver Four” is coming to an end, and some companies are experiencing the above-mentioned abnormal phenomena. What is going on?
Inventory is reduced, autumn and winter fabrics are starting to go out
During the Shanghai exhibition, the editor found that many textile companies invariably displayed autumn and winter fabrics in more eye-catching positions, and most of these fabrics were differentiated fabrics newly developed by the companies. Judging from the exhibition survey, the frequency of sampling and inquiry of autumn and winter fabrics at the exhibition is very high, especially the traffic drainage capacity of various new fabrics cannot be underestimated.
According to previous experience, from May to July every year, as the spring and summer fabric sales come to an end, the textile market will usher in a new round of product selection cycle. At this time, clothing companies will basically prepare for autumn and winter clothing in the second half of the year or next year, which is the regular stocking period for autumn and winter fabrics.
The textile person at the beginning of the article works for a trading company. The company’s business is “both internal and external” and its main business is nylon fabrics. According to him, since late April, the company’s fabric inventory has dropped significantly compared with the previous period, and there is currently only a small amount of inventory backlog. From the perspective of product sales, there are two fabrics that perform relatively well. One is imitation memory T400 fabric, which is mainly used to make jackets. There is also a nylon plaid fabric, which is a commonly used fabric for making down jackets. Looking at the volume of orders placed, the order volume of these two fabrics is about 200,000 meters, which is quite large.
When asked about the advantages of hot-selling fabrics, he said that the quality of these fabrics is superior, and the quality is comparable to that of market products, and they have won a good reputation among customers. High-quality products increase customer stickiness, which naturally leads to more orders.
Running volume is the main focus, and involution leads to profit decline
Since early April, the inventory of gray fabrics in weaving enterprises has stopped the downward trend and gradually stabilized and rebounded. As market inventory continues to accumulate, some companies have no choice but to choose to sell products at low prices in order to grab orders and effectively destock. This is a price war accompanying involution. However, today’s price war is no longer just a game between peers. Clothing brands and buyers have also “stepped in”, and price reductions during negotiations are common.
Through market research, we found that the current orders received by textile companies are generally small in size, concentrated between a few thousand meters to tens of thousands of meters. Occasionally, there are orders of hundreds of thousands of meters or hundreds of thousands of meters, and hundreds of thousands of meters. Oversized orders of 10,000 meters are almost extinct. Although it is inevitable that the order volume will shrink, what is even more frustrating is that whenever the order volume reaches a certain volume, price reduction will also occur.
“Now in order to increase sales volume, some profit margins must be sacrificed more or less. For example, the profits of the two hot-selling fabrics mentioned above are only 5%-6%, barely within the normal range. From a price perspective, even if the upstream raw materials If the price rises, it will be difficult to drive up the price of fabrics in the short term. For example, the price of raw materials has been rising continuously a while ago, but downstream buyers will still come to negotiate based on the low point of raw material prices. Once you raise the price, they will turn around and look for more quotes. Low corporate procurement.” The textile person said.
In an increasingly transparent market environment, it is no longer easy to increase fabric prices.
Postscript:
As the May Day holiday approaches, some companies surveyed are busy catching up on orders, and even holiday plans have been temporarily put on hold. Whether “Red May” can become a reality depends on how the textile market changes in the later period…
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