Judging from the operation of the textile market in February, the overall performance of dyeing plants can be said to be outstanding, and “explosion” and “postponement” have become the main theme of the printing and dyeing industry. However, with the arrival of the traditional peak season, such a “hot” market is showing signs of “cooling down”. The most intuitive manifestation is that the number of gray fabrics entering warehouses in some dyeing factories has dropped significantly.
Is the current state of the dyeing factory just a “virtual fire”? Let’s find out below.
Demand determines the market, and insufficient orders are a hidden danger
The printing and dyeing industry belongs to the transmission link of the textile industry chain. Its upstream is gray cloth and dye suppliers, and its downstream is manufacturing fields such as clothing and home textiles. Taking stock of the market trends over the years, it is not difficult to see that major market trends such as “dye factory explosions” and “dye fee increases” are closely related to downstream demand and are highly cyclical. Therefore, dyeing factories have always been the “wind vane” of the textile industry.
The latest data from the General Administration of Customs shows that from January to February, my country’s textile and apparel exports were US$40.84 billion, a year-on-year decrease of 18.5%. Among them, textile exports were US$19.16 billion, down 22.4% year-on-year; clothing exports were US$21.68 billion, down 14.7% year-on-year.
Image source: China Textile International Capacity Cooperation Enterprise Alliance
It can be seen from the data that since the beginning of the year, the global economy has been shrouded in gloom, and the consumption capacity and consumer confidence of major developed markets have been severely frustrated. At this stage, textile and apparel foreign trade exports are restricted by factors such as weak demand and insufficient orders, and will continue to be under pressure in the future.
Through market research, we found that since February, textile companies have been severely polarized in receiving orders. Some companies have fully turned on their machines and are working overtime to make orders; others have not been optimistic enough about order acceptance, and their operating rates are below the average. As the problem of overcapacity becomes increasingly prominent, purchasing sentiments become increasingly cautious and conservative. There are only a few orders in the market with a volume of more than one million meters, and “small batch, multi-batch” orders are the main ones.
As we all know, the orders of dyeing factories mainly consist of foreign trade orders and market orders. Nowadays, the performance of upstream and downstream orders is not as good as expected. How can the printing and dyeing industry, as a transmission link, be immune?
Lack of favorable support, the rebound momentum slows down
In the past, when expectations for the peak season were optimistic, downstream companies would place orders with dyeing factories 2-3 months in advance. However, now orders from dyeing factories have basically turned into real-time transactions, which shows how cautious fabric buyers are about expectations for the peak season.
According to a dyeing factory salesperson, starting from mid-February, the number of gray fabrics entering the factory began to gradually “shrink”, but the average daily amount can still be maintained at about 750,000 meters. However, in March, the number of gray cloth warehouses declined again. In the first week of March (March 1-3.7), the average daily warehouse warehouse volume was less than 600,000 meters.
According to monitoring data from Silkdu.com, after the start of construction, the operating rates of printing and dyeing companies in the sample rebounded rapidly. Due to the large amount of gray fabrics entering the warehouse in the early stage, the dye vats basically maintained high-load operation and worked overtime to consume the gray fabrics entering the warehouse. However, the current peak season performance of the fabric market is not obvious, market confidence has dropped, and the actual follow-up of new orders is not as good as expected. Affected by this, the recovery momentum of dyeing factory operating rates has slowed down, and delivery times have also been slightly loosened. As of March 10, the printing and dyeing operation rate remained at 77.2%.
According to the analysis of relevant people, this wave of dyeing factory prices is a fake market, and the “explosion” is just an illusion caused by factors such as the backlog of orders from years ago, the inability to keep up with production, and insufficient quality. At present, dyeing factories are experiencing a sluggish supply of orders. Pessimists even predict that some small dyeing factories will start taking turns in 20 days, and that some dyeing factories’ production capacity will be less than 70% in 40 days. When this dilemma comes, all dyeing factories may have a shopping moment. At that time, they can only fight for price, service, quality, and innovation…
Editorial
Taken together, my country’s printing and dyeing companies are relatively concentrated geographically, each company’s market share is not high, and competition is very fierce. In recent years, as the demand side continues to weaken and the living space has been continuously compressed, the printing and dyeing sector has gradually fallen from the altar, and profits have been declining every year. Under the “big waves”, transformation and upgrading to high-end environmental protection may be the only way.
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