The sun is scorching and business is hard to do. In the past two days, the editor has been chatting with a textile boss. It is understood that the peripheral textile factories have lowered the price of gray fabrics to the price of raw materials. You must know that the production capacity of peripheral textile factories is much greater than that of Jiangsu and Zhejiang. If this kind of The phenomenon spread, and it was impossible to even think about it.
The reasons for the current drastic price reduction by factories can be roughly divided into two aspects:
The market is deserted and the operating capacity is low.
From the first half of this year until now, the market has been deserted. Although some companies have continued to place orders, most of them are small orders. The entire market has internal and external worries, domestic trade has been affected by the epidemic, and foreign trade has been affected by “reverse flow”. Under such circumstances, the operating rate in Jiangsu and Zhejiang regions has not been very high this year. Generally, factories have maintained around 50-60%, and many factories simply take holidays when the weather is hot.
When the editor was learning about the market, I once asked if I had heard that the market was beginning to get better. The words of an old textile master woke me up. He said: “If the market is good, go and see the printing and dyeing factory.” Printing and dyeing The factory is a bellwether for the textile market. The editor immediately went to find out about the situation in the printing and dyeing factory. Sure enough, the reply he got was only two words – Liangliang. If the cloth cannot be sold, the only choice is a price war.
Overcapacity and high inventory status
The biggest problem caused by the cold market is overcapacity. In the past two years, when the market was at its peak, weaving manufacturers continued to deploy to the outside world. After the dozens of local machines were moved to the outside world, they generally had hundreds of machines. And due to The peripheral industry has been less affected by the epidemic this year, and with various advantages, many manufacturers are still operating at full capacity. As mentioned above, the current cloth cannot be sold, and so much cloth is produced in stock, which directly causes the current weaving situation. Market inventories are high.
Inventory is high, what should you do if you are in a hurry to get rid of inventory? Then sell at a lower price and earn some costs, and a price war will begin. Since the cost pressures of the peripheral companies are relatively small, they have no scruples in price wars, and the costs of local companies will be more or less higher than those of the peripheral companies. In this way If the consumption continues, it will not be consumed at all. A textile boss said bluntly: “If the inventory is high, we will definitely have to reduce production or even stop production. In the current situation, it is almost cheaper to buy gray fabric than to make it yourself.”
What about profits from such a price war?
The profits of textile companies this year have shrunk by at least 20%-30% compared to previous years. The price difference here is too big. First, the price of gray fabrics cannot rise, but at the same time, the price of raw materials has skyrocketed. Since the beginning of the year, upstream companies have been in a state of decline. With prices rising sharply and plummeting at other times, the downstream companies have no idea how to deal with them. It seems that no matter what procurement strategy they adopt, they will lose money. Therefore, weaving companies now choose to purchase as much as they need and pay little attention to the fluctuations of the upstream market conditions. . You must know that although the market is going up and down now, the overall price of raw materials is still at a high level, and the cost of purchasing is still rising no matter how you buy it.
It is really not easy for textile workers in 2022. Everyone has a lot of proofs, but there are no orders. When there are orders, the quantity is not large. If you make regular products, you will be killed by the price. If you want to squeeze into the circle of new products, the cake is so big. If it is not enough, the last wave of boost for this year’s market is the “Golden Nine and Silver Ten” in the second half of the year, which will be the last life-saving straw to boost the mentality of textile people.
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