After the May Day holiday, the exchange rate of RMB against the US dollar rose sharply, once again making foreign trade people cry without tears!
On May 7, the central parity rate of the RMB against the US dollar was reported at 6.4678. The exchange rate opened higher and moved higher, rising by more than 100 points during the session. As of 16:30 that day, it was reported at 6.4589, an appreciation of 150 from the previous closing price. point.
On May 10, the RMB exchange rate against the US dollar opened at 6.4275, an increase of 109 basis points from the previous trading day, hitting a new high since June 2018.
After the exchange rate fluctuated, foreign traders missed the opportunity to settle foreign exchange and encountered price pressure from customers. As we all know, the exchange rate has the greatest impact on textile foreign traders. Undoubtedly it is the exchange rate at the time of settlement and the quotation given to the customer. While many foreign traders were still “waiting for a better opportunity to settle foreign exchange,” the U.S. dollar had fallen sharply and the good opportunity was missed. For enterprises that have difficulty in capital turnover, it may be too long to wait for the next better opportunity to settle foreign exchange. When they are in urgent need of funds, they can only reluctantly settle foreign exchange. With this fluctuation in the exchange rate, taking 1 million U.S. dollars as an example, foreign traders can only watch helplessly as they lose nearly 800,000 to 900,000 yuan, and feel heartbroken! At the same time, foreign customers who are also always concerned about exchange rate fluctuations immediately send emails to lower prices, driving prices down again and again. As everyone knows, today’s quotations no longer have much profit to speak of and cannot withstand price reductions. In addition, this year’s foreign trade market is still affected by the epidemic, and the number of orders is still hard-won. Some companies even take orders at a loss, so when customers lower prices, they end up having to compromise.
Mr. Wang, an old trade master, revealed: “I received emails and chat messages from customers as soon as I got to work after May Day. They were all about lowering prices, and most of them asked for a reduction of US$0.1. It’s just happened recently. There are some orders that are still being negotiated but no contracts have been signed. In order to accept these orders, we have to bite the bullet and lower the prices.”
In addition to the strengthening of the RMB exchange rate, the recent increase in shipping prices and the difficulty in determining container prices This is something that makes foreign trade people feel tired. It is understood that due to multiple factors such as the shortage of labor caused by the spread of the epidemic, the majority of foreign trade companies are currently facing common difficulties:
Freight prices are rising every day, and they are rising crazily;
If you are willing to pay this money, you may not be able to get the cabinet;
Even if the cabinet is guaranteed, the ship may not be able to leave on time;
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Finally arrived at the destination port, but the port was so congested that we could only continue queuing on the sea;
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Marine shipping containers are stranded, costs are soaring, and foreign trade companies are under pressure again. Shipping costs have been rising since the third quarter of last year, and exports have become textile foreign trade. The biggest headache for companies. The high sea freight costs are beyond the reach of both trading parties!
Xiao Zhang, a foreign trade salesman, said: “Our customers all quote FOB prices. Recently, the sea freight has been too high. The customer cannot accept it, so he informed us not to ship the goods and wait until the freight drops a little bit before shipping. But This has also caused trouble for our company. There are so many goods that have not been shipped after production, and the warehouse is almost full of space. I have been worrying about this recently. If I rent a place to stock, it is unnecessary to add another sum. The cost!”
However, there are also some foreign trade companies that conduct transactions using CNF, and the shipping costs are borne by the cloth bosses themselves, so the impact on them is very large. Therefore, many foreign trade people said with emotion that this year they are not working for the boss, but for the shipping company!
It is worth noting that under the current situation of “high fever” in shipping, shipping companies are brewing a new wave of price increases. Starting from June 1, shipowners on the Trans-Pacific route are preparing to issue significant freight increase notices (GRI).
After seeing this news, foreign trade people feel chilled in this hot May. ! Textile companies have always operated on a small profit. Once affected by factors such as large exchange rate fluctuations and rising sea freight, an order may be made at a loss. This year’s foreign trade market is still not good. The overseas epidemic situation has worsened again, coupled with large exchange rate fluctuations, shortages of containers, rising freight costs, etc., resulting in repeated dilution of profits. In fact, these problems have been plaguing textile foreign trade people for a long time. At this time, the more cloth bosses need to stay awake, settle foreign exchange at the appropriate time, and never have a bargain-hunting mentality! In addition, the sky-high sea freight makes it difficult for any trader to ignore this cost, so please increase the freight budget in future quotations.
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