Because OPEC members led by Saudi Arabia and non-OPEC members led by Russia failed to reach an agreement to reduce production, the two sides began to engage in a price war, and international oil prices It fell more than 60% in one month, and even fell below the $20 mark on March 30, setting a new low since 2002.
The unprecedented drop in international oil prices has caused a sharp plunge in the price of polyester raw materials.
But on April 2, the crude oil market changed suddenly, and bulls suddenly After the outbreak, U.S. oil rose by more than 30% and Brent oil rose by more than 45%. As of the close of the day, U.S. WTI crude oil futures prices increased by 24.67% to US$25.32/barrel; Brent crude oil futures increased by 21.02% to US$29.94/barrel, both of which were the largest single-day increases in history.
The sharp rebound in international oil prices has also driven up the price of bulk polyester raw materials.
Polyester filament production and sales have also exceeded 100 for two consecutive days, ending the “tragic situation” that has been around 50% since the resumption of work. On the 3rd, some major mainstream manufacturers generally raised their quotations by 100-300 yuan/ton.
Under such circumstances, many cloth bosses have begun to buy raw materials at low prices and take advantage of the opportunity to stock up on large quantities of goods. Is now a good time to buy at the bottom, and what risks lurk behind buying at the bottom?
The low point of raw materials has reached, Take action when it’s time to take action
First of all, the price of polyester raw materials has indeed bottomed out, and there is not much room for decline. The editor has intercepted the trend chart of PTA internal price since 2014. It can be clearly seen from the above that before 2020, the lowest price of PTA was close to 4,000 yuan/ton, but on April 1, 2020, PTA’s The internal quotation has fallen to 3,080 yuan/ton.
The reason why the price of PTA is so low is because of the combination of the lowest international oil price in 18 years and the epidemic that has been rare in the world for decades. Now that oil prices are easing, it is expected that polyester raw materials will start to rebound.
From the production and sales exceeding 100 for two consecutive days, we It can also be found that many weaving companies changed their previous buy-and-use strategy and chose to stock up on bargain hunting during this period.
Manager Wang, the head of a weaving company with 200 water-jet looms, said that he stocked up on raw materials for half a month on Friday. The price of raw materials is already very low now. Even if it gets lower in the future, it will be limited. But if you miss this price, you will definitely regret it in the future. However, because of the limited funds on hand, I bought half a month’s worth of raw materials first.
Manager Wang’s thoughts reflect the current psychology of some weaving companies. On the one hand, they feel that it is time to buy the bottom, and on the other hand, they are troubled by liquidity problems. In the end, I chose to stock up on raw materials in small quantities.
There are also some weaving companies that have been stocking up on raw materials in large quantities in the near future. Generally speaking, these companies have two situations. One is that their business has not been greatly affected recently, so Those companies that can maintain abundant cash flow are now in the minority; the other type has a more radical business strategy and is ready to take advantage of this wave of market trends to “give it a go and turn their bicycles into motorcycles.”
There is more than enough ambition but not enough power. The most important thing is to stay alive
But at the same time, we also see that while some weaving companies choose to buy low-priced raw materials, more companies choose to maintain the status quo. Still buy and use as you go. During the survey, more than half of these companies were identified, and they have very good reasons.
As the epidemic spreads, foreign trade faces the “darkest moment”
As of the morning of April 6, Beijing time, the cumulative number of confirmed cases worldwide has exceeded 1.27 million, with a total of nearly 70,000 deaths. On the 5th, Johns Hopkins University in the United States analyzed the five-day average number of newly confirmed cases and sorted out the latest epidemic trends in countries with more severe COVID-19 epidemics around the world. The data showed that the United States, Italy, Germany, France, the United Kingdom, The epidemic is still spreading in countries such as Belgium…
As a traditional export destination for Chinese textiles, as the epidemic rages in European and American countries, China’s textile foreign trade exports have been greatly impacted.
Manager Liu, the person in charge of a foreign trade export company, said that since the beginning of the new year, their company has not shipped goods to the outside world, and all the things they were negotiating have been cancelled. Production has also been suspended. For example, many of the company’s products are exported to India, but when India went into lockdown on the 20th, customers sent messages saying that orders were suspended. The news said that India would unblock on April 14th, but would it be possible by then? It is unknown whether we will receive orders again, but we have no choice but to wait for notification from customers.
Manager Lin is mainly engaged in the nylon spinning business in Europe and the United States. He also said that since mid-March, foreign orders have been frequently canceled, and some orders The order is returned in advance, and some orders are returned during processing. Currently, foreign trade exports are basically at a standstill.
The experience of order cancellation is not an isolated case. According to an industry survey report in Keqiao, 78.4% of local textile companies said that orders were decreasing, and 64.8% of companies reported that existing orders were canceled by customers.
In 2019, my country’s textile and clothing exports were US$271.5 billion. When the foreign trade market is hindered by the epidemic, the textile industry will inevitably encounter serious overcapacity problems .
What’s more serious is that these problems occur when weaving companies have high inventories of gray fabrics.
Grey fabric inventory, 2019 “Cold Winter” “The “legacy issues”
Starting from May 2019, under the combined effect of Sino-US trade friction and overcapacity of water-jet looms , the inventory of weaving enterprises has become a headache. After 2020, under the repeated blows of domestic epidemics and foreign epidemics, when weaving companies resumed work, gray fabric inventories did not even fall but rose after a short period of consumption. According to data monitoring from China Silk City Network, the gray fabric weaving inventory in Shengze area was about 40-41 days on April 2, which is basically more than before the resumption of work.
In the huge inventory of gray cloth and dim Under the market conditions, many cloth owners have chosen to reduce or suspend production. From the perspective of loom start-up rate, according to data monitoring from China Silk City Network, after late March, the loom start-up rate of weaving enterprises in Jiangsu and Zhejiang did not rise but fell. On April 3, it dropped to 72%, while the start-up rate in the same period last year Nearly 90%.
Manager Lin is a company that produces pongee The person in charge of the weaving company has recently been troubled by the inventory piled up in the warehouse. According to him, the current inventory of pongee has reached 3 million meters, which is almost two months of production. During this period, the factory has already The startup rate has dropped to about 70%. If the inventory continues to accumulate, all machines may be stopped.
Manager Li, the head of a weaving company mainly engaged in the production of woven fabrics, also said that under the pressure of high inventory and low profits, they have currently switched from second shift to The shift has become three shifts, and nearly 1/3 of the machines have stopped. If we still cannot receive orders in the future, we may choose to work in four shifts or even take a holiday.
For some weaving companies, they are unable to receive orders now, and the fabric they produce can only be turned into inventory. The factories have reduced operations and are even preparing to take holidays at any time. In this case, choosing not to stockpile raw materials is also a wise choice.
Postscript
With the arrival of the turning point of crude oil, the price of polyester raw materials began to bottom out at the same time. For weaving companies, whether to stock up on raw materials has become an immediate issue.
On the one hand, the current price of raw materials is indeed cheap, and it is very likely that it is at a low point. It can be said that “you get what you buy”; but on the other hand, As the international epidemic spreads, orders in the market are canceled in large numbers, and weaving production capacity is severely overcapacity. Some weaving companies have chosen to reduce or suspend production.
Therefore, in the current situation, whether it is hoarding raw materials or not hoarding raw materials, there is no right or wrong. It is not advisable to follow the trend. Every enterprise must The situations you face are different, only the one that suits you is the best.
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