A notice of a four-month shutdown of a garment factory went viral on WeChat Moments: Because the customer has suspended all orders from the company, the entire company will be suspended from April 1, and the shutdown is estimated to last until July. 31st!
Seeing this news, textile people expressed great panic! As early as December last year, a textile factory issued a holiday notice for three months. In terms of holiday time, this four-month holiday can truly be called the longest. It’s vacation!
As the foreign epidemic continues to ferment, WHO statistics show that as of 18:00 Central European Time on March 27 (Beijing time) As of 1:00 a.m. on March 28, 512,701 cases of COVID-19 have been confirmed worldwide, with 23,495 deaths. The number of confirmed cases worldwide continues to rise. Many countries have adopted emergency measures such as city closures, country closures, and work suspensions to deal with the spread of the epidemic. This has also led to the decline of textile companies. We continue to receive notifications from customers about order cancellations and order suspensions. Many companies engaged in foreign trade said: They were looking forward to resuming work some time ago, but they have only resumed work for less than a month, and the holidays are about to begin…
Exports Orders from Southeast Asian countries have also been suspended, and cancellations and suspensions of orders are common!
Nowadays, the cancellation or suspension of foreign trade orders is no longer a matter of one or two companies, but has become common. The person in charge of a foreign trade company said: “When we heard a few days ago that many orders from Europe and the United States were cancelled, we had not received any. Although we were a little panicked, we were still lucky. Our company did not involve customers’ garment factories in Europe and the United States. They are also in Southeast Asian countries, but at noon today, we received news that two customers were suspending dyeing! 40,000 meters of oblique peach and 50,000 meters of four-sided bombs were all suspended! The company will not have any orders to make next.”
Coincidentally, another salesperson also revealed: “Because we are afraid that the order will be canceled halfway, now we have reported delivery. The period is shorter than before, and customers don’t dare to place more orders, which only cover a few thousand kilometers. They are also afraid of force majeure and the orders will have to be cancelled.”
“We are working around the clock to catch up on the orders that have not yet been cancelled. The two workers who were doing the printing were fired by the boss because they did not want to work overtime and they did not do their job well. Now they are all our order bookers and salesmen. I personally went to work on the rolls, and the boss also acted as a follower. He has been watching the dyeing process in the dyeing factory, hoping to deliver the goods before the customer stops it!”
Currently, The epicenter of the COVID-19 epidemic is still in European and American countries. Therefore, many companies that did not do European and American orders were relatively calm before and believed that the overall problem was not big. However, as the epidemic deepened, orders from Southeast Asian countries began to be suspended. Although the epidemic in Southeast Asian countries is now It’s not particularly serious. Many of our trade orders in Jiangsu and Zhejiang are exported to garment processing factories in Southeast Asia, but the final export destinations are European and American countries where the epidemic is severe.
There is another situation. Italy, where the epidemic is most severe, is the textile center of Europe and a country of design. The annual Milan Fashion Show is a fashion benchmark for the clothing industry. In addition to being exported directly to Italy, many fabrics are also purchased through other countries, and finally go to Italy for clothing design and then sold to other countries. Without the Italian link, there is no need to purchase fabrics.
Crude oil has plummeted again, and polyester yarn has dropped by more than 800 yuan in a week. The cloth boss: If the cloth cannot be sold, it is better to stop production!
On Friday, relevant sources in Russia reported that Russia is in contact with Saudi Arabia and some other countries and is expected to further negotiate on production cuts. However, Saudi Arabia quickly denied the news. The international crude oil market fell in response, with WTI crude oil falling 7% to the $21 mark; Brent crude oil also fell more than 6% to $24/barrel.
Due to the decline in crude oil, it is also difficult for PTA and ethylene glycol to rise, which has caused polyester filaments to remain in deep decline. The decline is on the one hand due to insufficient upstream support and too high inventory; on the other hand, due to the lack of downstream orders, weaving manufacturers are not motivated to purchase. As of Friday, the quotations of mainstream manufacturers of POY 75D/36F were around 6100-6200 yuan/ton, while the quotations of FDY 50D/24F products fell to around 7300-7400 yuan/ton.
For weaving companies, the inventory of raw materials will be more or less limited, which means that what is used in production now is the stockpiled before. of raw materials. Therefore, on the surface, when polyester prices have dropped, factories will spend less on raw materials. This may seem like good news, but it is not. AgainThere has been a lack of orders recently, weaving manufacturers do not have a strong say, and cloth prices have also fallen with the decline in raw materials. Buying raw materials is like trading in stocks. I thought the raw materials had hit the bottom, and many manufacturers took the opportunity to buy the bottom. But the reality is that there is no bottom, only lower. No one can accurately judge where the bottom is. Now we can only watch the raw materials bought at high prices produce low-priced cloth.
The owner of more than 100 water-jet looms said: “Since March, our gray fabrics have dropped by 2 cents! Next, we are planning to shut down some machines to reduce production. It’s just used as inventory, so it’s better to take the initiative to reduce production.”
“Customers have been lowering the price of goods recently. Last week, they dropped 1 cent, and this week it dropped another 1 cent. My heart is bleeding. The surge at the beginning of the year has been completely wiped out, or even lower. There will be no orders in the future. We are preparing to reduce production. If there are no orders for a long time, we will consider taking a holiday. Too much inventory will occupy working capital. No. We will not sell goods as a last resort, because firstly, it will disrupt the market price, and secondly, we are not willing to do a loss-making business.” said the boss Wang, who owns more than 400 machines.
Editor’s note
The current overseas epidemic continues to escalate, affecting Taking orders from weavers and traders. A cloth boss who has been deeply involved in the textile industry for more than 20 years said: “The most important thing now is not to make profits, but to ensure that we can survive during the epidemic. The first thing is to do a good risk assessment and accept orders. We must control the risks and do a reasonable job.” The quotation ensures the cash flow of the company, and I would rather not do a loss-making transaction.”
Nowadays, textile people are generally feeling sad, but the editor believes that this is only temporary, and now it is a challenge. But it is also an opportunity. Our country has a complete industrial chain and diligent textile workers. Low prices, high quality, and fast shipment are the advantages of China’s textile exports. I believe that after the epidemic, China’s foreign trade exports will clear up. !
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