There seems to be no shortage of topics in the market recently!
The U.S. stock market fell sharply on Monday, with the Dow Jones Industrial Average falling below the 19,000-point mark, and all gains in the S&P 500 Index since Trump took office were wiped out. At the same time, the stock markets of Asia-Pacific, Europe, America and other countries are also in turmoil. The US stock market has officially bid farewell to the bull market and experienced four circuit breakers in two weeks that are rare in the century!
This war extends to various industries! For the textile industry, in addition to falling, it is still falling!
The price drop of raw materials comes so fast like a tornado! Textile boss: It’s fatal!
After the current contradiction between insufficient production capacity and tight supply has been perfectly transitioned, new contradictions have emerged again, doubling the pressure on the domestic textile market. One of the aspects is the continuous decline in raw materials. The bottom-line decline has made the textile boss very uneasy: Now I receive notices of price drops from raw material factories every day, and I have become numb!
Compared with the same period last year, the current price of the entire raw material market is “depressing”. The price center of polyester filament has continued to decline, reaching a low in recent years. The price drop of products is close to 25%–35%.
This round of raw materials continues to fall, and the most direct factor points to the plunge in crude oil. In 2016, because OPEC could not reach an agreement on production cuts, oil prices hit a low of $26.12 per barrel in February.
Four years later, OPEC, led by Saudi Arabia, and non-OPEC countries, led by Russia, have differences over production cuts. Crude oil prices continue to drop, coupled with the prevention and control measures introduced by many countries and regions in response to the new coronavirus epidemic. The impact on oil demand and the fact that the existing production reduction agreement is about to expire at the end of the month have caused international oil prices to fall sharply and approach the low of 20 US dollars per barrel.
As the most upstream product of the entire textile industry, crude oil prices have fallen sharply, causing PTA and MEG to collapse. Polyester filament has also been doomed, with prices continuing to drop.
The decline in gray fabric is 10-20%! Textile Boss: Collapse!
In March, faced with the rising prices of polyester filament, many textile bosses were looking forward to price drops to reduce weaving costs. However, faced with such a “waterfall” drop, The textile boss shouted: Please don’t fall, if it falls again we will collapse!
According to the analysis of sample enterprise data monitored by China Silk City Network, before the Spring Festival in 2020, the raw material stocking cycle of weaving manufacturers is about 20 days. Judging from the production and sales trend chart of polyester filament, only production and sales exceeded 100 on March 3, and the average production and sales of the rest remained at a low level of 40-50%.
It can be seen that many textile bosses produce raw materials before the Chinese New Year or 3 Purchased in the first ten days of the month, the price of raw materials currently produced on the machine is higher than the current price.
The current sales environment comes from two pressures: on the one hand, raw material prices continue to drop, causing customers to lower prices; on the other hand, demand is poor, and there are negative reports in both domestic and foreign trade markets. News, new orders were not being placed smoothly, and previously received orders were canceled, causing the market to begin to run out of inventory. Based on the prediction of the panic in the market outlook, Boss Bu lowered prices to remove inventory in advance.
“There are more customers calling to inquire about prices this week, but actual orders are obviously not as good as in early March. Now that raw materials have fallen, our products have generally fallen by about 0.20 yuan/meter. Some stocks with large stocks will drop even more. Although these are produced with high-priced raw materials, we have to drop them!” said Mr. Wang, an imitation silk owner.
The current price of 210T polyester taffeta has dropped from 1.30 yuan/meter last year to the current 1.10 yuan/meter, a decrease of 15%;
75D glossy satin has dropped from 2.30 yuan/meter Yuan/meter fell to 2.10 yuan/meter, a drop of nearly 10%;
A textile boss said that the current decline in gray fabrics far exceeds the decline in raw material costs, resulting in profit margins Missing, it has entered a point where “every meter of production loses one meter”.
The price drop is scary, but what is even scarier than the price drop is: the customer has stopped production!
Falling raw materials, cost collapse, and loss of profits have become headaches for textile bosses recently. Misfortunes never come singly, as the epidemic has led to foreignThe turmoil in the market has also brought new drag on the current textile market!
Recently, a large number of well-known brands have announced the suspension of production: Hermès, Gucci, Chanel, Patek Philippe and other well-known global brands have announced the suspension of production one after another, and many well-known foreign clothing brands such as ZARA have also announced the closure of overseas stores. Stores and foreign demand have been blocked, which has led to recent order cancellations and suspensions, which have had a lot of impact on both manufacturers and traders.
As early as the beginning of construction, many foreign merchants who placed orders many years ago also followed up specifically The company urged the supplier to complete the order as soon as possible. However, after the company worked hard to complete the work, it suddenly received a notice of order cancellation a few days ago. This has become a “common problem” in the industry!
“Before, I was rushing to deliver the goods, and I finally got the order out of the printing factory, but I was picky about it and said it was not qualified. Originally, these situations would not have happened! I don’t know if the customer wanted to cancel it long ago or it was too difficult! “A trader said helplessly.
Not only foreign trade companies, but also the domestic sales market have encountered many difficulties. At present, major domestic professional markets are recovering slowly, and many textile companies have entered a stage where there are few or even no orders. “Now is a time of dilemma. It is easy to face losses or cancellations if you accept orders. There is also great pressure from all aspects if you do not accept orders. I hope that after March and April, we can usher in a new turn.”
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