Every year near the end of the year, weaving companies will stock up on raw materials. Once this time comes, the prices of raw materials generally will not rise too much, and they will even occasionally give some small discounts. Discounts and small promotions allow weaving companies to buy more. Just like Double Eleven and Double Twelve, you can spend cheap money shopping while taking the opportunity to destock without affecting the normal pricing of products. This has become a small tacit understanding between weaving companies and polyester factories. However, this year this tacit understanding was broken.
Polyester factory breaks “hidden rules” ”, weaving enterprises are “even more difficult”
At the beginning of this year, due to the high polyester stock of polyester yarn, polyester yarn was in the open market. Prices were reduced after the year, causing weaving companies to suffer losses from hoarding goods last year. It’s like you bought something on Double Eleven, only to find out a week later that the current price is cheaper than the promotional price.
Weaving companies are different from ordinary consumers, and the raw materials they purchase are also completely different in magnitude. This makes them more sensitive to prices. They stocked up on food last year. The loss has given weaving companies a “lesson from the past”.
After a year of sluggish market conditions, weaving companies and polyester factories are having a hard time.
For weaving enterprises, a large amount of gray cloth inventory has accumulated too much capital. The products in the market are highly homogeneous and have overcapacity. The price and profit of cloth have also been affected. It can’t go up because the machine can’t be stopped for various reasons, but it’s difficult to sell the woven cloth and we can only continue to increase the inventory.
For polyester factories, they are also facing a high inventory situation. In terms of polyester profits, they are basically operating at a loss, and the upstream PTA market is bearish. , if the problem of high inventory is not resolved, polyester prices may even fall further.
The last wave of market conditions at the end of the year, both sides The game unfolds quietly
The preparation of raw materials at the end of the year can be said to be the last wave of market trends in the weaving and polyester industry chain this year, and it is beneficial to both parties. It is crucial, and precisely because they are on both sides of the buyer and seller, there seems to be a natural antagonism between weaving companies and polyester factories, and when the last wave of market conditions arrives, the game between the two parties is also unfolding silently.
For both parties, the biggest problem currently is destocking. Excessive inventory suppresses prices and occupies the company’s cash flow.
For weaving companies, they need to ensure their cash flow when it is difficult to collect receivables this year, so they cannot spend a lot of money to purchase raw materials. Gray cloth inventory is difficult to realize in a short period of time. In addition, since the end of the year is approaching, we can control the timing of factory holidays. In a sense, early holiday time can replace selling goods and stopping losses. However, this method will have certain adverse effects on recruiting workers after the beginning of next year. Regarding the issue of stocking up, because they are not optimistic that raw materials will rise at the beginning of next year, weaving companies generally choose to stock up less or no stock on the premise of avoiding risks.
For polyester factories, it turns out that buying up and not buying down has become an “old calendar”. At present, the capital chain of downstream weaving enterprises is tight. There is no ability to withstand the price of raw materials driven by speculation. On the contrary, the promotion can drive a wave of purchasing interest among textile people who are budget-conscious. At present, there is a high probability that polyester factories will adopt a method of increasing production reduction to reduce inventory. However, because the hidden cost of this method is too high, various methods will be used to reduce some inventory before the year.
The price of raw materials has been forcibly raised, and weaving Enterprises cannot afford to buy it
But judging from the current situation, the price of polyester filament has been rising, but weaving enterprises do not buy it. The production and sales of polyester factories have shown no improvement, and polyester yarn inventories are still accumulating.
The price of silk is also difficult to rise in a short period of time. The end of the year is approaching. If the price of polyester filament is raised now, although it is not conducive to destocking, it will only increase the maintenance efforts for polyester companies, but it will raise the benchmark price of next year’s polyester filament. . When weaving companies start operations in the coming year, the silk that needs to be bought will still need to be bought. Overall, this is a thing that has more advantages than disadvantages for polyester companies.
But for weaving companies, the recent increase in polyester prices has further compressed profits, and some well-run companies can still accept it., but for those companies that already have high inventories and are struggling to survive, this will undoubtedly further increase their pressure.
China-US negotiations have made progress next year The market may get better
The market has gotten worse this year. In addition to the fact that the market was so good last year that the raw material end and the weaving end “let themselves go”, the most important thing is The biggest problem is that the demand for end-use textiles and apparel has not kept up. This is due to the cyclical law of “three good years, three bad years” in the existing textile industry, but what is more intuitive is the impact of Sino-US trade friction.
On December 13, China and the United States reached an agreement on the text of the first phase of the economic and trade agreement. The United States will implement the phased elimination of additional tariffs on Chinese products. Relevant commitments were made to achieve the transition from raising tariffs to lowering them.
The gradual elimination of tariffs between China and the United States is definitely a huge benefit to the textile industry. It can fundamentally solve the current oversupply in the weaving market from the demand side. Asking questions. If orders can pick up, the problems currently encountered by textile companies and polyester factories can be easily solved.
The same phenomenon has been seen from recent visits to the market. With the arrival of good news one after another, the textile market has begun to become more confident about next year. At the end of the year Whether it is weaving companies, traders or dyeing factories, there is a rare busy scene this year, which may be a good sign for next year’s market.
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