It is said that the textile market in 2019 will be too difficult. How difficult is it? The hardest year ever? Obviously not! Dating back to the past few years, low profits and few orders have long been a long-standing problem that plagues weaving companies. Let’s take a look at the specifics.
In 2018, due to the rectification of water-jet looms, there was a serious shortage of goods in the market. Only conventional varieties of gray fabrics could be sold at high prices and manufacturers had the right to speak. However, in 2019, there was extreme overcapacity and manufacturers had to Reduce inventory by lowering prices. However, the editor would like to remind textile people that hot market trends like 2017 and 2018 are “sick”. The market is stimulated by external conditions. Such a situation will not happen often, so we cannot expect it to happen again. If we compare 2019 with 2017 and 2018, the editor believes that the comparability is not strong, so we chose 2016 for comparison.
There were many orders in 2016. Thin profits
In 2016, the market conditions throughout the year were not bad. Needless to say, the two traditional peak seasons were Whether it is domestic sales or export sales, both are good. The company is constantly receiving orders and the workshops are operating at full capacity. Overall, orders in 2016 increased compared to 2015, showing a good upward trend.
However, despite the good market conditions, weaving companies are still in trouble and their profits are constantly compressed. The chart below reminds us of polyester prices in 2016, which showed a straight upward trend. According to the survey data from China Silk City Network that year, about 48.6% of companies said that they were receiving more orders this year, but their profits were decreasing. Every time the raw materials surge, gray cloth manufacturers will follow suit and raise the prices of gray cloths, but the increase in raw materials is much higher than the increase in gray cloth prices. Often a surge in raw materials may only bring about a 0.05 yuan increase in gray fabrics, which can be said to be of no help. There are also many weaving companies that have sacrificed profits or lost orders in the face of the surge in raw materials.
There will be few orders and low profits in 2019
In 2019, the entire textile market has been shrouded in a pattern of “overcapacity”, which has caused the prices of most conventional chemical fiber fabrics to “plunge”. “Small profits but quick turnover” seems to be no longer applicable in 2019, and has evolved into “sell when you are given money”. Especially in the traditional off-season months of July and August, pongee sales can be seen everywhere in the market, and it is not uncommon to clear inventory at a loss.
The price of gray cloth fell by nearly 30%
In 2019, the price of conventional gray fabrics can be said to have dropped both in volume and price. Weaving manufacturers generally reported that the price of gray fabrics has dropped by nearly 30%, and some products have even dropped even more. ! From the price point of view, the price of some specifications of gray fabrics has dropped by more than 1 yuan/meter. It can be said that there is no lowest, only lower! Conventional products such as polyester taffeta and pongee, which are no longer conventional products, are designed to sell at low prices and in large quantities. In this year’s market, we can only protect our capital and maintain normal operations.
Profits of weaving companies have shrunk by 80%
Falling prices have brought about profit compression. According to a survey conducted by China Silk Capital Network, it was concluded that the profits of gray fabric manufacturers generally fell by 80% in 2019! For example, in 2019, the daily profit of a polyester taffeta machine was only 10 yuan/machine, while in 2018 it could reach 50-60 yuan/machine; the profit of Chunya Textile dropped directly from 100 yuan/machine in 2018 to 20-30 yuan/unit in 2019. Compared with the profits in 2018, it really makes weaving manufacturers sad.
Low raw material prices reduce cost burden
Although the market situation in 2019 It is indeed not friendly enough, but there is still an optimistic side. Polyester prices are at a low level. In the second half of the year, polyester prices continued to fall. Even if there was a rebound in the middle, the duration was very short and it quickly fell again. Weaving bosses don’t have to worry about when to stock up on raw materials, they can just buy them and use them as they go. At the same time, there is no cost pressure on raw materials, which can be said to have alleviated a big burden.
Afterwords
By comparing two years, we can see that 2019 was not the worst. Even if the market is good, profits are still compressed, which is an unspeakable pain for weaving companies. Weaving companies are like “sandwich biscuits”. For raw material factories, they must accept that their prices rise and fall, and use cash to purchase. For fabric merchants, the volume of shipments depends on their purchases, and the bargaining power is also in their hands. Finally, the editor’s advice: The market is already like this, just do it and cherish it!
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