The Spring Festival is getting closer and closer, and there are more and more voices in the market about textile companies taking holidays. Looking at the past 2019 and the still grim situation in 2020, it can be said to be a mixed blessing. At present, the production enthusiasm of major textile and garment clusters is obviously cooling down, and the mentality in the market is obviously weakening.
“The overall business this year is average.” A boss who has been in the textile business for more than 20 years said . This year, both the raw material market and the fabric market have experienced deep declines. Some chemical fiber fabrics have fallen by nearly 5 cents/meter per month, and some have been selling at low prices. So why is the market so unsatisfactory this year? In fact, there are many reasons, such as production capacity, external environment, policies, etc. Among them, the vigorous expansion of peripheral production capacity has caused overcapacity in the market and has become an “important straw” that overwhelms the market this year!
Cloth production increased by nearly 20% year-on-year, and overcapacity is more than just talk!
Since this year, “overcapacity” has become an indelible pain in everyone’s heart. Many textile bosses who set up factories in peripheral areas also have a headache holding a large amount of inventory.
In fact, as early as 2 years ago, going to the Midwest to buy land and set up factories was a new “Garden of Eden” for textile bosses pursuing wealth. In the years of 2017 and 2018, when “every day makes money”, as Jiangsu and Zhejiang eliminated water-jet loom production capacity, in order to meet production needs, weaving companies began to move to peripheral areas. Companies in southern Jiangsu moved to northern Jiangsu, and companies in Zhejiang and Shanghai Enterprises are moving to Hunan, Hubei, Jiangxi and other places.
In an era when environmental protection is prevalent, many textile factories that have been liquidated have begun to relocate. To the central, western and inland regions, and in accordance with local investment requirements, hundreds of hundreds of new products were launched, resulting in a blowout of the originally shrinking production capacity a year later.
According to estimates by many industry insiders, the current production capacity of water-jet looms in Anhui Province is close to 40,000 units; the production capacity of water-jet looms in Hubei Province is It has reached about 23,000 units, and Northern Jiangsu is the “first stop” for many bosses to transfer, with greater output.
If the newly added loom production capacity is added up, it has already exceeded 200,000 units, exceeding the number eliminated in Wujiang, Jiaxing, Huzhou and other places. The production capacity gap originally caused by loom renovation has been filled, and there is even a lot of surplus.
Take the textile industry in Anhui Province as an example. In 2018, yarn output was 1.276 million tons, a year-on-year increase of 15.6%; cloth output was 970 million meters, a year-on-year increase of 19.4%; clothing output was 940 million pieces , a year-on-year increase of 1.4%; chemical fiber output was 396,000 tons, a year-on-year increase of 10.5%. It can be seen that the entire industrial chain is expanding, especially the output of raw materials and gray fabrics, with growth rates exceeding 10%.
(Output of main products in Anhui textile industry from 2011 to 2018)
The sharp increase in production has laid the “foreshadowing” for this year’s overcapacity! After a year, the textile boss who was originally preparing to go out to do something big now feels even more pressure. There is less than a month left before the Chinese New Year, and many textile bosses who have built factories in other places are already preparing for their holidays.
The inventory is so piled up that it can’t be put down. Boss Bu said frankly: He will have a holiday until the end of December!
Because the technological level of emerging industrial clusters is not as good as that of coastal areas, the homogeneity of products produced is serious, which ultimately leads to a surplus of conventional products in the market.
“We have been running only half of the machines since November, and there is too much inventory in the factory.” A textile boss who put into production in northern Jiangsu in 2018 said, “This year The pressure to set up a factory is great, and the profits are low. Now we can only earn about 10-20 yuan per loom, so we can only maintain a normal livelihood.”
It is understood that, Entering December, some textile manufacturers have either stopped production and taken holidays, or reduced production and destocked inventories. The market has been operating at a relatively low level. Many manufacturers have only opened about 50% of their machines, and the prices of conventional chemical fiber products have frequently dropped.
“We are now controlling inventory by reducing operating hours. We don’t dare to take a holiday too early for fear that we won’t be able to retain workers next year, but we will also take a holiday in 1 or 2 weeks. .” said Mr. Chen, the owner of another textile factory.
In addition, many textile factory owners plan to have a holiday at the end of December. The inventory pressure of manufacturers is relatively high. Almost every factory has more than 2 months of inventory, and some even have more than 2 months of inventory. Half a year’s worth.
In fact, entering the second half of this year, the peripheral textile market has shown weakness. In previous years, we would go all out to rush production during the National Day holiday. In order to rush the orders for the “Silver Ten” holiday, we would rarely take a three-day holiday, but this year is very “different.” Due to the sluggish market season, manufacturers have large production capacity and have been in a state of accumulated inventory. As a result, the market has a collective “holiday” during the National Day holiday this year. Most peripheral manufacturers have a holiday of 3 days or more. I even heard that some manufacturers directly connect the Mid-Autumn Festival with the National Day. The reason is because the inventory is high!
Overall, it has entered the last month before the Spring Festival, and most Textile factories already have their own holiday plans. Roughly speaking, the increase in peripheral production capacity and the decline in industry prosperity this year will make the textile industry in 2019 thorny. However, even when the market is in a downturn, there are still bright spots to be found in the market. : For example, with the change of trends, imitation silk has changed from spring and summer fabrics to all-season fabrics, and the demand prospects are greater. For example, non-ammonia super elastic fabrics are still developing. For example, many textile bosses with large inventories are preparing to open spot supermarket models. , transformation and development…
So, textile people, come on, welcome a new year full of unknowns, and don’t let overcapacity “stumbling” “!
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