On December 13, the State Council Information Office held a press conference to introduce the progress of China-US economic and trade consultations. At the press conference, China stated that as the two sides reached the first-phase agreement, the United States has promised to cancel proposed and already imposed tariffs on some Chinese products and increase the export of Chinese products to the United States.
As soon as the news came out, it was undoubtedly a great benefit to the textile market. After several days of continuous fermentation, many market participants Pay particular attention to the impact of this news on downstream companies. In fact, its impact is a gradual process, and the current changes in downstream weaving enterprises are subtle.
Can textile manufacturers usher in a “stocking wave”?
After the news of Sino-US trade broke out, upstream raw materials experienced a surge. At this time, weaving companies encountered the “routine” year-end stocking market, and this surge continued. Judging from the current plans announced by polyester factories, in order to reduce inventory, the maintenance of polyester factories during the New Year this year will be greater than in previous years. Therefore, the good news about Sino-US trade has a certain boost to the purchase of raw materials by weaving manufacturers. Under this boost, weaving manufacturers may increase their raw material stockings, and it is estimated that the consumption will increase by 3-4 days. According to a survey conducted by China Silk City Network last week, most weaving manufacturers expected to have 30 days of raw material stocking, which may now be extended to 33-34 days.
01
Insufficient funds, act within your capabilities
Storing a large amount of raw materials must be based on what you have on hand There is a premise of sufficient funds, but for weaving manufacturers this year, capital turnover is more difficult. With the market downturn, the credit and debt situation has become more and more serious. The debt cycle is basically 1-3 months, but the editor has also heard of many cases where the money owed is not paid or is simply ignored. At the end of the year, various accounts and expenses are cleared again. When the receivables have not been received, the manufacturer’s funds are particularly tight, and the purchase of raw materials can only be done with more than enough energy but not enough energy!
02
Excess production capacity, do not produce blindly
Furthermore, the overall weaving market this year shows overcapacity, and it is still fermenting. This problem is the crux of the downturn in the weaving market. Many weaving companies have begun to pay attention to it and are working hard to change the status quo. The decline in the operating rate of looms is a manifestation of the weaving manufacturers’ efforts to reduce production capacity. It can be said that manufacturers that buy large quantities of raw materials and produce blindly no longer exist. Most companies have a buy-and-use attitude, but in order to prevent the price of raw materials from rising after the year, they will stock up appropriately.
Can traders usher in a “stocking wave”?
It is said that this year’s sluggish textile market is due to the decrease in overall apparel fabric exports caused by the Sino-US trade war. For example, an Oxford cloth company in Shengze received a large order of 150,000 meters in March and April this year, but in May the customer canceled the order due to tariffs. The orders received by downstream companies reflect that the Sino-US trade war has indeed had an impact on companies receiving orders. After the good news about Sino-US trade is released, there may be a substantial improvement in fabric orders next year. We are currently at the end of the year, and stocking up is a routine operation every year. Traders may relax their vigilance in stocking and increase the stocking volume appropriately, but the editor predicts that the volume will increase by up to one week.
01
Prudent stocking under high inventory conditions
Although the Sino-US trade war continues to ease , but it is unknown how much impact the increase in orders received by companies will have on the heating up of the textile market next year. Traders are still cautious in stocking up. There are so many inventories on the market that have not been digested, which is the biggest “ticking time bomb”. Once a manufacturer sells goods on a large scale next year, the market price will definitely drop. Then traders will lose their competitive price advantage and stocking up will become inventory. If you sell at a low price, you will end up with a loss. This is why most traders dare not stock up in large quantities.
02
Lack of expectations for next year Market conditions
In addition, the textile market at the end of the year did not usher in the expected “rush for goods”, and traders are not very confident that the market will improve next year. For example, this year’s Oxford cloth market has been greatly suppressed by the Sino-US trade friction. Manager Tao, the person in charge of a textile trading company, said that two US orders this year have been suspended. The cloth has been woven, but the orders have been suspended indefinitely. Traders’ confidence in the market has been suppressed due to the disruption in order acceptance caused by the Sino-US trade friction. Based on the above two reasons, it is unlikely that the positive Sino-US trade will stimulate traders to prepare large quantities of goods.
Can stocking restrain the decline in weaving manufacturers’ operating rates?
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Since the end of November, major textile clusters have shown “cooling down” signals, and the startup rate has declined. At present, the average operating rate of looms in Shengze is concentrated around 80%, the water-jet looms in Changxing remain at 70-80%, and the average operating rate of looms in Changshu is around 80%.The operating rate of Haining warp knitting machines is around 70%, and the operating rate of Xiaoshao circular knitting machines is about 50-60%. After the good news about Sino-US trade comes out, can weaving manufacturers suppress the decline in the loom operating rate?
The editor’s answer is no . This year, due to the sluggish market during the peak season, weaving manufacturers have not sold as much as expected, so inventories are on the rise, and prices have also declined due to the dual pressure of raw materials and demand. According to the monitoring of China Silk City Network, the inventory of gray cloth in Shengze area has been at a high level of about 38 days in December. The inventory of some companies with high inventory has been as high as 2-3 months, or even more than half a year. In the same period last year, it was about 30 days. . Under the pressure of high inventory, manufacturers have to reduce the load by reducing the operating rate.
Can stocking drive gray fabrics and fabrics? What’s the delivery speed?
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The current market is still not satisfactory. Market orders have come to an end, but foreign trade orders are still mediocre. At present, the overall printing and dyeing delivery time in Shengze area is between 7-10 days, which can be said to be very smooth. In previous years, dyeing factories would issue news of liquidation at this time, and traders were rushing to ship out the last batch of goods before the Spring Festival. However, this year, most dyeing factories said that there was not much work, and the operating capacity of dye vats was only maintained at about 80%. A very few dyeing factories Liquidation occurs. The inventory of gray fabrics of weaving manufacturers is also gradually increasing slightly, and the sales atmosphere of gray fabrics is not good.
From the perspective of market conditions, China The positive release of US trade has not directly affected the downstream market. In fact, for the downstream industry chain that is already in the final stages of finishing work, it is minimal to directly promote the number of orders received by enterprises. The Spring Festival holiday is getting shorter and shorter, and the original orders from end customers have basically come to an end. It is unlikely that there will be a wave of orders. The stocking of downstream traders is also a process of purchasing one after another. In addition, for the huge gray cloth market, small batch stocking will not make a big splash on the market.
Afterword
In summary, the editor believes that the easing of Sino-US trade relations will have a certain impact on downstream textile enterprises, especially enterprises The enthusiasm for order taking and stocking has been improved to a certain extent, but the direct effect on the volume of gray fabric shipments and fabric order volume is not obvious. Regardless of the stimulating effect of this good news on the market, it has increased the enthusiasm of textile people. For this year’s sluggish market conditions, don’t we need such a “shot in the arm”?
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