Recently, the editor and my friend Xiao Wang, who runs a weaving factory at home, were together While chatting, we came up with the issue of stocking up for the year-end holidays. Xiao Wang said that they should have an early holiday at the end of this year, and they may only prepare to stock up on raw materials for half a month, which is half the amount of one month in previous years.
Why do weaving manufacturers need to Pre-stocking?
Similar to holidays and debt collection, stocking up at the end of the year is a “routine operation” for weaving companies before the Chinese New Year every year. It has a “very long history.” But how did this “history” come into being?
This is the case every year. The price of polyester raw materials rises at the beginning of the year. Price
For weaving enterprises, the price of raw materials accounts for the vast majority of product costs and is the most important influence on the price and profit of gray fabrics. One of the factors. Therefore, textile workers will be extremely sensitive to changes in raw material prices.
After so many years of production and operation, textile people have also formed their own set of experiences with changes in raw material prices – polyester raw materials will increase in price after the year .
In order to verify this conclusion, the editor specially rummaged through the box and found out the price change data of polyester filament from 2015 to now. Sure enough, after the Chinese New Year every year, the price of polyester yarn will rise.
Things are complicated at the beginning of the new year, and raw materials need to be arranged for production as soon as possible
It is important for everyone to resume production after the new year. Weaving businesses are a mess. Nowadays, it has become a common phenomenon in the textile market that recruitment of workers is difficult and expensive, especially skilled workers, security workers and other technical jobs. All weaving companies need them, but they are in short supply in the market.
Therefore, when the new year starts, textile companies will generally put a lot of energy into recruiting workers. In addition to recruiting workers, they also have to deal with tedious matters such as taking orders and arranging production. They are all top priorities after the beginning of the new year. Purchasing raw materials as a pre-production step is naturally the sooner the better.
In general, we can use a small theater to explain this reason.
There is a new weaving factory that has been opened less than a year ago and is preparing to start operations after the new year. Because of lack of experience or tight funds, the boss has no awareness of stocking up on raw materials before the new year. As a result, when production started at the beginning of the new year, he found that there was not much raw material left. The boss was struggling to recruit workers, while looking at the skyrocketing polyester prices, he called the polyester factory and some manufacturers were reluctant to sell. The textile boss was heartbroken and decided to stock up on a batch of raw materials before the Chinese New Year holiday every year from now on.
This year’s textile market environment, Everyone knows it
But the situation this year may be somewhat different from the previous two years.
This year’s market situation is really “everyone knows it”, terminal demand is insufficient, the prices of raw materials and gray fabrics have been falling, and the inventory of conventional products in the weaving market has “broken through the sky” , and more importantly, the capital chain is very tight.
Under such circumstances, selling goods has become a routine operation for textile companies: No money to buy raw materials? Sell goods! No money to pay wages? Sell goods! No money to pay for water and electricity? Sell goods! Too much inventory to store? Or dump goods…
Buying raw materials for production while throwing away the produced products to maintain production has become a “routine operation” for some weaving companies. When almost all working capital is turned into inventory, this phenomenon is not surprising.
Back to the issue of raw material prices, this year’s The price of raw materials can be described as “falling”.
PTA prices have been falling since July and have now fallen to around 4,700 yuan/ton, a three-year low.
The price of polyester filament is not much better, POY150D The price of /144F has now dropped to around 7,000 yuan/ton.
Such a price trend makes the market lose focus Confidence in ester raw materials, the common raw material purchasing strategy of weaving companies today is to buy and use as they go, and the purchasing cycle is basically compressed to less than a week, so they are afraid of buying raw materials.Later its price dropped again.
Coupled with the wave of new PTA equipment being put into production starting in November, the market is further bearish on the price of polyester raw materials. “The price of polyester raw materials will increase after the Chinese New Year.” This most important prerequisite for textile companies to stock up on raw materials before the holiday has now become an uncertain event.
If weaving companies do not stock raw materials , what will happen to the market?
Affected by factors such as excessive inventory of conventional products in weaving companies, tight capital chains, and short selling of polyester raw materials, this year’s textile companies before the holiday Whether and how much raw materials will be stocked is unknown.
Let’s make a hypothesis here. If it becomes a common phenomenon for textile companies to reduce the stocking of raw materials before the holidays, what will happen to the textile and polyester market after the new year? What impact will it have?
Raw material inventories are high
According to the data monitoring of China Silk City Network, the pre-holiday stocking market before the Chinese New Year last year caused polyester factories to remove about 10 days of inventory. Even so after the new year, due to poor buying momentum The average inventory of polyester factories has still increased to a high level. If this year’s market trends are followed, the inventory accumulation of polyester factories at the beginning of next year will far exceed this year’s.
Falling raw material prices
The high inventory of polyester factories at the beginning of this year severely suppressed the polyester industry. The price of polyester yarn had not yet shown a downward trend at that time, and PTA was still strong. However, because of the high inventory of polyester yarn, prices and profits could not rise. If the inventory of polyester factories next year is higher than last year, and the price of PTA has dropped so much, polyester prices will not be optimistic at the beginning of next year.
Weaving companies continue to accumulate inventory
The biggest problem facing weaving companies now is that the inventory of gray fabrics continues to depreciate as raw material prices fall, resulting in traders being unwilling to stock up, and the burden of inventory falls on weaving companies. . Once raw material prices continue to fall at the beginning of next year, the inventory of weaving companies is likely to continue to accumulate, and then continue the vicious cycle that started in the second half of this year.
If this phenomenon really happens, the period at the beginning of next year may become a continuation of the downturn in the second half of this year. This is something textile people don’t want to see, but judging from the current situation, there is a high probability that this will become a reality.
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