On June 29, the heads of state of China and the United States met at the G20 Summit in Osaka. The two heads of state agreed that China and the United States would restart economic and trade consultations on the basis of equality and mutual respect. The United States has stated that it will no longer impose new tariffs on Chinese exports. The economic and trade teams of the two countries will discuss specific issues.
What impact will the easing of Sino-US trade relations have on raw materials, market orders and the subsequent trends in the textile market? How will the weaving and raw material markets perform?
The “fried” polyester market
Whenever there is a disturbance in the market, polyester raw materials tend to respond the fastest. With the Sino-US dollar negotiations reaching good results, polyester products such as PTA and polyester filament have begun to rise sharply.
On July 1, PTA futures hit the daily limit, and polyester filament prices rose by 200-400 yuan/ton.
On July 2, the main force of PTA futures continued to hit the daily limit, and the price of polyester filament rose by 100-300 yuan/ton.
But by July 3, the polyester market could no longer fly.
On the evening of July 2, PTA began to fall in night trading, and on July 3, PTA continued to fall slightly.
On July 4, PTA unexpectedly dropped to the limit, while polyester prices remained stable!
On July 5, PTA continued to fall to the limit, and the price of polyester filament was partially reduced.
In terms of polyester production and sales, since July 3, polyester production and sales have only hovered around 10-20%.
In just one week after the G20 summit reached an agreement, PTA futures went from continuous highs to lows , such ups and downs made the weaving boss who was used to seeing big winds and waves a bit stunned.
Manager Wang of a weaving company in Wujiang said that the current market prices are caused by raw material companies. They have not changed the way factories purchase raw materials. They still buy and use them as they go. At present, the factory The inventory of raw materials is maintained at about 10 days.
We have about 2 months of raw material inventory. Now we don’t have to worry about using the raw materials at all, so we have no plans to buy raw materials in the short term.
Upstream raw materials are constantly being speculated, and downstream weaving companies simply don’t buy it. In the end, the price of raw materials suffered a “blow”. It can be said that this wave of market conditions has been “hyped”.
“Calm” weaving orders
Polyester raw materials have jumped up and down from the upper limit to the lower limit within a week, which is very lively.
The weaving market is just the opposite. It is calm. If there are no orders, there are no orders.
First, July is the traditional off-season in the textile market. In previous years, there were no orders at this time; second, the rising momentum of polyester stopped abruptly, and the raw materials did not bring That kind of long-term and stable rising momentum cannot give traders and clothing companies a sense of urgency that “if they don’t buy it, prices will rise.” Thirdly, the previously expected wave of US orders has not even seen a shadow. US customers Negotiations have not increased recently.
Mr. Lu from a textile company in Wujiang said that after the G20 summit, American customers are still relatively calm. Yes, there are not a large number of orders placed. Their operations this year have been relatively cautious, especially in May. Orders from American customers were not advanced due to the imposition of tariffs, and orders were placed at the normal pace. Therefore, after the Sino-US trade improved, the market did not place many orders. It is estimated that it will take time to confirm this benefit.
Manager Zhu, the person in charge of Wujiangyi’s main jacquard products, said that in the first half of this year, affected by the tense trade relations between China and the United States, the number of orders in the United States dropped more obviously than in the previous two years, but in the Middle East The number of regional customers is increasing, and the orders are also relatively large, with each order basically covering tens of thousands of meters. At present, the relationship with American customers has not improved compared with before. All the customers who should buy have already bought, and customers with potential needs will also need a certain amount of time to find customers.
It can be said that the originally envisioned “tide of orders” did not arrive as expected, and the market remained tepid. However, we also learned during the interview that most bosses had anticipated such a tepid situation in the early stages and were fully mentally prepared for it.
The “wave of production reduction and suspension” is really coming
After visitingWe learned that both the traditional textile clusters in Jiangsu and Zhejiang and the emerging textile clusters in the periphery such as northern Jiangsu, Anhui, Hubei and other peripheral textile clusters have certain-scale production reduction and suspension plans in July.
Mr. Niu said that their company currently has two factories, and the old factory has stopped production. On the one hand, it is because the inventory backlog is too serious, and on the other hand, because the machines in the old factory are relatively small. It was old and unable to produce better quality products, so we took advantage of this period to purchase new machines and carry out technical renovations to the factory.
Even though weaving companies had removed part of their inventory due to traders’ stockpiling, because the market was in the off-season and the number of orders was very small, the fabric produced was almost equal to the inventory. According to previous years’ experience It seems that this situation will continue for at least more than a month.
Wujiangyi has 200 looms. Mr. Zheng, the head of a textile company that specializes in down jacket fabrics, revealed that the current circulation speed of spot goods in the market is still very slow. The demand in the secondary and tertiary markets is still very small. At present, the company’s products are mainly sold to Keqiao, Beijing, and Guangzhou. The market environment in Keqiao this year is not good either. Compared with the same period last year, the price of gray fabrics has dropped by more than 1 yuan/meter.
With the market order situation not improving, due to the pressure of high inventory, the previously rumored “wave of production reduction and suspension” has really come!
Is it good to restart trade negotiations between China and the United States? Yes! But for weaving companies, inventory, raw material prices, orders and funds are their lifeline. Macroeconomic benefits cannot bring tangible benefits in the short term, and the market has exaggerated such news.
As time enters July, the market has entered the off-season. Without the support of orders, most of the cloth bosses’ funds are pressed on inventory. The “big guys” want to replicate last year’s situation. The crazy market can be said to be a miscalculation! </p
