As the Spring Festival approaches, the textile and apparel industry has entered the final stage. The operating rate of looms in Jiangsu and Zhejiang has dropped to less than 50%.
Abnormal fluctuations in raw materials at the end of the year
Textile companies are in a dilemma between clearing inventory and stocking up for the year.
Last year, the textile industry chain was affected by rising costs and imbalances between supply and demand, and it has been uncertain.
With the recent fluctuations in the prices of chemical fiber and cotton yarn, textile companies are in a dilemma between clearing inventory and stocking up for the year. “Under normal circumstances, March to April after the new year is a traditional peak season. Domestic demand itself is not optimistic about the raw materials after the holiday, so there is no rush to place orders,” a clothing industry analyst told reporters. According to market reaction, this year’s stocking The volume is less than in previous years, and the industry believes that the textile and apparel industry will be on a low-growth recovery track this year. In addition to the uncertainty of consumption, the person in charge of the above-mentioned Jiangsu enterprise said that on the one hand, the weaving factory is subject to cost pressures such as electricity bills, labor, raw materials, etc., and on the other hand, there is new inventory pressure. “In the past few years, the market first built the inventory and then promoted the popular models. Inventory pressure is shared among weaving factories, traders, and garment factories, but the current marketing model has become to attract popular products first, and then keep up with inventory, so the inventory pressure is all on the weaving factory.” The above-mentioned fabric dealer Cost pressure was also mentioned, “At present, the market price of fabric accessories has stabilized, but the cost of raw materials this year is still relatively high, and downstream purchasing willingness is not strong, and more are only purchased on demand. Taking cotton raw materials as an example, cotton Downstream yarn and clothing price increases are relatively small, and most of the costs need to be absorbed by textile companies themselves, so we cannot compress factory profits.”
Segment leaders continue to expand production capacity
Industry differentiation is gradually increasing
Unstable profits have been a common feature of the textile industry in the past two years, but leading companies in subdivided fields have expanded production capacity, and industry differentiation has gradually increased. “The biggest change in the textile industry in the past two years is that weaving factories have lost their product profits, and corporate profits come purely from the price difference caused by fluctuations in raw material prices.” The person in charge of the above-mentioned Jiangsu enterprise described the future industry pattern as “more and more machines. The number of enterprises is getting smaller and smaller.” The expansion of production capacity is concentrated in the six leading enterprises. “The expansion of upstream production is a good thing for the entire supply and demand market. In a buyer’s market where supply exceeds demand, weaving factories will have many more choices.” According to the disclosed production capacity According to the plan, the growth of polyester production capacity in 2022 will exceed that in 2021, with new production capacity at 5.1 million tons per year, a year-on-year increase of 7.8%; output will reach 61.34 million tons, a year-on-year increase of 6.3%, mostly concentrated in leading companies.
Some listed textile fabric companies have also recently announced production capacity expansion plans. On January 8, Taihua New Materials’ green multi-functional nylon new material integration project with a total investment of 12 billion yuan started in the Hongze Economic Development Zone. After the project is fully put into operation, it will It will form an annual production capacity of 100,000 tons of PA6 recycled yarn, 120,000 tons of PA66 spinning, 200,000 tons of PA6 polymerization and spinning, 600 million meters of gray fabrics, and 200 million meters of finished fabrics after completion. It is expected to achieve an annual output value of 18 billion yuan.
Huafu Fashion, the world’s largest manufacturer and supplier of colored yarn, announced on December 24 last year that it would change the Huafu (Vietnam) 500,000-spindle new yarn project (Phase I) into a 300,000-spindle smart spinning industrial park project. (The project is implemented in Huaibei City, Anhui Province). After the project reaches capacity, it will form a production scale of 300,000 spindles of high-end new yarns, with a total annual profit of 64.54 million yuan.
Zhongwang Fabric, a manufacturer in the sofa fabric segment, recently stated in a research event that the company’s current production capacity has increased from 13.2 million meters per year two years ago to 16.5 million meters per year this year, with an annual output of 15 million meters of high-end decorative fabrics and R&D The main body of the center project has been completed, and 100 loom equipment has been put in place. The apparel OEM company Virginie invested 1.5 billion yuan to build a production base in Zhaoqing, Guangdong, and plans to move domestic production capacity to the new factory in Zhaoqing by the end of 2023.
Generally speaking, the market fluctuations will decrease as the Spring Festival approaches, and the entire textile market is entering this track. However, there is uncertainty in demand after the Spring Festival. Whether the traditional peak season can become justified remains to be verified by the market. If the demand is not as good as expected, the high price may be weak and volatile, otherwise the high price may be strong.
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