Recently, US Vice President Pence said that 16 states have released official plans to restart their economies, and most states have adopted cautious methods such as phased “resumption of work” and “resumption of work” in different regions. The Institute for Health Metrics and Evaluation (IHME) at the University of Washington in the United States used computer modeling to predict the course of the COVID-19 outbreak. The results show that some states may be able to relax some social isolation measures as early as May 4. The world will gradually unblock and companies will resume work, which also means that textile foreign trade will gradually recover from the “freeze”. This news is undoubtedly exciting news for the textile market and sees the dawn of victory.
01
“Super order” stimulates market enthusiasm for stocking up
Last week, a super order for 210T polyester taffeta appeared in the gray fabric market, which was caused by the scarcity of protective clothing. The sudden large orders have caused the market to become active, and there are also some factors of speculation. A number of middlemen have emerged in the market to purchase gray fabrics. Affected by this, the price of polyester taffeta gray fabrics has been driven higher and higher, with a difference of 0.2 yuan/meter in the morning and afternoon. This super order incident has increased the enthusiasm of some gray cloth middlemen to stock up. In addition to 210T polyester taffeta, which has super orders, there are also middlemen on the market who are purchasing a full range of polyester taffeta, pongee, nylon, four-way stretch and other gray fabrics. Of course, everyone thinks this is speculation, but we cannot ignore the possibility that speculation will cause the price of gray fabrics to increase! Therefore, some cloth bosses are also considering the issue of stocking gray cloth recently.
It’s really a good idea to stock up now Is it the right node? Is it time to buy the dip? These questions may appear in Boss Bu’s mind countless times every day. But there is no single answer to this question. Speculative operations are more about predictions and gambling about the market outlook.
02
The recovery of foreign trade may trigger a price war, prepare in advance
believes Fabric bosses who can stock gray fabrics mainly believe that the lifting of foreign lockdowns and the gradual start of foreign trade will drive the entire textile market, especially the order volume in the second half of the year. However, even if the order volume improves, the downstream gray fabric trading market will still be in a situation of oversupply and undersupply. Under such a situation, price wars to grab orders will be inevitable. Through such predictions, some fabric bosses have the idea of stocking gray fabrics, which saves them the trouble of rising gray fabric prices caused by price wars and competing for orders among peers.
Apersoninchargeofatradingcompanysaid:”Oncenormalproductionresumesinthesecondhalfoftheyearandordersareplaced,therewilldefinitelybeapricewar,soyoucanpreparesome.Iwillstockup.Someconventionalvarietiesofgrayfabrics,suchaspolyestertaffeta,pongee,Oxfordcloth,etc.”
03
Recent Some traders have abundant funds and are able to prepare goods
On the other hand, stocking up must be based on sufficient working capital. The end of the year and the beginning of the year may not be the time when Mr. Bu has the most funds, because many orders cannot be paid back smoothly at the end of the year. Recently, the financial pressure has undoubtedly been great for manufacturers. The machines cannot be stopped, the inventory of gray fabrics is accumulating, and all the cash has been tied up. For fabric merchants, the financial pressure may be very small. Due to the impact of the epidemic, orders have dropped sharply, and corresponding capital investment will also decrease. In addition, repayments from previous orders are being issued one after another, so funds are more abundant. Therefore, substantial actions have been taken in stocking up.
Another person in charge of a trading company said: ” I’m going to buy raw materials and pack machines to produce gabardine in the near future. I’ve been selling this product all year round, and I’m preparing to resume production in foreign trade. In addition, the payment for domestic sales orders last year has been paid off, and the funds have been relieved a lot, and I have the ability. Go stock up some.”
04
There is no lowest price for gray fabrics, only lower prices
Although the analysis of the above two aspects is very reasonable, we can start to prepare to stock up, but we cannot do bad things.If ignored, you should still stock up with caution. Although the current price of raw materials is falling again and again, and the price of gray fabrics has been falling for a long time, there is a saying that “there is no lowest, only lower.” For example, before this year, many weaving bosses thought that the price of raw materials was very low, so they stocked up a lot of goods. Unexpectedly, prices fell all the way after the beginning of the new year. It can be said that they were almost ruined by stocking up. Therefore, we must learn from this lesson. After all, the current market is very unstable and prediction errors are inevitable. Stock up in an appropriate amount and adopt a cautious and conservative attitude.
05
The phenomenon of high inventory still exists, and the market may sell goods for a long time
“High inventory” is a high-frequency word in the textile market this year. Weaving manufacturers are forced to reduce production due to the increasing accumulation of gray fabric inventory. Although we predict that a trade price war is more likely to occur in the second half of the year, the gray fabric market with high inventory will also be affected and a price war will begin. By then, it is very likely that some manufacturers selling at a loss will appear on the market. Prices in the gray cloth market are chaotic, and there may be lower prices than now.
Editor’s Note
Historically, good things must always be bad, and bargain hunting is also risky. Textile companies need to weigh it again and again before doing this, and act within their capabilities. . But in short, we are all preparing for the second half of the year and working towards a common goal!
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