The COVID-19 epidemic is still to blame!
The U.S. stock market, which has experienced meltdowns three times in eight days, has turned into a “roller coaster” this time.
After the Federal Reserve’s “cutting interest rates to zero + quantitative easing” failed to affect the stock market, on March 17, local time, the Federal Reserve launched the “big killer” of the financial crisis. The U.S. government also announced that it would launch a new round of economic stimulus plan, which was only used during the 2008 financial crisis and the Great Depression of the last century to alleviate the impact of the epidemic on the U.S. economy.
But the most direct factor triggering this round of global economy—— The COVID-19 epidemic continues to ferment. The cumulative number of confirmed cases outside China has exceeded 100,000, and Europe has become the “epicenter” of the epidemic! An epidemic caused global shock. Many countries and regions have announced “retreat”.
On the 11th, the United States announced that it would impose a travel ban on Europe;
After the national security meeting held in Belgium on the evening of the 12th, it was announced that Belgium had announced a lockdown;
On the 13th, Venezuelan President Maduro delivered a televised speech in the evening announcing that the country was in a state of alert;
On the 14th, France announced the closure of “non-essential” public places;
On the 14th, Saudi Arabia announced the suspension of all international flights;
14th It was announced late that Spanish Prime Minister Sanchez announced that Spain would be locked down nationwide starting from the 16th;
On the 15th, the Estonian government announced a ban on the entry of foreign tourists;
On the 15th, the President of Kazakhstan declared a national state of emergency;
Romania on the 16th This week has entered a state of national emergency;
…
It can be seen that, whether at home or abroad, for textile bosses, there is no news What good news. Especially after experiencing the darkest moment last week, the hearts of textile people are “unable to calm down for a long time.” “Recently, some customers have canceled orders with us!” said a textile boss who has been engaged in foreign trade exports for more than ten years. “I guess this is just the beginning. There will be more cancellations or delays in orders!”
Currently, Saudi Arabia and Russia are still fighting, and the crude oil market remains weak. In the short term, the weakening of raw materials is already a certainty. Currently, all aspects of the textile industry Everyone is hoping that the downstream industry will start to “come back”, which will lead to a positive improvement in the entire industry, but what is the reality?
Production and sales balance →Oversupply, the market has reached a “watershed”
Recently, many textile friends will ask In the early stage, due to the low operating rate and low market capacity and supply, many traders were busy rushing to make orders for the year and obtained gray fabrics very diligently, which led to a “hot” situation in the market: some specifications and prices increased, and the number of weaving manufacturers declined. , dyeing factories have difficulty shipping goods… But in the past week, the market has become less and less vocal about purchasing goods. Has the market entered an inflection point ahead of schedule?
“The current market situation is something I have never encountered in so many years of working in the industry. Recently, our sales are obviously not as good as in early March. At that time, 60,000 meters of polyester taffeta could be transported every day, but now the goods shipped every day are obviously much less, and some specifications are already in the factory’s inventory.” said a textile boss who has been working as a polyester taffeta for more than ten years.
Coincidentally, a textile boss whose 80% of his customers are from Hubei said helplessly:
“Originally we wanted to follow everyone else’s lead and planned to start construction in late February, but seeing that our customers had not started construction yet, we had to postpone it until early March. If we don’t start work, and if we don’t start work again, workers will be lost, and it will be difficult to recruit them back. Now we have no orders, so we can only produce inventory. In other words, all we produce every day is inventory.”
Judging from the current market fundamentals alone, the market is gradually moving from a balance between production and sales to oversupply. Recently, sample companies monitored by China Silk City Network can show that more and more textile bosses say that orders have been stagnant. The execution of orders before the year is coming to an end, and there is insufficient follow-up of new orders after the year. The operating rate is gradually recovering, and the market The supply of goods is prone to overcapacity.
Some bosses have chosen not to start work. Is this helpless or wise?
In previous years, March was usually the season with the highest number of construction starts in the whole year, but this year’s performance was “different. “: First, the start of work was delayed due to the epidemic, then the recovery was slow due to labor shortages, and now we don’t want to start work because of poor orders.
After twists and turns, many textile bosses are currently in this mentality, but equipment depreciation, rent, labor, water and electricity, etc. This cost forces them to start work. Only by starting work can the output value be achieved. Of course, a small number of bosses choose to keep the work operation low or even not start work.
“Currently, only 20% of the machines in the factory have been opened. Now that raw materials have plummeted and there are not many orders, the inventory is easily devalued. , It is very unwise to occupy too much funds in today’s market.” said Mr. Chen, the owner of Keqiaoyi Textile.
In addition, I heard that a few textile bosses who opened factories in Jiangxi chose not to start work to avoid the epidemic in the first half of this year. Not optimistic.
According to relevant sources, out-of-town production and local distribution are the way of survival for many factories building in the Midwest. During the epidemic, due to logistics obstruction, the inventory previously shipped to local warehouses has been successfully digested. Therefore, the inventory of these small factories is not high, and some even have no inventory. It is these bosses who have chosen not to start operations temporarily considering the risks of the current market. , in order to avoid the difficulties caused by this “black swan”.
In any case, judging from the current evolution of the market, raw materials will be available for a period of time in late March. The low position has caused the factory’s inventory to face depreciation, and also induced many manufacturers with high inventory to either maintain or even reduce their operating load, or launch a full-scale price war to compete for shrinking shares.
The opening of the largest fabric trading market in the south will inject “warmth” into the market outlook
On March 9, after announcing an indefinite postponement of the market opening for more than a month, Guangzhou Zhongda Textile Circle has finally regained some excitement. It is the largest wholesale market for clothing accessories in South China. It has more than 20,000 shops and an annual turnover of over 200 billion yuan. It has formed a textile and clothing industry circulation market including shops, garment factories, and workshops, with more than 100,000 employees. .
In previous years, March was the peak purchasing season, but this year the operation was delayed by one month, which also led to the recovery of the market order rhythm. sluggish. According to a market source, the resumption of factory operations does not mean the recovery of orders and production capacity. The current operating rate of the factory is only about 50-60%.
In any case, major domestic textile and garment clusters are gradually recovering, which also indicates that The domestic demand market is also recovering. Although currently affected by the epidemic, many orders are lagging behind, but when the downstream market slows down, it will be easy to stimulate the placement of orders.
“Recently, there are quite a lot of customers making samples, and some are even urgent samples. It can be seen that customers are also very anxious and want to rush. Seize the opportunity for summer clothes to be launched.” A trader in Wujiang said, “At present, our foreign trade orders are shrinking severely, but the domestic trade market may recover.”
Many market participants also said that they heard that many textile and garment owners in Guangzhou are severely understocked, with basic inventories in the hundreds of thousands or even millions, which also means that their demand for fabrics will be relatively high. cautious. “From the current point of view, everything may return to normal until autumn order production in June and July. I hope that the consumer market, which has been suppressed for a long time, can be exchanged for a retaliatory rebound in consumption. Only when customers buy and buy can we sell and sell!” said a trader.
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