“We are basically willing to accept any order in the market now as long as we can protect our capital.” This is what a cloth boss said to the editor when the editor visited the market last week. He went on to say, “Even so, There are not many orders that can be accepted now.”
Polyester raw material prices soar
On 6month6, in raw materialsPX, PTA span> Driven by the increase, the prices of polyester filament yarns in various factories generally increased, with an increase of 100-300yuan/ span> tons, even some factories with good sales volume just finished the increase in the morning, and continued to increase in the afternoon when business improved.
Polyester production and sales have also risen sharply under this surge, with average production and sales exceeding 300%. A large number of weaving companies still cannot escape the law of “buying up, not buying down”. A wave of raw material inventory was replenished.
On June 7, the price of polyester filament continued to rise, with an increase of 50-200yuan/tons.
Faced with such price increases, cloth bosses are also helpless. Some cloth bosses have no choice but to raise some cloth prices. Even if this will reduce customers, no matter how much cloth prices are raised, they cannot make up for the increased costs of raw materials and freight.
Without inventory buffer, increasing raw materials equals increasing costs
Compared with several raw material price increases a few years ago, the current raw material price increases are more harmful to textile companies.
First of all, weaving companies generally have little inventory. Before 2019, a considerable number of weaving companies bought silk in quantities of three or four months at a time. On the one hand, there were often discounts for large quantities, and on the other hand, silk at that time was The price fluctuations are not that big. In addition to straining your funds, buying a lot of silk is often profitable in terms of accounts.
But starting from 2019, things have been completely different. After the beginning of the year, raw materials have experienced a rare sharp drop, especially in 2020 After the COVID-19 epidemic, the price of polyester raw materials fell directly to the bottom, causing cloth owners who had stocked up on raw materials to suffer losses.
The editor went to a large-scale weaving company and stocked tens of millions of raw materials at the end of 18. As a result19The raw materials plummeted at the beginning of the year, and we lost almost 300 million. After that, we stopped stocking up on raw materials in large quantities.
Therefore, when polyester prices surged in 18, many fabric owners were actually very happy because they had enough raw materials in their warehouses to last for several months. The higher the raw materials, the more competitive their products became. The stronger the force. But now there is no inventory. For almost all cloth owners, the price increase of raw materials will be directly reflected in the cost.
The “involution” textile market
In addition, the domestic weaving industry is also very “rolled”. After expanding production capacity in 2018, life itself has not been easy. This year, Vietnam has relaxed its blockade. Not only does it require In order to “engage” domestically, we also need to “engage” with Southeast Asian countries. In the end, profits will be squeezed lower and lower. When there is a bursting point in the market, peers who are short of orders will rush in and push profits to the bottom.
Therefore, it is really not easy to take a breakeven order as mentioned at the beginning of the article. And as the price of polyester continues to rise, the number of orders that can break even is getting smaller and smaller, and weaving companies are not willing to put too much money into the market. Putting too much money on inventory can only reduce the operating rate.
Some orders were even placed today, but the price of raw materials increased the next day, and then they lost money. But operating at a loss is never a long-term solution.
Loss money can be a means, but it must not be the norm!
In order not to lose money, the number of orders that weaving companies can accept has been getting smaller and smaller. In order to maintain operations, the operating rate has become lower and lower. Now the average operating rate of looms in Jiangsu and Zhejiang is already less than 7 Success. It is foreseeable that as raw materials rise, the operating rate will only become lower and lower.
According to Boss Bu, the current market is all about who can survive, and victory will be the one who survives to the end. Rent, labor, water and electricity costs are all constantly being consumed. Even if you are making capital-guaranteed orders, it is just to make funds flow. Overall, cash flow is still being consumed.
It’s okay to make one or two loss-making orders occasionally, but if you keep selling cloth at a loss and your family is not a banker, who can afford it! Therefore, selling at a loss must never be allowed.��becomes the norm.
There is no way to change the market on one’s own, so one can only reduce production capacity under forced circumstances, hoping to change supply and demand and allow cloth prices to rise a bit. Perhaps this is what ordinary textile companies do in the context of involution. I fought as hard as I could.
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