On the first day of June, polyester filament prices experienced an increase of 50-100 yuan/ton. Since the May Day holiday, oil prices have fluctuated upward. The tight supply of dual raw materials has supported the market. Polyester filament has followed the rise of raw materials. Taking POY150D/48F as an example, the current focus of market negotiations in Jiangsu and Zhejiang closed at 8570 yuan/ton, an increase of nearly 10% compared with the end of April. 12%, an increase of nearly 13% compared with the same period last year.
Seeing the price of raw materials rising, the price of gray fabrics continues to fall. This contradiction has pushed downstream weaving enterprises into the abyss of losses, and they are struggling but difficult to escape. In the first half of the year, the impact of the epidemic caused high inventory levels in the entire industry, and manufacturers in all aspects were trying every means to reduce inventory. This has caused the entire industry to become a mess. Especially for weaving companies in the middle of the industrial chain, the price of gray fabrics has skyrocketed! Today I’ll give you a 5 cent discount, tomorrow you’ll get a 1 cent discount, and the day after tomorrow I’ll give you a 2 cent discount…
Most weaving companies are doing loss-making business
After all, the inventory of gray fabrics is at a high level, and it is difficult to raise prices. The combination of high costs and high inventories has put great pressure on weaving manufacturers. Many manufacturers of conventional products are losing money every day!
An owner of a weaving company shook his head at today’s market: “The market situation was indeed much better in May, but all we can do is lose money by running out of volume. It’s just about removing inventory, cashing out and paying wages. If the inventory wasn’t high, who would be willing to sell at a loss!” ”
“The current market is really bad. The prices of gray fabrics are all forced. If you are not willing to give a discount, naturally someone will be willing, and customers will not come to you to get the goods. You have to follow the trend, and the entire industry is losing money. .”
Manufacturers may have plans to discontinue production
This kind of phenomenon has been commonplace, but catalyzed by the rising prices of raw materials, it has now fermented to the point that weaving companies have begun to call for suspension of production!
Looking back on the past, weaving manufacturers would stop production in groups during the off-season every year. In the past, mainly due to the surge in raw materials and costs, some weaving manufacturers would suspend production for a period of time during the off-season. In addition to the surge in raw materials this year, overcapacity and weak demand are the main reasons. As June has just entered, many companies are starting to reduce production and take holidays.
It is reported that the inventory of textile enterprises in northern Jiangsu and central and western regions is generally around 40 days per month. In late May, as the wave of shipments at the beginning of the month faded, the operating rate dropped and remained above 60%. The operating rate of major clusters in Jiangsu and Zhejiang has also declined. The current operating rate of water-jet looms is less than 50%; the operating rate of warp knitting is about 40%; and the operating rate of circular knitting machines has dropped to over 30%. Compared with the end of March, the start-up load dropped by 13 percentage points month-on-month, and manufacturers’ production enthusiasm was obviously frustrated.
This weekend marks the Dragon Boat Festival national holiday, and most companies have holidays of varying lengths. For weaving manufacturers, the Dragon Boat Festival holiday may be an opportunity to reduce their burden. However, considering the “year-round” perspective of the textile industry, weaving manufacturers will not take holidays easily. As a factory boss in Anhui said: “I have been thinking about the Dragon Boat Festival holiday, whether to have it, and for how many days. If not, the price of raw materials is so high now, and it will be unbearable for the sake of inventory. If it is, the workers will not be able to bear it. Wages are still paid, but there are also losses.”
This boss’s hesitation should be the voice of many weaving company bosses. The same is true for large-scale production reduction and suspension. If it continues, it will face the risk of accumulating inventory. Coupled with high-priced raw materials, there is a high possibility that these inventories will be sold at a loss this year. After production is stopped, various costs will still be incurred. To put it bluntly, this cost is lost in vain, and Boss Bu is naturally heartbroken.
As the temperature rises, the market seems to have begun to smell the off-season and is beginning to show weakness. With the support of international crude oil and raw materials, we are afraid that the weaving operating rate will drop sharply again in the later stage of the market. Next, many textile bosses said that they would adjust the startup rate according to their actual situation. Even if production is not suspended, production reduction is inevitable.
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