Recently, affected by the rising prices of raw material chemical fiber yarns, the profits of most warp knitting companies have exceeded the safe range. Affected by this, many warp knitting industry chambers of commerce issued production suspension agreements.
On August 4, the Tongxiang Warp Knitting Chamber of Commerce took the lead in issuing a production suspension proposal.
On August 6, the warp knitting industry chambers of commerce in Wujin, Haining, Tongxiang and Changshu issued a joint production suspension proposal.
On August 6, the Haining Warp Knitting Association issued an appeal to leading upstream chemical fiber companies.
On August 6, the Jiaojiang District Textile Industry Association of Taizhou City issued a production suspension proposal.
These proposals mainly state several pain points:
1. The price of raw material chemical fiber has increased too much recently
2. The cost of labor, printing and dyeing is also rising
3. The prices of finished warp knitting products and gray fabrics cannot rise.
4. The warp knitting industry is in a sluggish market and the receivables problem is serious
To what extent have chemical fiber raw materials increased? How much impact do the costs of labor, printing and dyeing have on the company? Can the prices of gray fabrics and fabrics keep up with the increase in costs? Is the problem of accounts receivable really that serious? With these pain points mentioned in the initiative, the China Silk City Purchasing and Weaving Center went deep into the textile town of Shengze and conducted a face-to-face exchange with weaving companies.
Production costs have skyrocketed, and enterprises are under heavy pressure
According to China Silk Capital Network price monitoring It shows that the price of polyester filament has increased significantly in the past month.
In addition to the increase in polyester prices, the increase in dyeing and labor costs has also The main problems mentioned in the production suspension proposal have indeed caused great difficulties to the production and operation of enterprises in recent years.
Suzhou Mi Tuyou Textile and Clothing Co., Ltd. mainly deals in imitation silk products. In addition to the increase in polyester prices, they are also sensitive to increases in dyeing fees. Their money manager said that the dyeing fee for dyeing a piece of common simulated silk cloth at Shengze Dyeing Factory at this time last year was about 1.5 yuan/meter, but now the dyeing fee has risen to 1.7 yuan/meter.
Wujiang Medite Textile Industry and Trade Co., Ltd. mainly produces polyester taffeta, pongee, imitation silk and other conventional varieties. Their manager Zou said that for them, , now the total cost of a conventional simulated silk cloth has increased by 0.3-0.5 yuan/meter.
Labor costs are rising every year. Most weaving companies say that they will increase labor costs by several hundred yuan/month every year. This has been the case for the past few years and is an industry practice. .
The upstream giants have a monopoly, making it difficult for the downstream to follow the growth
Today’s Chinese manufacturing industry has A very common situation is that the price of end products cannot rise. Most raw materials are in high demand, and the amount of capital investment required is also relatively high. As the market continues to adjust and the country continues to raise the threshold in terms of environmental protection and approval, most bulk raw materials are monopolized by giants.
Taking polyester filament as an example, the current polyester production has basically begun to form a “giant monopoly” pattern,
In 2017, several polyester leaders such as Tongkun, Xinfengming, Hengyi, Hengli, Shenghong, and Rongsheng have already accounted for the output of polyester filament 43%. And as time goes by, the degree of industry agglomeration is getting higher and higher. Several giants have also formed the “Polyester Industry Alliance” and firmly grasp the pricing power of polyester filament.
In addition, most of the leading polyester companies have begun to lay out the entire polyester industry chain, from PX, to PTA, to slices and filaments, so the upstream price The rise and fall are transmitted more smoothly in the polyester industry chain.
But when the polyester yarn is transmitted to the gray fabric, the price often cannot be transmitted.
Suzhou Tongke Textile Co., Ltd. mainly produces imitation memory fabrics. Their manager Zhou told reporters: “The recent surge in raw materials has had a greater impact on weaving companies and traders. It is more difficult for large businesses, especially traders. Raw materials have risen, but fabric prices cannot keep up with the increase. Among them, sandwich biscuits – traders are the most uncomfortable. If they don’t rise, they are afraid of losing profits; if they rise, they are afraid of losing customers.”
And more importantly, many customers cannot accept the price increase. Suzhou Henghuang Import and Export Trading Co., Ltd. mainly deals in jacquard, five-metal satin, polyester taffeta, pongee, etc. The main raw materials used are polyester FDY and DTY. Because there are many conventional varieties produced, the cost is more affected by fluctuations in raw materials than other varieties. Their manager Shi said that the production threshold for conventional varieties is low and the technical level requirements are not that high, so market competition��Very intense. During this period, as the price of polyester yarn rose rapidly, they wanted to increase the price of gray fabrics and fabrics, but most customers simply did not accept it. It is a conventional product and has strong substitutability. If your price increases but others do not, customers will buy it from others, thus losing customers. In order not to lose customers, we can only hold on and not increase prices. Although profits are compressed in this way, it is still better than not being able to sell.
Some manufacturers of special fabrics will also encounter this problem. Wujiang Yanfeng Textile Factory mainly produces polyester taffeta and wide-width blackout cloth. The raw materials of wide-width blackout cloth are DTY75/72 and blackout black silk. The requirements for raw materials are relatively high, and the manufacturer cannot be changed at will. Now that the price of raw materials has increased, everyone is buying in large quantities. The output of this raw material was not high in the first place, and now it can be said that the supply exceeds the demand, and now there is a danger of running out of stock. However, because several companies compete together, it is difficult for the price of finished products to rise immediately and profits are compressed.
So the logic why price transmission cannot continue is very clear. Because there are a large number of weaving manufacturers, they are highly substitutable, and there is no strong connection between them. Therefore, one company often wants to increase its prices, but seeing that others have not, it is afraid that it will lose customers if it increases, so it can only hold on. Often, prices will only start to rise only when you are really going to lose money and there is really no other way.
The industry has been reshuffled, and the repayment is relatively optimistic
Currently, judging from the Shengze area alone, the problem of receivables is much better than it was a few years ago. Through interviews, the author found that most textile companies rarely have problems with receivables.
The author analyzes that this should have a lot to do with the previous environmental protection improvements.
Environmental protection is becoming more and more strict. On the one hand, environmental protection is becoming more and more strict. If small and medium-sized enterprises are unable to meet environmental protection requirements, they will be eliminated, and water jet looms Remediation also caused a large number of small and micro textile companies to cease production;
On the other hand, environmental protection, as a “visible hand”, eliminated a large number of companies that failed to meet standards. , and also eliminated a large amount of low-end production capacity. For companies that can survive, both profitability and risk resistance are generally guaranteed.
In addition, due to limited production capacity due to the renovation of water-jet looms, conventional varieties such as polyester taffeta and pongee were in short supply in the first half of this year. In this market situation, This provides a good opportunity for weaving companies to select customer groups, and many textile companies have also begun to “ship on delivery”.
Recently, the author saw an article in the China Securities Journal. In the article, a person in charge of an enterprise said that some enterprises have indeed experienced operational difficulties in recent times, but all of them have Concentrate on high-indebted companies and small companies with low added value. The profits of most companies have declined, but there have been no large-scale losses or large-scale production suspensions.
But in the woven industry, a large part of such enterprises have been eliminated in the renovation of water-jet looms.
Baotuan stops purchasing raw materials, it is more a choice of the market
Many places now issue Baotuan’s proposal to stop purchasing raw materials actually caused little response in the Shengze area. After interviews, the author found that most people only said they had heard of this matter, but did not understand it in depth.
Manager Shen of Suzhou Shijiu Textile said that with raw materials rising so sharply, there will definitely be some companies with a weaker foundation that will suffer losses.
Manager Zou of Wujiang Medite Textile believes that stopping the purchase of raw materials is only an idea of some people and is difficult to implement. Whether to buy or not mainly depends on market behavior. What he is currently concerned about is how companies can reduce production risks through self-adjustment.
In general, group suspension of production is a market behavior. The warp knitting industry itself is in a slump, and the rise in raw materials has caused the profits of some companies in the industry to break through the warning line. If the suspension of production can If the losses are reduced, then the losses will be understandable.
For most textile companies, although the surge in raw materials has not caused their companies to lose money, it has actually reduced a large amount of profits. The lack of a stable and effective price mechanism, and the failure of price transmission at the end of the industrial chain, often cause price changes in gray cloth and fabric prices to lag behind. Once raw material prices continue to rise, the profits of weaving and fabric companies will be compressed again, which may lead to new risks. </p
