2021 is over. As the holiday time is getting closer, due to payment reasons, except for some orders with payment for delivery, most domestic trade orders are gradually coming to an end.
In mid-to-late December, foreign trade orders began to pick up to a certain extent, and there was another wave of stocking in the domestic market. In 2021, when the overseas epidemic is raging, it is naturally a good thing to receive a wave of orders at the end of the year, but after the orders are received, it will be unknown whether they can be successfully completed and normal profits can be guaranteed.
01The holiday is postponed, but the operating rate of textile mills drops sharply
First of all, rushing for orders at the end of the year is a very stressful and exciting thing. This year, printing and dyeing factories and weaving factories began to take holidays as early as early December, and there are rumors that large-scale shutdowns will occur at the end of December. Fortunately, orders picked up at the end of the month and factories postponed their holidays. As of now, the holiday time in the industry has basically been announced, and most of the weaving factories and dyeing and finishing factories are within the range of January 15-25. This time has not actually been advanced, and has even been delayed compared to the previous two years by comparison.
The postponement of the holiday is undoubtedly good news for companies rushing to order, as the production time has been extended. But just when everyone was breathing a sigh of relief, the production shutdown came again! Affected by the suspension of production by some enterprises, the weaving operation rate has dropped sharply. According to data monitoring from China Silk City Network, the current operating rate of water-jet looms in Shengze is only 51%, and there will be a further downward trend in the future.
02Limited production suspension leads to inability to deliver on time
The limited production suspension of weaving companies is a heavy blow to some trading companies. At the beginning of December, the market seemed to have entered a freezing period, which was particularly light. Gray fabrics were unsalable and inventories gradually accumulated. Under such a general environment, low-price selling has once again occurred. In addition, since the end of the month, with orders picking up, the shipment of gray fabrics has accelerated, and the inventory of weaving companies is not very high. According to data monitoring from China Silk City Network, the current inventory of gray fabrics in weaving enterprises in Shengze is about 33.5 days. It can also be seen from the figure that the current inventory level is still the lowest in 2021. And it almost coincides with the same period in 2016, 2017 and 2018, which further proves that the current inventory level is not high. In other words, some products with slightly special specifications have very little inventory and will soon be in short supply. Some products that require custom weaving are not so lucky. Once the manufacturer stops production, the order will be terminated. Even if we find another manufacturer, we still need to queue up, and production time will still be delayed in the process.
A local trader said that he recently received an export order. The gray fabric needs to be custom-woven, but the cooperative manufacturer has stopped production. It must be shipped before the Chinese New Year. He can only find other normal production factories to expedite it. .
03Raw material prices fluctuate greatly, corporate profits shrink
In addition, looking back at the last limited production stoppage in October, what it brought about was a wave of price increases in the industry chain. Nowadays, crude oil is rising sharply, and PTA and polyester filament are rising continuously. With the help of limited production suspension, the price of gray fabrics may be rising right around the corner. Then the recently received orders are likely to have low profits or even losses. This situation is the norm in the industry and is difficult to avoid. Although the current market situation has improved, due to the impact of the epidemic in the past two years, the number of orders is not as good as before, especially during the off-season, when there is a large amount of inventory on the market. Therefore, customers often push prices very low, with almost no profit. Not only that, while keeping prices down, there will also be all kinds of nitpicking. In previous years, some small mistakes that were acceptable and unavoidable in the production process will become reasons for deducting money this year, which further reduces the already small profits. .
In order to avoid such losses, Mr. Shen, who produces polyester taffeta and Oxford cloth, simply stopped taking orders and waited until after the holiday. He said:“The price of raw materials has fluctuated quite a lot recently, and even if we take the order now, it will be delivered next year. But the price and market next year are unclear. In order to If there is no loss, I dare not take orders rashly, so I stopped taking orders from the beginning of January.”
04Sea freight has risen again, and “it’s hard to find a box” has become more and more serious
After the goods are made, it is troublesome to transport them out.
Towards the end of the year, the “hard to find a box” situation has not improved, and has even intensified, with sea freight prices rising again! Before the Spring Festival, sailings were suspended and shipping space was tight. The three major alliances canceled 44 flights.Voyage! On January 7, the Shanghai Export Container Comprehensive Freight Index (SCFI) released by the Shanghai Shipping Exchange exceeded 5100 points for the first time and reached 5109.60 points, an increase of 62.94 points from the previous issue.
Today’s shipping situation is very stalemate. Not only is it “hard to find a box”, but the price is also ridiculously high. Although low profits, rising raw materials, and difficulty in transportation have made orders “tasteless to eat and a pity to throw away,” textile workers in many cases still bite the bullet and take orders in order to reduce inventory. However, the resurgence of overseas epidemics and the discovery of mutated viruses may cause a “draining blow” to market demand.
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