What's Going On? Shengze, Haining, Changxin And Other Textile Market Orders Disappeared.

2019 of the textile market has passed 1/3!

Entering the May, for textile makers, they did not feel the "warm" trading atmosphere of the past, but had a sense of "cold wind".

After the May 1 holiday, I feel that many textile bosses are advertising more frequently in friends circles and groups, and are looking for lists everywhere.

According to the market in previous years, this time is not busy. Under normal circumstances, the factory should still be able to catch up on the list of summer fabrics, so it is difficult to prepare for the "first summer vacation" in the first half of this year.

The textile and garment industry is basically concentrated in the industry of the vast majority of small and medium-sized private enterprises in the Yangtze River Delta and the Pearl River Delta region. Since 2016, the two major measures of environmental protection and safety supervision have been "two pronged". Many small and micro factory owners have been forced to move out or turn around. The tight market capacity has led to an improvement in the market. For those who stick to the industry, they will be better off, but the current textile industry does not seem to be so optimistic.

Xiaobian learned from the major weaving clusters of Jiangsu and Zhejiang that at present, the entire fabric market is gradually fading away, and orders are no longer available. Let's take Haining and Changxin as an example. What are the two major markets?

Haining Market: less than three days off, more than five or six days!

Before, we have been talking about the garment factories in Guangzhou area. This year's May Day holiday has not yet been started for five days. In recent years, most of them have been on a one day holiday. It is common for them to work overtime to make clothes. But this year's scene is compared with last year.

This phenomenon is also staged in the Haining area. It is understood that during the May 1 period, many warp knitting factories in Haining also released fake products, with less than three days and more than five or six days, and the market operating rate also dropped to 7-8.

In fact, this phenomenon emerged as early as late April. With the execution of orders executed before and after the Spring Festival, the new list has been exhausted, resulting in the unsmooth delivery of knitted fabrics and the increase in market stocks. Some bosses in Haining indicated that if the market was not good enough, they would choose to take a holiday in order to reduce inventory. The result is not unexpected, and the market order has not improved.

Liu Chang, whose main product is mesh, velvet and swimwear, said: "At present, there are not many monads on hand. The factory is already doing inventory." Yao Zong, the director of another warp knitting factory, said, "now we have to balance the production and marketing, or make profits or reduce the start up. The two schemes are all for us, but there is no way to compete, so the market competition is too fierce!"

It is learnt that, due to the good performance of warp knitting for 3 years in a row, the enterprises in Haining in 2017 and 2018 introduced over 1300 production equipment, KS warp knitting machine, which has increased by more than 20% over the original equipment, and the supply of the market has increased sharply. However, the demand for terminal has not improved as expected, which has led to Haining's warp knitting industry being dragged down by the market.

At present, many small and medium-sized enterprises are worried about receivables and increasing inventories. They can only alleviate the contradictions and difficulties in current production and operation by reducing profits or operating rates.

Changxin Market: sales fell year-on-year, 1 months ahead of the off-season.

"Only a few tens of thousands of pieces of cloth have been left in the past week, much less than last year!" Sun Zong in Changxin Textile City sighed, "this year's off-season has been more than a month earlier than before. In June, it is now a cold market. This year has already started. It is estimated that the market will be hard before August."

Changxin is the third largest textile production county in Zhejiang province after Shaoxing and Xiaoshan, and the capacity concentration is very high. At present, the county has produced more than 70 hundred million tons of chemical fiber filament weaving machine, 1 billion 600 million tons of printing and dyeing cloth, 115 thousand tons of nonwovens, and 400 garments (including leather garments). The total output value of textile industry is 35 billion 300 million yuan, accounting for 31% of the total industrial output value of the whole county. In the Changxin Textile City, almost 90% of the textile enterprises are doing the cloth mill business.

Many textile bosses have said that this year's business is very difficult. Tao, who owns more than 200 looms, said: "after the end of the year, the loom has not been fully opened. Now the boot rate has dropped to about 9. The factory has already started to pile up the stock. If the market is still so, it is estimated that it will still have to fall." According to investigation, at present, the load in Changxin area is around 8, compared with the same period last year, which has dropped by about 1.

Falling turnover, low profits and rising inventory have become the biggest headache for textile bosses. In the Changxin market, many enterprises of the same type mainly rely on home textile products. The homogenization of products is serious, and the market competition is poor. Especially in the market downturn, it is more likely to lead to vicious competition and price war. "Before we could make sure that we earned 1 cents per rice cloth, and now we can get 3 points if we have a list." Sun Zong said.

Shengze: inventory rises, grey cloth factory issue price notice

"In the past, the imitation silk list in the factory had to be finished at the end of May, early June and after the end of April this year. Wujiang area, a silk imitation boss Wang said.

In addition, Oxford cloth as the main product of bags and fabrics, this year's performance is also poor, it is reported that the recent polyester filament Oxford cloth turnover is weak, manufacturers inventory rise obviously, all bullet products although performance is acceptable, but stamina is insufficient. According to the monitoring data of Chinese silk net sample enterprises, there are about 38 days of billet storage in Shengze, which has increased by nearly half a month compared with the same period last year.

Facing the increasing inventory, cloth boss's heart is secretly anxious. As early as the middle of April, when I visited the market, many textile owners said that if the market was still so weak, we did not rule out this year's advance in price, in order to seize market share. Sure enough, on the first working day of a small holiday, textile enterprises will issue new price adjustment information: the quotation will be reduced by 5 points.

In fact, this price adjustment information is only one of many information. With the implementation of the previous orders, the new single tracking is slow, resulting in a small number of manufacturers have entered the off-season without a single state, and the stock market has increased significantly. Although in order to retain workers and retain market share, manufacturers will not reduce the operating rate, but in the face of an increasingly weak market outlook, many manufacturers began to reduce prices at the end of April.

According to the boss of a small textile factory specializing in processing, Tucao: "in the first half of the year, customers always keep the list, but this year I don't feel much. But I can't stop the machine. If I stop, I will lose more. I can only keep my head on the scalp to produce conventional products as stock."

Let's look at cotton spinning again.

One day and one night, cotton futures price has fallen by nearly 10%.

Shortly after the opening of the morning of May 13th, the cotton futures price in Zhengzhou was on the whole, and part of the cotton yarn futures contract was temporarily down until the end of the day. And yesterday evening night trading session, cotton and cotton yarn price decline will not change, cotton futures main contract 1909 and far month 2001 contract after expansion board again limit down. One day and one night, cotton futures prices have fallen by nearly 10%.

In May 14th, domestic cotton futures continued to decline, and the main contract of Zheng cotton and cotton yarn futures were both down. The main contract of Zheng cotton futures fell 7.03%, to 13820 yuan, and cotton yarn futures contract fell 6.91%, to 22165 yuan. Zheng Shang also issued a risk warning letter today to remind investors to pay attention to risk prevention.

What is the logic behind this two day continuous limit? What is the interpretation of market participants?

Trade disputes escalate and downstream demand slows down

On May 13th, the office of the United States Trade Representative (USTR) announced that it would seek advice and hold a public hearing on about 25% US tariffs on Chinese goods, and USTR also announced a tax list covering 3805 products, including mobile phones and laptops, in the annex. USTR

USTR will hold a public hearing on this list in June 17th, and cease to submit written opinions. USTR requires the evidence and materials to be submitted to public hearings before June 10th. The deadline for collecting opinions and soliciting opinions in June 24th is obviously shorter than that of the past.

Figure: rounds of us 301 customs hearing procedure arrangement

Since April, the consumption of textile and clothing has continued to be weak. Customs data show that in April 2019, China's exports of textiles and clothing decreased by 9.43% compared with the same period in April 2019, and the total export volume decreased by 8.45% in the same period. In February, the US import and export of Chinese textile and clothing decreased double last year, while the imports to Vietnam and India increased substantially. The impact of the Sino US trade frictions has already pushed the US traders' orders to the Southeast Asian region. The domestic textile consumption has shown the "peak season is lighter and the off-season is even lighter". The situation of the downstream industry market in the off-season is obvious, and the lack of demand has been pressing the disk.

In the 200 billion list of newly added products, the amount of textiles and clothing exported to the United States is about 4 billion dollars. If the US impose tariffs on the remaining 300 billion dollars, it will contain more Chinese exports to the United States, such as woven garments, knitted garments and household textile products, which will involve about 45 billion US dollars in exports of textiles and clothing to the United States, and the export of the downstream textile and clothing will be impeded to cotton consumption. It is estimated that the domestic cotton consumption will be reduced by about 1 million tons, and domestic cotton consumption will be reduced by about 12%. We can see that about 15% of the amount of the goods added to the tariff is more than that of cotton spinning products, so the impact on the cotton textile industry is greater.

US cotton production is expected to increase, and external market will drag down Zheng cotton.

The conversion of stocks increased by 381 thousand tons to 1 million 393 thousand tons over the previous year, and the global output increased by 1 million 529 thousand tons to 27 million 315 thousand tons compared with the previous year. The global consumption increased by 701 thousand tons to 27 million 418 thousand tons compared with the previous year, and the inventory consumption ratio dropped to 60.10%. Only from the data of the report itself, the global cotton inventory consumption ratio declined, and the global market was good, but for the US cotton market, the output of US cotton increased, and the expected accuracy of the increase in export and consumption may not be satisfactory. At present, under the ambiguous situation of Sino US trade relations and the worrying situation of the global economy, the increase of cotton consumption in the world and China is expected to be considered. In the US Department of agriculture report released in May 10th, the US output forecast for 2019/20 was 4 million 790 thousand tons, an increase of 791 thousand tons compared with the previous year.

Domestic inventory and policy guidance to keep inventory

According to the China Cotton Association survey, the total cotton inventory in the end of April was about 3 million 794 thousand and 900 tons, down 369 thousand and 100 tons from the previous month. But last year, business inventories increased by 921 thousand and 500 tons compared with the same period last year, and domestic cotton business inventories were still at a high level for the same period last year. In addition, the 19 year 800 thousand ton slide tariff quota policy was earlier than last year, and the cotton supply continued to be replenishment, and the supply of cotton market continued to increase.

In summary, the current market is still in the process of emotional venting, or there is still room for downfall. If Sino US negotiations progress, cotton price will be 14500 yuan / ton or support. If the friction between the two sides continues to escalate, under the limit, Zheng cotton will fall to 13500 yuan / ton.

From the current textile market, most textile bosses have encountered similar problems: poor terminal demand, serious homogenization competition, and low market profits. At present, the competition in the global textile industry is fierce. The textile industry in India, Vietnam and Bangladesh has continuously occupied the market of China's textile enterprises, and the substitution effect is more and more obvious.

In addition, since 2012, the growth of China's total retail sales has been in the downward channel, and there has been a decline in demand for clothing, footwear and other industries. This has led to the domestic market's demand for textile clothing is not optimistic.

In times of peace, traders seek a "stable".

In recent years, with the impact of foreign grey cloth on the market, conventional chemical fiber fabrics such as polyester taffeta, spring Asian spinning, and nylon spinning are all performing in general. The market supply exceeds demand. As a result, the discourse power of the weaving factories is weakening this year. Traders' days are much better than that. Even so, there are still many traders who dare not rush to stockpile goods. Besides having concerns about the market outlook, they are more strict in controlling cash flow.

In addition, with the rise of raw materials, labor and dyeing fees, many traders said that the profit margins had shrunk. "Now do not seek to make more money, but only do the orders safely, and the repayment of goods is satisfactory" has become the aspiration of many traders.

Many bosses believe that this year's "golden three silver four" is yellow. Last year the off-season has become the peak season. The peak season is still the off-season, which makes textile bosses feel anxious. But this is also a signal for the market to release into the battlefield of survival of the fittest and survival of the fittest.

Next June, the textile people will continue to bite and stick to it. Textile people, come on!