Under The Impact Of Trade: Where Will The Textile Enterprises Face The Profit Test And The Market Downturn?

In May 13th, after the Sino US trade negotiations ended with mutual tariffs, the market faced dramatic changes. Most commodity groups dived, especially in zhengmian. After two successive stops, the CF1909 contract price dropped to 13820 yuan / ton from 15300 yuan / ton, and dropped 1480 yuan / ton on the two day. The market change exceeded the expectation of the market. Not only the cotton market, but also the depressed downstream consumer market is also testing the profitability of cotton spinning enterprises. What is the status of enterprise orders under the Sino US trade friction? How should textile enterprises cope with complex and changeable trading environment?

Accelerating industrial spanformation and upgrading under adversity

It is understood that this year, for a stable customer service group textile enterprises, the production and operation of normal business, full load start. However, as the international trade situation changes, the market situation further falls, shortening the order period, slowing down the order return, reducing raw material inventories and increasing the stock of products.

Since the second half of 2018, the production and sales growth of the entire textile industry chain has slowed down. With the recent "reversal" of Sino US trade friction, the market has once again brought impact and uncertainty. From the downstream terminal market, domestic and foreign demand is weak. Individual enterprises reflect that the clothing trade orders have obviously shifted to Southeast Asia, and such orders are hard to return to the domestic market. In some areas of the south, the recent opening rate of pulp and dyeing production lines is insufficient, and there is a special "cool" scene. In addition, many international brands are increasingly demanding Chinese companies to set up factories overseas.

From the upstream point of view, spinning enterprises have low inventory level of cotton and yarn stock up to 2 months or so. Spinning enterprises believe that the price of cotton is still at a low level and cotton prices remain strong. Cotton is still competitive with the use of yarns. Some enterprises are upgrading cotton yarns by changing varieties to reduce cotton purchase and yarn stock. With regard to the spanfer of orders, the enterprises believe that the spanfer orders are limited to the conventional, medium and low grade products, and the high value-added products will remain at home, and will not be lost with the escalation of Sino US trade disputes. Therefore, the current market is a short-term panic and the real demand still exists.

The enterprises in Guangxi are operating normally, and the blended yarns are the main products in production. Due to the serious aging of cotton textile workers, enterprises invested a lot of money to actively upgrade and gradually eliminate old equipment, replace spinning equipment with high automation and reduce employment. After the Sino US trade friction, the downstream market became more pessimistic and did not dare to make long orders, resulting in the reduction of orders for spinning enterprises. Some of the spannational group enterprises promptly adjusted strategically, spanferring the US orders to other overseas subsidiaries to deal with the uncertainties brought about by trade friction. A large enterprise in Jiangsu is affected by Sino US trade friction and market downturn. Some production capacity has been shut down or only produced to roving process, so that varieties can be adjusted in time according to market demand.

Some enterprises say that if the market continues to be depressed or the trade friction between China and the United States continues to deteriorate, the order will not be very optimistic. The product inventory will become the main burden for enterprises, and the risk of capital will also gradually enlarge. Most enterprises believe that the more difficult period and the more opportunity period, the adverse circumstances should accelerate the spanformation and upgrading of the entire textile industry and capture the new market positioning.

Orders reduce cotton yarn stock increase

For yarn enterprises, the "golden three silver four" in 2019 is not imagined "prosperous", the current market demand is low, and the recent continuous price limit of Zheng cotton prices, so that the market in the traditional off-season is shrouded in pessimistic atmosphere.

According to "China textile daily" reporter understands, before and after the Spring Festival this year, the domestic textile enterprises operating efficiency is generally good, cotton yarn downstream demand has appeared in the small peak season, cotton yarn prices continue to rise, sales of products increased rapidly. Among them, the profit per ton of yarn in small and medium-sized textile enterprises is generally around 800 yuan, but the situation began to change from the end of 3 to the end of the month, and demand continued to decline. In April, it became more and more weak, and many textile enterprises increased their inventories.

"From the change of cotton yarn sales, we can see that the market demand is relatively low." The head of a textile enterprise in Shandong said that when the market was bad in 2018, the sale of cotton yarn was basically based on credit sales. Before and after the Spring Festival this year, as demand becomes better, cash settlement becomes the main way. When the market is the hottest, the cotton yarn sales of enterprises even adopt the way of prepayment. The enterprises do not get the cotton yarn without the first payment. Now that market demand is weakening, cotton yarn sales are starting to sell again.

"Careful analysis of changes in enterprise orders can be found that the phenomenon of long orders reduction is more obvious." Some textile enterprises responsible person said that after the recent downstream demand has become worse, many intermediaries and exporters' product sales patterns have also changed greatly. Many middlemen have changed from the original inventory sale mode to the order production and sales mode. For example, the order is changed from long list to short list, or orders are placed to the textile enterprises according to the order of the end users, and the intermediaries basically have no stock. To a certain extent, this has weakened the demand for cotton yarn and reduced the social inventory of cotton yarn.

"The sales pressure of the cotton yarn market is still increasing. The stock of our cotton yarn has increased to 1 months from the original 7~10 days. It is felt that not only the external demand is not good, but also the domestic demand appears to be a problem." The head of a small textile enterprise in Xiajin, Shandong believes that the main reason for the decrease in domestic demand is that the market is saturated.

Analysts believe that the number of orders received, plus a higher rate of start-up, textile enterprises will definitely increase the stock of cotton yarn. This aspect has made it difficult for enterprises to recover capital, increased the demand for capital, and on the other hand increased the financial cost, thus reducing the direct profit of products and the comprehensive profitability of enterprises.

Small and medium sized textile enterprises are facing a test of profitability.

Taking a look at the operation of textile enterprises in various provinces in China, the industry experts believe that the current division of domestic textile enterprises is more serious and the industry is "reshuffling". When the market demand is low, small and medium-sized textile enterprises are often faced with more serious business problems.

It is understood that at present, Henan, Hebei, Shandong and Jiangsu small and medium-sized textile enterprises processing 1 tons of cotton yarn profit of 700~1000 yuan, under normal circumstances of about 2000 yuan. The head of a small textile enterprise in Shandong said that the downstream customers of the company were mainly cotton yarn exporters. Before September 2018, the downstream customers had more orders for cotton yarn export. But after that, influenced by the factors such as Sino US trade friction, the sales of cotton yarn in the downstream customers went bad, and some downstream customers even closed the factory due to the lack of orders, which eventually led to a sharp decline in the sales of the cotton yarn. In addition, the 3~6 months of previous years are the peak season for knitting yarn sales, and this year's peak season only lasts till the Qingming Festival.

In view of the difficulties faced by the textile enterprises, the pressure of recruitment, environmental protection, capital and cost is also a headache for textile enterprises. Experts said that the automation level of textile enterprises is constantly improving, and the number of newly built enterprises is only 10. Therefore, because most of the small and medium-sized textile enterprises are old and backward, these enterprises have a higher volume of ingots. For example, some enterprises in Hebei and Shandong have 35~50 million people, the differentiation between enterprises is more obvious, and the market elimination process is accelerating.

Compared with the operation of small and medium-sized textile enterprises, large textile enterprises have better production and operation because of their long industrial chain and high added value of products. At the same time, a large amount of manpower and material resources developed by enterprises have also achieved good comprehensive benefits. The overall competitiveness of enterprises is relatively strong, and the market position is relatively high.

"In the long run, the differentiation of textile enterprises and the restructuring of industries will continue. However, at present, many enterprises can still" live ", and the worst case in the market has not yet appeared. Industry experts believe that textile enterprises can not just focus on expensive employment, financing difficulties, cost increase and other issues, and face serious market challenges. If we consider the long-term development of enterprises, product development and so on, we need to keep abreast of changes in market demand. It is also very important to improve workers' working environment and change their business philosophy. Textile enterprises should actively carry out technological upgrading and equipment upgrading.