Bad Profits, Profit Drop 37%, Water Loom Capacity Migration And Outbreak Or Market Shuffle

Recently, the water jet loom factory along the Tai Pu River has been affected by environmental protection action and demanded evacuation. At present, the relocation of weaving factories across the Taiwan Strait is drawing to a close, and a few factories are still moving. In other parts of Wujiang, some weaving factories need to move out and evacuate the factories to the central and western regions.

Since 2017, the "limited spraying" environmental protection wind has blown up the boom of looms shifting from the coastal areas of Jiangsu and Zhejiang to the inland areas of the central and western regions. But this upsurge is not follow suit, it is strategy shift, it is response to environmental protection policy. A few months ago, it was reported that there were nearly 120000 looms loom away in Jiangsu and Zhejiang provinces. Jiangsu, Northern Jiangsu, Anhui, Henan, Hubei and Jiangxi became new textile clusters. The trend of the entire textile industry has been overwhelming.

At present, Jiangsu Northern Jiangsu is the largest area of loom transfer, of which Siyang has become the sixth largest sector of China's textile industry, and has a share of more than 1/5 in the six major sectors. By 2020, there will be 80000 water looms in Siyang's textile industry. According to many industry insiders, the production capacity of loom loom is approaching 40000 units in the large province of Anhui province. The capacity of loom loom in Hubei province has reached about 23000 units, and the capacity of loom loom in Jiangxi province will reach 60000 left and right.

This large string of data shows that in the past two years, the newly developed loom loom in Northern Jiangsu, Anhui, Hubei and Jiangxi has exceeded 200 thousand units, far exceeding the number of loom looms eliminated by traditional textile clusters in the Yangtze River Delta region. The volume of water jet looms in the entire textile industry is much larger than that before the "restricted spray" operation.

With the great migration and outbreak of the loom loom, the downstream weaving enterprises bear the brunt, and the textile industry has also undergone tremendous changes.

Part 1

Overcapacity and lack of money

This year, the textile industry boom is not good, the upstream polyester demand is weak, the downstream fabric inventory is too high is the current market normal. In such an environment, Xiaobian is looking for its reasons, which in the final analysis is caused by overcapacity of grey cloth.

The market is the buyer's market, and the purchasing power determines the demand of the market. This year, affected by Sino US trade relations, the overall economic downturn in China has led to a decline in the purchasing power of clothing. Purchasing power has declined, and demand has been reduced, which has finally affected the downstream weaving industry.

Weng, a company that runs the main fabric of spring Asia textile, said: "now the output of grey cloth is too large, and the supply exceeds demand. The demand for this year has decreased, and the supply has increased by at least twice as much as in previous years. How much can each enterprise share in such a cake? "

Recently, the market came out that cloth boss stopped production and insured the price. The boss of the weaving factory voice: finish the material on the machine and leave. Many cloth owners are planning to suspend production for the summer vacation, hoping to drive the market to stop production as a whole. In fact, this operation is to alleviate the excessive inventory of gray cloth and overcapacity of the market.

It is reported that the inventory of textile enterprises in Northern Jiangsu and the central and western regions is generally around 2 months, and the textile enterprises in Shengze are in stock for about 41-42 days. Grey cloth inventory can be said to be the lowest in nearly four years, and the chief culprit is overcapacity.

Part 2

Demand decline, profit dilution

The purchasing power of clothing decreases, and the demand for fabrics decreases, which directly affects the price of fabrics. Despite the fact that the cost of polyester fabric has always been high in recent years, the price of grey cloth has been on the high side. In this year's market downturn, the price of grey cloth is lingering low.

One of the main cloth owners of the Nei spun grey fabric sighed, "last year, 380T nylon sells more than 4 or 5 yuan, and this year it only sells 3 yuan." The price per meter of grey cloth is reduced by at least 25%, while the profit of grey cloth per meter is mostly less than 10%. Take spring Asia spinning as an example. It is reported that the profit of a spring loom of last year's spring is 80 yuan -100 yuan. This year, the profit of a loom has dropped to 50 yuan -60 yuan, and its profit has dropped by more than 37%. Therefore, at present, many weaving manufacturers feedback, and it is very fortunate to be able to break even.

Part 3

Market regulation, another shuffle.

In fact, the weaving factory experienced another shuffle. The high inventory of grey fabric is directly related to the difficulty of capital turnover, plus the overall profit margin this year, and the long time owing to the shortage of grey cloth. Many thin cloth enterprises are facing great pressure. Based on this pressure, many small factories have been shut down in mid June.

There are cloth boss prediction, if the market capacity has been unable to continue, by the end of this year, 20% of the enterprises will be eliminated. Therefore, the key point of textile market in the second half of this year is to reduce production capacity and inventory. The head of a weaving enterprise in Wujiang said, "the market in the second half of the year is good or not, mainly because of the capacity of the weaving factories in the central and western regions. If there are large quantities of grey cloth poured into the Jiangsu and Zhejiang provinces, then the latter half of the year will probably not be good enough.

afterword

No one can accurately predict the market in the second half of the year, but overcapacity is a certainty. The market itself also has the function of self regulation. It is still a while before we reach the balance between supply and demand.