How Long Can The Textile Industry Last?

Textile market has been difficult to pick up since the beginning of this year, and the reasons for this phenomenon are also different. But in the final analysis, the global economy is weakening and confidence is lacking. People's risk aversion is strong and their willingness to consume is reduced. The growth of the whole retail industry is very weak, and so is the textile and clothing industry.

Take China as an example, in recent years, the momentum of social consumption is obviously insufficient, and the cumulative growth rate of the total retail business has been declining all the way, from 10% growth in 2017 to about 4%. The cost of clothing also went out of a similar curve, but fell faster and fell more ruthlessly. In 2018, the cumulative growth rate of clothing retail sales was basically around 10%, but when entering 2019, it was a drop of cliff clipper, diving from around 10% to about 2%.

Terminal clothing demand market is so sluggish, upstream textile industry is also difficult to be independent. In the past two years, the cumulative growth rate of textile industry revenue has dropped sharply, from the growth rate of about 9% in 2017 to 2% in 2018, and even negative growth in 2019.

Solving the current plight of the textile industry is, of course, inseparable from individual efforts to develop new products, focus on quality, and serve on the basis of services. However, the economic environment of "laying eggs under the roof" will not change, and the consumer market will not get warmer.

The textile market is short of power and is hard to find in the busy season.

The textile market, which has been silent for more than half a year, has been showing frequent news of improvement in recent years. The reversal of the market trend seems to be in sight, but the actual situation is not as optimistic as we think.

First of all, textile raw materials, normal textile market warming, raw materials production and marketing thriving, prices will immediately rise, but at present, polyester FDY, POY, DTY are at the lowest point of the year, PTA is constantly creating a new low throughout the year. Dyeing factory in this node, but also can be seen that the dye fee does not rise and fall. All these are lack of confidence in the textile industry now and in the future, and feel that the current textile status is not the peak season at all. It is also difficult to promote a peak season.

According to the feedback from a grey cloth factory owner in Wujiang, their sales of grey cloth are actually better than that of the previous period, but they were totally different from the previous two years. Some time ago, the prices of raw materials dropped, and they kept on stockpiling raw materials. They used to be prepared for only one month, and now they have two months' stock. But the price of raw materials has not stopped rising. The ideal price of raw materials has not come back, and the price of grey cloth has not appeared. The price of the fabric has basically been stuck to the cost line, and the sales volume has increased, but it is hard to say that there is a lot of profit.

The current order profit is hard for the boss to sit comfortably in the office. Running out every day for customers is also normal. He has no confidence in the future market. After all, if the business is not profitable, it will be a waste of time.

Economic policy changes, textile industry is expected to "blood reborn"

The most fundamental problem of consumption and industrial production is capital. Consumers' lack of confidence in future wealth growth and limited funds in their hands have led to a decline in consumption growth momentum. Lack of liquidity in the industry has led to difficulties in upgrading equipment, increasing production capacity and improving services.

By analyzing the investment and current assets data of textile industry in recent years, we can clearly find that the investment growth of textile industry is decreasing and the current assets are decreasing. The growth rate of investment in the textile industry was around 7% in 2017, and it has been negative for two consecutive months. Liquid assets dropped from the highest 12800 billion in 2017 to about 11000 billion, or more than 14%. In the textile industry, the loss of funds on one side and the lack of investment growth on the other side make such a "dead chess" how to open up the situation.

Since it is short of money, the most direct and effective solution is to release capital admission, such as national interest rate reduction and deposit reserve ratio. In particular, this year, nearly 30 countries around the world have implemented a relaxed fiscal policy to ease economic pressure by cutting interest rates. However, China is constrained by the CPI (residents' price growth index) that has remained high for many months. Fear of economic policy change has led to inflation, and has not followed the international trend.

But the recent adjustment of mortgage interest rates has released a good news for China's interest rate cut. The state has isolated the interest rate of the housing loan from the benchmark interest rate. Its purpose is to combat rising housing prices and to avoid large amounts of capital flowing into the real estate market. In fact, it is also a large number of funds to cut interest rates in the market. Only by limiting the flow of funds to the real estate market can we ensure that industries that are in urgent need of capital can really benefit.

The latest mortgage interest rate policy will be implemented in October 8th, that is to say, China's loose fiscal policy is likely to be implemented after that. Once funds are available, the industrial and consumer markets will immediately become active. Clothing as a rigid demand, in the hands of people with sufficient funds, consumption will immediately soar, and the textile industry will inevitably follow.