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    The Current Round Of Price Failure Has Failed Completely: Not Upstream Or Not, Nor Downstream.

    2020/4/14 11:26:00 0

    Market Quotation

    Since the outbreak of the epidemic has experienced two rounds of price fluctuations, with the rapid deployment of polyester filament last week downwards, this would like to continue to raise the price of polyester, eventually due to insufficient demand completely failed.

    The reason for failure is not upstream efforts or downstream prudence, but "really missing the list".

    According to the description of the downstream textile and apparel market last week, we feel that orders have been reduced too much, especially export orders.

    The overall start-up rate of weaving mills is less than 60%, and some enterprises' orders have been cut by 80% or even shut down. Although polyester factories are still trying to raise prices and pull prices last week, the reality is that the price rise without market price has become a slip.

    The fact that "speculation at the bottom of the market may lead to price increases" has basically been negated. As domestic demand and foreign trade continue to sink and it is hard to recover in the short term, the reduction of demand for end users has become an irreversible fact that the weak chassis can no longer sustain the driving force of price increases.

    European countries have announced the lifting of the ban plan. Is the hope of foreign trade enterprises really coming?

    Since late February, the epidemic spread from Italy to Europe, and European countries have declared a state of emergency and started to "seal the country and seal the city".

    After nearly 2 months of outbreak, at present, the number of confirmed cases, infection rate and mortality rate in European countries has declined significantly. Therefore, some European countries have begun formulating plans aimed at eventually returning to normal social life.

    At present, Spain, Germany, Austria, Denmark, Czech and other countries have indicated that they will relax the closed measures to cope with the new crown epidemic situation. Does that mean that foreign trade is improving?

    "Epicentre" shift, foreign trade improvement is probably just wishful thinking.

    From the perspective of the whole industry chain, the situation of foreign trade in textile and apparel industry is slowing down, and the slow recovery of domestic sales and the "epicentre" of the new crown pneumonia epidemic are coming from Europe and the United States to the "handover bar" of India and Africa. In fact, the speed, harmfulness and prevention and control ability of the outbreak in India is far beyond the anticipation of the government departments. The World Health Organization and some international medical institutions invariably point the next epicenter to India and Africa. Although textile and garment enterprises look forward to unlocking and lifting the ban, I am afraid it is only wishful thinking.

    Bad to upstream transmission, the industry appeared "chain" breach phenomenon.

    Moreover, the recent bad environment continues to ferment and transmit to the upper reaches. The whole industry even appeared a "chain" breach of the phenomenon, which has caused great damage to the entire textile and garment industry chain. In the past month, foreign trade orders (direct and indirect exports) have been cancelled, delayed shipment and the shipper's failure to take delivery or even the abandonment of goods has increased dramatically. Some foreign trade companies can only negotiate and terminate the contract with the spinning and weaving enterprises in order to "protect themselves". (some manufacturers have been on the machine and even finished the 50%-80%). We can only selectively cancel the contract with the weaving mills and spinning enterprises; after the pressure is transmitted through layers, the enterprises will eventually become the terminal of chain breaking. In fact, under the influence of the international epidemic situation, the whole domestic textile and garment industry chain can not be "independent" in any part of the industry chain. Every link of the industrial chain must share the risk of the whole industry.

    Terminal consumption is almost down, and domestic demand is deteriorating.

    The overseas epidemic continues to ferment, and the same internal demand has not been opened. After the Ching Ming, it has entered the traditional off-season. Therefore, in the environment of internal and external troubles, weaving mills are generally in the form of withdrawal, and it is difficult to find domestic trade orders. In order to ease operating pressure, taking part in the opportunity of Qingming, enterprises in some areas extend their vacation to 7-10 days. Considering the worsening operation environment, the construction will continue to be postponed. While yarn enterprises have entered the storehouse period, but with early orders, the overall construction is still higher than that of weaving enterprises. At present, the yarn industry starts at 60%, while weaving starts to 41.39%.

    All in all, the epidemic is a big test for the entire industrial chain, and even a test for mankind. Generally speaking, the next situation is not optimistic. Recovery is not equal to the resumption of production. Downstream demand can not be opened to the entire industrial chain. Internationally, the global economic boom caused by the continuous rise of the United States is just a "false appearance". Many large economies are opening up the "printing money" mode to bring a lot of capital to the outside. It is difficult to inject small and medium-sized entities, even if they can alleviate some of the enterprises' capital chain problems, but whether the funds can finally fall to the textile and clothing enterprises is still questionable. "The ashes of the times are a mountain for everyone and every small business."

    Here are three suggestions for the industry.

    1, enterprises with foreign trade orders will give up their illusions and turn to domestic orders quickly. Do not hold on to the idea that they will recover after a long period of overseas demand. It is hard to see the prospect of recovery at least half a year.

    2, enterprises should not fantasies about using past experience and methods to deal with this year's market. They always think that profits can be recovered by rising prices. The old drivers have no solution to new problems, and more are thinking about how to use their advantages to find new business models.

    3, the direction of business development is "waiting for external demand based on domestic demand". This year's mission is to "live" and "make money" next year and even next year.

    Because the epidemic has gradually escalated from the beginning of medical problems to economic problems and international external environmental problems. There are too many uncertainties in the follow-up market.

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