Raw Materials Are Going Up, Cotton Mills Try To Protect Cash Flow.

Today, the research team of China cotton information network continues to investigate in Xiaoshan, Hangzhou, and held a small exchange meeting with several local chemical fiber manufacturers.

One of the main manufacturers of eddy spinning, after starting in March, encountered some orders and returned to the market. It immediately felt that the market was not good enough. In the early April, it closed half of its capacity. It belonged to the local enterprises with lower production capacity. Therefore, the inventory of the finished products is relatively small, and the production and marketing are basically balanced, so the cash flow is relatively abundant.

Another chemical fiber manufacturer is still fully open, the monthly yarn production is about 650 tons, the current production and marketing rate is only half, and the remaining half can only be reserved for inventory, so the factory's inventory is far higher than the same period last year. The factory official said that the reason why the production capacity has not yet been reduced is the fact that it has underestimated the seriousness of the epidemic and that the market downturn will not be too long, so there is no reduction in production. It is hoped that the workers will be saved, and that the market will not attract people when the market improves. However, the cash flow has also been tightened. If the inventory continues to rise, it can only choose to cut production.

After all, the average start-up rate of the local chemical fiber factory is 50%-60%, and the average operating rate of the downstream dyeing and finishing plant is around 60%. The epidemic has led to a sharp reduction in export orders and a great impact on the whole industry. Factories have been shut down or bankrupted. But the overall capacity is still oversupply, so the price competition is heating up. Factories are losing profits or even losing money.

From the perspective of the whole industry chain, the raw material side occupies a high profit point, because the raw material enterprises are more concentrated, and several large petrochemical enterprises are almost monopolized in the industry, and the prices are relatively uniform. Crude oil has rebounded sharply in recent days, so the price of polyester staple fiber has also risen, rising 100 yuan / ton in one week, and the downstream can only accept it, and the bargaining power is very low. Moreover, downstream yarns can not follow the price increase, and only hope to make more goods and reduce inventory pressure.

Faced with the severe foreign trade situation, the local government has also given some support measures, such as the reduction of 5% of the electricity charge, and the reduction of the burden on the part of the enterprise social security. However, for the mills, the inflection point of consumption does not appear, and other stimulus policies can only be a drop in the bucket. As for how to interpret the market outlook, there are many differences between us. Individual grey traders reflect that orders can be set to July as domestic demand improves and Southeast Asian orders return. Pessimists argue that in the short term, there is no hope of a better recovery, or even a switch. This part of the enterprises believe that the textile industry is shifting to Southeast Asia in the long run. Even if there are no black swans such as epidemics, the good days of the mills may also be greatly reduced.