Limit Production 30-50%! What Did A Group Of Textile Enterprises Release From The Convention On Joint Limitation Of Production?

Recently, the Jiangsu Peixian Textile Association issued a Joint Convention on limited production:

In view of the current epidemic impact on textile exports. Supply and demand imbalance, and raw materials remain high, there is a vicious competition in yarn sales. In order to alleviate market pressure, it was agreed and agreed by members. The decision is as follows: from June 20th onwards, enterprises will limit production by 30 to 50% according to their own operation. All enterprises should be implemented as appropriate.

According to the Joint Convention, the epidemic has hit the traditional textile off-season. The pressure of Peixian textile enterprises is too large. In order to ease the pressure on inventory and capital, many textile enterprises sell at a low price, but you cut prices, I lower the price, the market is plunged into vicious competition, no one can earn money, and the market order is disrupted, as a common organization of textile enterprises, and local associations intervene. This Joint Convention also reflects the survival predicament of the textile enterprises.

According to statistics, Peixian is located in the northern part of Xuzhou city of Jiangsu Province, and is located at the junction of four provinces in Jiangsu, Anhui and Anhui provinces. It is China's cotton yarn textile County, an important cotton and viscose yarn textile base. It owns 510 textile enterprises, 1 million 760 thousand spindles of air spun yarn and 800 thousand tons of viscose yarn.

In recent years, Peixian has vigorously promoted the development of the textile industry through the measures of "highlighting planning guidance, optimizing the development environment, promoting resource integration, eliminating backward production capacity and playing the role of the association", and was awarded the title of "China's Viscose yarn production base county" in 2017.

Shortage of orders

With the deepening of the traditional off-season atmosphere and the further decline of the market, many textile enterprises have been increasing their stocks due to insufficient orders.

A textile enterprise owner said: "our export orders have decreased a lot, demand is less, the machine is also open in weaving inventory, we stock has 5-600 million meters, coupled with the recent increase in raw materials, cloth price has not risen, equal to the production of low-priced fabrics with high price raw materials, it is actually a loss."

Coincidentally, a cloth boss who transferred the loom to the Henan area also revealed: "we have a lot of stocks, 7 or 8 million meters, and now the looms are only 50%. The grey cloth is basically sold at a loss. There are also some high priced raw materials that are not sold for sale. If they sell, they will lose 0.3-0.4 yuan / m."

In the two outbreak, there was no order in the United States. The European plate had increased the demand for consultation but lacked the determination to make a final decision. Domestic demand continued to shrink, and the epidemic prevention materials in the market still occupied the mainstream.

Drop in sales and drop in revenue

In May, the sales volume of yarn and cloth increased by 16.28% and 6.59% respectively. In the case of insufficient demand in downstream market, textile enterprises increased sales by lowering prices and squeezing profits. The monthly average price of pure cotton yarn and pure viscose yarn decreased in varying degrees. The price of pure polyester yarn was relatively stable after rising, and the monthly average price was basically flat. As of the end of May, yarn inventory and cloth Inventory were basically flat.

In 1~5 months, the business income of tracked enterprises decreased by 15.38% compared with the same period last year. The decline narrowed by 2.3 percentage points from the previous month, of which 85% of the enterprises decreased compared with the previous month. The value of export delivery decreased by 28.8% compared with the same period last year, a decrease of 2.5 percentage points from the previous month, and the total profit decreased by 44.12% compared with the same period last year. The decline narrowed by 5 percentage points from the previous month, of which 78% enterprises decreased year by year.

Slow production and low start-up rate

According to the tracking survey of cluster situation, the overall production of clusters in May continued to slow down, and the utilization rate of enterprises started at a low level. According to the economic operation data, compared with the same period last year, 1~5 months tracking the output of all kinds of yarn in cluster enterprises decreased by 32.4% compared with the same period last year, and the output of cloth decreased by 36.2% compared with the same period last year. The operating income decreased by 26.4% compared with the same period last year, and the total profit decreased by 57.3% compared with the same period last year.

According to investigation and research, the start up of clusters with medium and low end yarn or pure cotton yarn is basically normal, and some enterprises' orders can be produced to the beginning of July. On the one hand, some cluster enterprises reduce inventory and speed up turnover; on the other hand, actively adjust product mix, produce marketable products, and gradually adapt to the current market situation. As of June 15th, the average operating rate of the tracking cluster was around 54%, and the utilization rate of spinning and weaving capacity was below 40%.

Production or holiday will increase.

With the advent of the traditional off-season and the shortage of orders, enterprises have started the "holiday mode" to avoid inventory accumulation.

"If the raw material falls, we will buy something to continue production. If it does not fall, we may have a holiday at the end of the month."

"Now this situation can only be sold at a low price, but we do not want to lose money all the time. We may have to reduce the number of machines, and more than 300 units will be reduced to more than 100 directly." Wang Chang, who moved to Henan, said.

The prevailing view in the industry is that orders are on the way, and no orders continue to take vacations. Although there is hope for August, the retaliatory rebound is still not strong. Crude oil prices are rising and falling, making the price of raw materials change faster, and enterprises' ability to resist risks is becoming weaker. It is understood that the current domestic cotton yarn, grey cloth "demotion" phenomenon is more common. We should abandon the export list with low profit, tighten the layout of domestic sales, take the initiative to reduce product grades, ensure that products are diversified and meet the needs of customers.

Global research orders can resume in the four quarter

To understand the impact of the new crown epidemic on the global textile industry chain, the International Textile Manufacturers Federation (ITMF) recently conducted fourth surveys in 600 members worldwide. Research shows that textile orders will resume in the fourth quarter of 2020.

The survey showed that textile orders in the world dropped by more than 40% from March 1, 2020 to June 8, 2020. Orders in all sectors of the supply chain generally declined, of which the orders of the cotton mill decreased by 44% and the turnover decreased by 33%. The order of the weaving mill decreased by 46% and the turnover decreased by 33%. Orders for garment manufacturers fell by 37%, and turnover fell by 31%.

In the future, textile companies expect orders to fall by 32%. Among them, 22% of Southeast Asian companies expect orders to drop, while 36% of Asia's companies are expected to decline. About 23% of respondents said they expect the order to resume in the first quarter of 2021, and 21% of them are expected to resume in the second quarter of 2021. 14% of respondents expected to recover in the third quarter of 2021, while 20% of respondents expected to recover in the fourth quarter of 2020.