Demand For Raw Materials Double Down, Textile Enterprises "Survive Year Of Disaster" To Survive

Since March, there has been a rare drop in cotton and chemical fiber. I learned from my friends that yesterday, the petrol station in Michigan, USA, only had 1.879 gasoline per 93 petrol, equivalent to 95 or even 98 gasoline in the country as long as 2.39 yuan / liter.

Because of the oil slump, chemical fiber and viscose raw materials started earlier than cotton. Zheng cotton has also experienced 3 down limits, and even below the threshold of 10000 yuan. Under the collapse, raw material inventory of textile enterprises has formed a larger invisible loss. As of March 26th, the domestic C32S average price fell below 20 thousand to 19868 yuan / ton, compared with last week, it continued to plummet by 383 yuan / ton.

From the inventory point of view, at present, the export orders for textile and clothing have been impacted, and domestic demand has not yet been restored, and new orders for downstream garment factories are seriously lacking. According to many garment factories, many enterprises have to turn their exports to domestic sales, resulting in a smaller market cake this year than last year. The demand for fabric is decreasing, resulting in the increasing inventory of finished products. In addition, the current sheet of grey fabrics and fabrics also ushered in the withdrawal of orders and breaking the tide. Most mills almost stopped purchasing raw materials, all of which did their best to inventory and reduce costs. As a result, the textile enterprises in the middle are in a dilemma. Although the price of raw materials for the upstream cotton is down or down, there is no demand for the downstream raw materials. The direct result is the backlog of the finished product inventory. If the production continues to accumulate, the enterprise will bear more cost than the accumulated inventory. If the company stops working, the enterprise will also suffer a heavy downtime loss. It is understood that due to the current cash flow, there have been small factory owners disappear, or only willing to use equipment to offset, spinning enterprises complain.

In terms of imported yarn, the epidemic situation has intensified the global influence. Many countries have taken measures to fight against the epidemic situation. At the same time, the import and export of yarn is also a great blow. The ports in India, Pakistan, Vietnam and other countries are closed, and India, Pakistan and other countries have also stopped foreign reporting prices, foreign orders have been cancelled, imported yarn has been cut down, and the yarn has been imported 1-2 months later. The amplitude declined. As of March 26th, the spot price of FCY Index C32S was 20223 yuan / ton, down 156 yuan / ton compared with last week. And domestic imports of yarn stocks remain high, close to the historical record. Traders suffered losses across the board, and many buyers were in breach of the contract or asked the sellers not to deliver them.

In several major cotton importing countries, India has been closed for 21 days since March 25th, and most ports have stopped shipment. Only a few ports need to be applied for shipment. But because there is little demand, the port is also deserted. The government of India has called on enterprises to take a vacation, but there has been no mandatory downtime. However, due to the stagnation of downstream demand, many factories in India have been on holiday since last week. The current operating rate is less than half, and the follow-up may be lower. In fact, from the domestic situation, many imported cotton, cotton and cotton importers, weaving mills or traders simply agreed on the 21 days of India's "closed country". Because the contract period of cotton and cotton yarn contract executed in 3/4 months is mostly in 12/1 month (the main price of ICE cotton futures contract is 71.96 cents / pound, while the current low point is 53.08 cents / pound, the drop is as high as 26.24%), and the price of India MCX futures and spot has also fallen sharply. Since February, the India cotton mill's OE yarn, combed yarn and combed yarn FOB and CNF Quotation have fallen more and more. Chinese buyers are worried that cotton and cotton yarn contracts will be difficult to enforce. They need to negotiate with the international cotton traders and India exporters to cancel or postpone shipment and re sign contracts. (now they may face a claim). Now India unilaterally breaks the contract because of "force majeure". Chinese enterprises can buy cotton, Brazil cotton, Pakistan and Vietnam cotton in low position, and the risks will be further reduced.

To sum up, some people regard this year as a "year of great calamity". But although the market pressure is great, it is the same for all of us. Most manufacturers' salesmen say that the market for the second half of this year is still relatively good. Because most countries in the world are closing the country, the total supply of domestic yarn will be reduced. With the gradual return of domestic production, the improvement of domestic demand is positive. Looking at the world, the Federal Reserve's unlimited easing policy and mobile tools boosted market confidence. The global stock market has responded. At the same time, the epidemic control and control of various countries have been upgraded. If the epidemic situation is better after the arrival of the northern hemisphere in summer in 4-6, the epidemic will resonate with inflation, and the global market which has already fallen sharply may have a rebound.