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A week skyrocketed 10%, a textile raw material textile factory in full swing, textile market ushered in the peak season?

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After seeing the recent rise and rise of the textile market everywhere, many textile workers may also be full of questions.
The price of raw materials has gone up. You don’t need to ask about it. Your friends in your circle will tell you which raw materials are going up again, which are rising, and which are not available at a high price.

Cotton yarn shot up 10% in a week

As of February 25, 2021, CY C32S pure cotton yarn closed at 25450 yuan/ton, up 1455 yuan/ton only in one week, an increase of more than 6%.

The ex-factory price of cotton yarn was “adjusted one day or even two times a day”. The spinning profit increased compared with the fourth quarter of 2020, mainly due to the low inventory of cotton and cotton yarn in cotton mills, sufficient liquidity and the aggravation of inflation caused by the surge of crude oil, chemical source and chemical industry.
As of February 25, the spot profit of the textile enterprises in 1500 yuan/ton line.

From the price of cotton yarn of textile enterprises, now the price of various varieties of cotton yarn is significantly higher than before the Spring Festival 1500~2000 yuan/ton.
Cotton mills are full of confidence in this year’s production and operation, post-holiday sales quickly on the right track.
And the start of 2021 textile enterprises before the holiday time delayed, the year after the start of work ahead of time, the boot recovery is faster, according to the lunar calendar, the probability of the eighth day after the holiday is nearly 10 percentage points higher than 2018 and 2019.
Yarn inventory is significantly lower than previous years. As of February 25, China’s yarn inventory index closed at 9.2 days.
If the March to April peak season market as expected, the situation will continue to outstrip supply of textile enterprises.

After investigation, most of the current spinning enterprises actively complete the pre-festival lint order contract, pay close attention to the organization of lint storage, to prevent upstream cotton mills and traders due to the price of cotton skyrocketing and breach of contract phenomenon;
At the same time appropriate procurement with cotton urgently needed lint.

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In terms of cotton yarn sales and shipment, the company adjusted the idea of rushing and making pre-holiday orders and completing the contract in time with timely delivery. Instead, it changed to completing pre-holiday orders by stages, giving priority to supplying high-priced cotton yarn purchased after the holiday and actively delivering it.
Many textile enterprise owners believe that “today’s wine is drunk”, now should be full of horsepower, seize the opportunity to produce, sales, and strive to achieve the first half of 2021 one-year profit target, production task 70% or even higher.

The downstream weaving mills are fully operational

As of February 25, China grey fabric load index has soared from 24.3% on the 19th to 57.5%, more than doubled.
The price of CG C32 grey fabric also rose to 6 yuan/meter, compared with 5.49 yuan/meter on 19th, an increase of 9.29%.
However, compared with the upstream cotton yarn rose more than 10% in February, the price of grey cloth, fabrics, clothing and other prices are significantly behind, export-oriented companies, processing enterprises are more cautious, can withstand and digest the cost increase also need to observe, run in.

On the other hand, the US government continues to impose tariffs on US $370 billion worth of imports from China and continue to impose an import ban on cotton products from Xinjiang. The increase in unit prices of textile goods purchased by brands and retailers from Europe, the US and other countries is relatively limited or even refuses to go up. As a result, foreign goods will either continue to be transferred to Southeast Asian countries.
Or Chinese enterprises low profit, no profit or even loss to accept orders.
At present, the mentality of weaving factory is still cautious, that there is no demand support even if raw materials to help rise can not form a sustained market.
But as long as the upstream cotton still maintain short supply, the superposition of the outbreak of improvement is expected, in the first half of this year cloth market in the possibility of unilateral drop also is not big, the cotton price fluctuation is normal market behavior, as long as the amplitude of relative control need not deliberately to reduce production, so the factory capital chain or will affect the boot load in the first half of 2021 factory, well-funded factory inventories or will increase slightly, while money tight factory pay more attention to sales.

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Top-down price rise downstream customer acceptance is general

Recently all kinds of fabric price news, we have seen too much.
The fabric price rise, the main reason for raw material prices rose sharply, a day, or even half a day a rise in the recent scene is still relatively common.

“A raw material we often make, at the end of last year was 7,000 a ton, these days has reached 9,000, it is estimated that within a few days over 10,000.”
“Said a company official.

Raw material rise of 20 to 30 percent, so that many weaving enterprises abnormal regret.
Due to the poor market of the global epidemic last year, the price of raw materials continued to fall, making many enterprises that prepare raw materials before the 2020 Spring Festival suffer substantial losses.
So this year many enterprises are extremely cautious, raw materials are with the purchase, not a large number of reserves of raw materials.

Downstream customers generally find it difficult to accept a large increase in a short period of time, mainly because most of their orders are pre-existing orders, and this part of the price is quoted according to the pre-existing market, but the current increase has basically eaten up all the profits.
In order to retain orders, to retain customers, some trade enterprises can only “tears” accepted.

To sum up, the power of this wave of raw materials surge is not the fundamentals of supply and demand, but capital, speculation.
From the recent central bank of a series of actions, 2021 monetary policy “ultra-loose”, large release of water expectations significantly weakened, steady and even phased tightening into the main tone.
However, the trend of Sino-US relations is not clear. Whether Trump or Biden takes office, it is always the core of the US to suppress China.

May only after the stability of raw materials, fabric prices, the textile market can really usher in the overall season.

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Business Director at Shanghai Fumao Clothing Co.,LTD

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