Fabric Market is not Prosperous in Peak Season

As usual, textile industry is in traditional peak season in Sept. and Oct. but the overseas market demand of textile industry shows weak tendency affected by the factors like the aggravated Euro crisis, sluggish recovery of global economy and so on. And the textile market is also not prosperous in peak season in the second half of this year. Therefore, why it shows depressed situation in peak season? Let’s see several sets of data as follows:

According to the above sets of data, it can be concluded that even in Sept. and Oct. which are the best months for sales, the prices of textile raw materials change little and some even drops obviously. Thus, it’s not hard to see the market demands are still depressed. In addition, the prices of the products in the sheet all slide significantly, so it also reflects that textile price of this year are clearly inferior to last year. Especially FDY price, the decline reaches to 20%. On one hand, it is resulted by insufficient terminal demands and the slide of upstream raw material. On the other hand, the excessive growth of FDY capacity causes the decline of price.

Since September, the sales have improved in fabric market and the inventories of gray fabric have showed declining tendency. It can be proved from the inventory index of woven enterprise which is monitored by “China Textile Suppliers”.

But we can see that the sales in fabric market showed weak tendency after the holidays and the inventory index hovered around one and a half month. So it was a big contrast with the same period last year. This was because the inventory began to form at this time last year, but right now the enterprises need to digest the inventory.

At present, most enterprises express that they can bear the inventory pressure of one and a half month if in off season, however, it is in peak season, the inventory does not fall. And along with the coming of off season, the sales pressure as well as the inventory pressure will become bigger. Therefore, in order to curb the climb of inventory, they have to suspend operation or slash production.

As for price information, the prices of conventional products change little in recent days. But the enterprises say that the prices can be discussed during the close of deals. For example, the current quotation of full-dull 210T polyester taffeta is about 2.3 Yuan/meter and it doesn’t change in nearly two month. But the quotation of this fabric was 2.7 Yuan/meter quarter-on-quarter, which fell 0.4 Yuan/meter, dropped 15%.

As for sales data, now most enterprises reflect that the sales turnover descends at least 30% compared with the same period last year, and some even 50%. This is because big orders and standing orders begin to reduce, small orders and short-term orders are in the majority. In addition, the production cost keeps surging, the inventory doesn’t be improved and the profits of the enterprises are not good. Therefore, most enterprises are break-even or even bring negative profit. Along with the slide of orders in the market, enthusiasm for production of the manufacturers begin to weaken, the operating rate is generally around 60%-70% and it is even lower in some small enterprise.

The less-prosperous market in peak season makes entire participants in textile industry feel helpless. A lot of risk factors during the operation in whole industrial chain like upside-down cotton price at home and abroad, high labor cost, surging logistics cost and financing cost, etc. all make the profits of textile enterprises glide and the operating pressure increases. However, along with the end of textile peak season, domestic and external demands will slide gradually, so textile enterprises will face greater challenges.