China’s textile industry explodes orders, raw material prices soar

The New Year’s atmosphere has not completely faded, the textile people’s business has been in full swing! Since the fourth day of the Lunar New Year, many major chemical fiber raw materials factories have begun normal production and sales, sending hundreds of trucks a day, and it is common for orders to be queued a few months later. On the eighth day of the Lunar New Year, most of the weaving companies also began to open their doors for business. The order situation is also gratifying.

“New year’s first order, 60 thousand meters 240 pongee shipment…” A textile worker’s circle of friends revealed the harvest of the first day of work in the Year of the Ox. And it can be seen that not only some real orders have been placed, but also many inquiries. Not only this textile company, many textile companies have it on the first day of the new year

Although the national textile market was almost shut down during the Spring Festival, foreign markets were not closed, and there are still many quotations and orders. This is why many companies bought grey fabrics on the first day, but there is still a question. That is, most printing and dyeing factories have not started because the workers from other places have not returned. Why are textile companies eager to buy grey fabrics, after all, they have nowhere to process them? In fact, an important reason why trading companies are eager to buy grey fabrics on the first day is that the price of grey fabrics is about to rise.

In addition to New Year’s greetings, what I have seen most in the textile people’s circle of friends in recent days may be various price increases or notices of price increases.

The price increase of various textile companies is generally about 0.1-0.2 yuan/meter, but there are also 1-1.5 yuan/meter. Around the Taihu Lake Shading Cloth Home Textile Chamber of Commerce, hundreds of companies have raised prices in a group, and the price increase space far exceeds other textile companies. However, because the original price of the shading cloth was relatively high, the price was more than ten or twenty yuan per meter, so the increase was not large.

But in terms of the scale of price increases, more than a hundred companies raised the prices of grey fabrics at one time, which also indicates that the grey fabric market has come out of the price trough of 2020 and has begun to bottom out.

Fabric price increases are usually affected by cost or demand. Although the overall performance of the textile market has been relatively good in the near future, both the raw material end and the weaving end have taken goods to varying degrees, but it is obviously too early to say that the textile peak season is here. On the one hand, most of the printing and dyeing factories have not yet entered the production state, and the amount of dyeing factories that can reflect the market situation is not clear; on the other hand, even if there are many orders at present, it is likely to be a backlog of orders before the year. The market is still unclear.

So the demand side is not the direct driving force of the fabric price increase, so the only thing left is the cost increase. In fact, it can also be seen from the price increase notices of various textile companies that most companies have mentioned that the recent sharp increase in raw material prices has pushed up costs, and textile companies have had to increase their prices.

However, how long can the price increase caused by rising costs last if it is separated from the demand side?

The increase in raw material prices was mainly due to the soaring national oil prices during the Spring Festival. The rise in international oil prices is mainly due to the fact that on February 15th, affected by the unprecedented Arctic cold wave, the temperature in most parts of the United States dropped sharply and the energy market fell into chaos. Large-scale power outages in cities such as Dallas and Houston have caused a surge in heating demand to push the power grid to its limit. The sub-zero temperature in Midland, Texas, caused the U.S. shale gas production to drop by 1 million barrels per day, pushing oil prices to a new high in the past 13 months. U.S. oil exceeded $60 per barrel. Cold weather may also trigger fuel Panic buying, heating oil futures rose more than 2%, natural gas rose more than 3%.

The rise of textile materials after the holiday is a supplementary increase after the crude oil surge, but the cold wave in the United States will eventually pass, and oil prices will lack the motivation to skyrocket. It is also difficult to produce a sustained boost to our textile raw materials, and the prices of raw materials will eventually return to stability. In addition, many companies in the fabric market still have a lot of inventory of low-priced raw materials for sale last year, as well as the low-priced raw materials purchased in large quantities last year. Therefore, there are definitely many companies eager to digest inventory and not follow the trend and increase prices.

Amidst all kinds of “rising” sounds, we also need to calm down. After all, before the market does not substantially improve, price increases will only cause prices and no market. At the same time, companies that maintain the original prices may make market competition more intense.

Post time: Feb-26-2021