Views: 6 Author: Site Editor Publish Time: 2022-03-04 Origin: Site
In early-Mar, the epidemic in China is gradually being controlled. However, overall sales ratio of cotton grey fabric market was still lukewarm. Fresh orders in the traditional peak season did not increase obviously despite some pre-holiday orders. In addition, the production capacity of weavers in some regions has not been fully restored, and the output of grey fabric was still not as good as the same period of last year.
Lackluster follow-on orders
In Feb, as more weavers resumed work, pre-holiday orders also began to be fulfilled by arranging production and delivery. Although fabric mills have continued to produce recently, the market price inquiry and new orders have not increased evidently. Current average order level can sustain for half a month. Some large-scaled ones can produce until mid-Apr, and the order price is still hard to rise. According to the feedback from weavers, first, there are no large export orders, and customers and weavers prefer short-distance and fast orders; second, due to the epidemic in Feb, fabric mills were shut down, overseas customers chose to cancel or transfer the order to other countries due to delivery; Third, amid impact of the national shutdown in the early stage, sales of domestic spring apparel has greatly reduced, and the summer one was also facing a delay in delivery, so gray fabric orders in the downstream will shrink significantly.
Slow pace of feedstock replenishment
Due to limited pre-holiday feedstock of weavers, they had to purchase cotton yarn in end-Feb. In addition, low O/R resulted in a shortage of cotton yarn supply. As a result, cotton yarn prices rose. Recently, due to the insufficient increase in orders, they show weaker willingness to replenish feedstock. Although production continues, cotton yarn procurement is not as good as that in previous stage, and weavers replenished stocks for their nearby requirement.
Slow recovery of operating rate
Compared with previous years, this year's weaving mill shipments are significantly slower. Compared with the operating rate in recent years, O/R in 2020 is at lower level. As of now, the O/R is less than 50%, and the recovery speed is also slower. There are specific reasons. First, weavers in Hubei cannot resume work due to strict local epidemic prevention work. Second, due to limited opened stores in China textile city, some of them controlled production for consideration of orders and inventory transfer. Third, some have resumed work for many days, but due to many migrant employees and some of them still not returning to work, the recovery of capacity has been limited.
Significant decline in inventory
In 2020, the inventory dropped sharply after resumption work. Compared with the slow restart and first rising and then falling inventory after the holiday, downstream customers urged weavers for an immediate delivery of the goods due to the delay in resumption time. And after resumption work, the downstream still purchased stocks amid rigid demand. Some weavers said that the high-end and high-density varieties were tight in spot, and they needed time to deliver goods.
In Mar, the market was somewhat lackluster, meaning that downstream traders showed weaker enthusiasm to stock up than that in same period of past years, and the increase in orders was insufficient. So market confidence weakened. Therefore, judging from the current fluctuations in the prices of upstream feedstock, grey fabric price is unlikely to rise significantly in Mar; and from the perspective of downstream O/R and orders, it is expected that the market will be hard to take a favourable turn in Mar-Apr.
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