What will textile businessmen encounter this September and October?
There is a saying about there being a golden September and a silver October in the textile industry. This means that during those two months, the textile and garment market recovers from the preceding downturn and the number of orders is notably on the rise due to the decreased cotton price and several other factors. The golden September and silver October describes not only the textile industry, but all walks of life, because those two months are the season for harvesting in the agriculture industry, and family consumption significantly increases during this period according to consumer psychology.
Therefore, against the background of Sino-US trade friction, did business in the most recent September meet the expectations of the textile industry? And what happened in October?
Since the Sino-US trade war began, the US market has gradually transferred its trade to Vietnam, India and Mexico, while China’s textile products manufacturing industry has moved to southeast Asian countries. The country’s textile industry is no longer exporting finished products but raw materials and semi-finished products.
The responses of textile enterprises across the nation since September reflect the market situation created by the Sino-US trade war.
The new cotton price in Xinjiang Uyghur autonomous region is generally higher. By Sept 18, the price of high-quality fine staple cotton for presale in Aksu and Kashgar was 17,500 yuan[$....] ($2,536) per ton. With the addition of freight charges, the total price was predicted to be 18,000 yuan per ton, 1,400 to 1,800 yuan higher than the reserve cotton. This difference in price is unacceptable for many textile enterprises, which have said that, although the new cotton is for presale, they dare not buy it due to the high cost and pessimism about the future market.
The golden September of the chemical fiber market was disappointing. It encountered a sharp drop in chemical fiber material prices and the negative effects of Sino-US trade war on the export market for textiles and garment products. Since September, the rising prices for chemical fiber prices started to ease, and after a week the prices began dropping sharply. The price of pure terephthalic acid (PTA) decreased to 1,500 yuan per ton by Sept 27, but the price of dacron and related products only fell by 600 to 800 yuan per ton. Therefore, profits from dacron and related chemical fiber products rose greatly. And with the strengthened efforts of dacron factories reducing output to support value, the decrease of dacron prices may also ease. But downstream dacron factories suffered more because the fabric did not catch up with price rises in chemical fiber products and is now trapped in a difficult situation of how to price new orders.
Although the downtrend is strong, the drop in the price of dacron and related products is minor, as the dacron price had risen sharply since mid-July. During the sharp rise, the downstream greige cloth price did not increase that much. It is said that the greige cloth price increased by only 30 percent year-on-year in early September. Even so, the price is unacceptable for downstream fabric and clothing factories.
Although fabric trade deals are made up of more than the amounts during the slack season, they are still less than expected. Some factories’ inventories have increased more than usual. Due to the sharp rise raw material prices and the influence of environmental protection policies, profits of textile factories are discouragingly low. The rate of use of weaving machines in Jiangsu and Zhejiang provinces has reached only about 68 percent.