Cotton grey fabric: high season purchases to come in Sep?

Cotton grey fabric market was extremely slack this year. On the one hand, export orders were scarce due to the sanction on Xinjiang cotton. On the other hand, domestic sales were also weak. Domestic sales ratio of textile and apparel enterprises above designated size reached more than 75%. There was great demand for cotton grey fabric, but domestic demand consumption slipped.

There were five retail enterprises that released half-year report, including only one with rising performance. The sales in electronic commerce industry was not good, mainly due to the slip in domestic economy despite of the frequent sales promotion in various e-commerce platforms.

Market players concerned the domestic demand in traditional peak season in September.

According to CCFGroup’s survey, 70%-80% fabric mills reflected more enquiries in early August, mainly in Shandong, Zhejiang and Guangdong. However, the sales declined commonly in mid and late-Aug. In terms of inventory, medium and large-scaled mills were still under great pressure and continued to sell fabric with discounts. The fabric output reduced due to power rationing in Zhejiang, Jiangsu and Shandong. Fabric mills commonly haven’t taken working orders, although more enquiries and demand for sampling are received.

Will the demand recover in the peak season?

From the perspective of quantity, the procurement demand of dyeing mills reduced or postponed due to a lack of orders. On price front, cotton grey fabric prices almost followed cotton yarn prices that were easy to drop and hard to rise. In consideration of the rise of the rigid demand in Sep, the possibility of continuous price fall was small. Cotton grey fabric prices are mostly expected to keep stable.

In conclusion, the sales in Sep will not be worse than that in Aug, but are unlikely to exceed the performance in peak season last year.  In addition, mills still have to reduce inventory so that they can gain priority in pricing, no matter the peak season comes or not.