Off-season and losses lead to increased production cuts in downstream sectors – ChinaTexnet.com
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Off-season and losses lead to increased production cuts in downstream sectors

2024-07-29 09:17:51 CCFGroup

Entering July, the terminal business continues to exhibit a seasonal downturn. Orders are decreasing, and combined with losses on finished products, downstream operating rates are continuously declining. The arrival of hot weather has further exacerbated this trend.

According to CCFGroup statistics, the comprehensive operating rate of texturizing mills in Jiangsu and Zhejiang provinces fell to 80%, a 6 percentage point decrease from last week, while the comprehensive operating rate of weaving mills in the same regions dropped to 70%, a 3 percentage point decline from last week.

New order index in major polyester grey fabric production bases

Profit of polyester grey fabric

Since late June, some dyeing and printing mills in areas such as Shaoxing, Xiaoshan, and Wujiang have issued announcements regarding production halts or shifts. Industry analysis indicates that the lackluster performance in both domestic and foreign demand has led the dyeing and printing industries to enter the off-season earlier than usual (without support from large or long-term orders). It is expected that July will be a period of frozen business for the industry, and continuing production would result in severe losses, making production cuts or halts inevitable.

The significant increase in raw material prices earlier this year has heavily squeezed weaving and fabric mills, leading to tight cost controls on dyeing fees. Despite multiple attempts at communication and price adjustments, dyeing mills have to reduce or even refuse orders to avoid risks, waiting for the "golden September and silver October" peak season.

Operating rate of printing and dyeing plants in Zhejiang and Jiangsu

As the terminal business further weakens and the upstream raw material PTA continues to decline, downstream purchasing sentiment has shifted from cautiously optimistic to cautious, with some even feeling pessimistic.

There is concern that leading enterprises might not be able to sustain filament prices. Recently, some small and medium-sized enterprises have started offering discounts, further fueling the wait-and-see sentiment downstream. Consequently, some downstream producers have opted to cut production to avoid risks, resulting in persistently low sales for polyester filament.

July is typically the month with the lowest demand in a year, and this year is no exception. Under continuous pressure from low sales, it will be crucial to monitor how leading enterprises respond. They may either intensify production cuts to maintain prices or potentially adjust prices while ensuring a margin, depending on market conditions.

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