As price goes up and down, how the fabric enterprises survive?

Recently, fabric enterprises are facing severe chal—lenges.

The upstream raw material prices continue to climb,viscose fiber, polyester yarn, spandex, nylon, dye prices have risen substantially. Among them, the price of 40D spandex has increased to more than 70,000 yuan/ton,with an increase of 86 percent this year and an increase of more than 150 percent compared with the same pe—riod last year.

However, fabric prices are falling. According to China Customs HS 8—digit statistics, from January to May, the average export unit price of China’s 8 major categories of printing and dyeing products was USD 0.98/meter, a year—on—year decrease of 0.53 percent. Compared with the same period in 2019, its average export unit price growth rate was —4.81 percent.

As the price changed, how do the fabric enterprises survive in the crack has become a major test that must be faced at present.

In addition to the rising prices of raw materials such as spandex, the price of polyester filament also began to rise. Monitoring on related platforms shows that recently,the mainstream negotiation price of POY150D products in the market is 7,850 yuan/ton, an increase of 325 yuan/ton from the previous month; the price of FDY150d is 8,025 yuan/ton, increased by 250 yuan/ton from the previous month; the price of DTY150d is 9,200 yuan/ton,up 400 yuan/ton from the previous month.

In the face of aggressive raw material price rise tide,the relevant person in charge of the Suzhou Shengze Silk Chemical Fiber Index Monitoring and Publishing Platform pointed out that although the rise in raw materials after the Spring Festival, but the market fabric enterprises raised the price is still a few.

The China Keqiao Textile Index released on July 19 also showed that the price index of apparel fabrics has fallen slightly recently. The transaction prices of pure cotton, polyester, polyester—cotton, polyester—nylon,polyester—spandex, viscose, nylon, and linen fabrics fell in varying amounts, affecting the overall price index of ap—parel fabrics to decline.

“Fabric prices are difficult to rise because custom—ers don’t accept it.” Li Changchun, manager of Suzhou Wujiang Weihua Textile Co., Ltd., said that the company’s current orders are basically the same as pre—pandemic period, but profits have declined significantly.

Yang Jiandong, general manager of Haimen Youyuan Textile Co., Ltd. also said, “Although there are amount of orders coming in, it is getting harder and harder to make money. Since the second half of last year, the price of cotton has risen rapidly, and so has the price of yarn. In the case of grey cloth, for example, the cost has generally increased by 20—30 percent.”

“Can’t adjust the price casually, once the negotiation is bad, we will lose the order.” This has become the con—sensus of many surveyed fabric enterprises, especially those in charge of small and medium—sized enterprises.In this start by the upstream price rise tide, fabric enter—prises are helplessly under more cost pressure.

It can not be denied that some fabric enterprises are in an embarrassing situation, although orders are clearly at a loss, but they still have to continue to receive orders.An anonymous person in charge of fabric enterprises told reporters: “This is mainly to reduce the upfront fixed costs, but also to retain workers. It’s hard to find workers now,” he said. “If we shut down, we have to pay more for workers, so we lose more money. If the capacity utiliza—tion rate reaches 70 to 80 percent, the enterprise may cut down some loss—making orders,” the person said.

Yang Jiandong believes that the soaring prices of textile raw materials will inevitably affect fabric com—panies. The pressure of rising prices of cotton, cotton yarn, polyester—cotton yarn, etc. will eventually need to be shared by fabric companies, clothing purchasers and other parties. A large price increase in one link alone can—not be solved, and all parties need to make concessions.

Faced with this round of booming price increases,not only fabric enterprises feel anxious.

The person in charge of a clothing brand in Shen—zhen said to the reporter, since this year, this round of price rise tide has relatively big impact on the company.“It is unclear whether the cost will be passed on to consumers and how much they can afford. What we are doing now is partnering with other clothing brands,purchasing together and negotiating prices with fabric manufacturers to reduce costs.” He predicted a correc—tion in the second half of the year, when prices should fall. But he also pointed out that even if raw material prices do fall, it is difficult for fabric companies to change immediately. “After all, the losses in the first half of the year need to be covered.”

This is indeed the concern of many fabric enterprises:in the first half of the year, the operation of fabric enter—prises has been greatly affected. Next, if the raw mate—rial prices can’t return to the normal price in time, it will certainly bring great challenges to the operation of fabric enterprises for a whole year.

But there is a positive side to this wave of price rises.In the face of the rising price of raw materials, many fabric enterprises have tried their best to resist the cost pres—sure through the implementation of process improve—ment and other measures.

“The ‘pain’ brought by the price rise will inevitably cause the increase of the operating cost of fabric enter—prises in a short time. Enterprises need to weaken the adverse impact of the price rise on the operation through multiple paths.” Chen Baojian, chief engineer of National Textile Development Center, pointed out that in this case,the most powerful measures for enterprises at present are both internal and external: internally, through process improvement, continuous refinement, more material saving, energy saving, consumption reduction; externally,we should form a mechanism of joint resistance and risk taking in the whole industrial chain.

Chen Baojian also suggested that fabric enterprises should pay attention to the change of raw material prices at any time. When raw material prices are low, they can properly store more. In the off—season, the production can be reduced timely according to the market demand. “Many companies in Keqiao have already taken such measures,which may not fully hedge the impact, but it will be miti—gated.”