Order flow to Southeast Asia? Textile and garment industry may face changes

The crude oil market may usher in a rise in oil prices

In recent days, PTA prices have continued to rise, and the main contract price once broke a new high. This round of PTA price rise is mainly caused by cost and supply and demand.

In terms of cost, the international oil price rose significantly. In addition, PX's early valuation has fallen. Since April, the supply side has suffered a lot of maintenance losses, and the PX naphtha oil price difference is around $300, forming strong support. In terms of supply and demand of PTA itself, due to the low price before, PTA processing costs were squeezed to the low level, and the supply contraction was expected to be strong.

In terms of demand, polyester production in February showed a steady increase. In the context of a moderate recovery in domestic demand, although the demand did not increase significantly, it can currently maintain a high level of rigid demand. Therefore, in terms of supply and demand, PTA3 is expected to destock in April, and the price will rise under the undervalue.

In Jiangsu and Zhejiang, the starting rate of downstream terminals has gradually recovered. By the end of February, the comprehensive starting rate of Jiangsu and Zhejiang texturing has increased to 92%, and the comprehensive starting rate of Jiangsu and Zhejiang looms has increased to 75%. In terms of the source of orders, export sales are weaker than domestic sales, and the downstream of domestic sales is supported by stock demand.

The reason why the starting rate of Jiangsu and Zhejiang stretch weaving continues to rise to a relatively high level:

1. Downstream enterprises with good business, supported by the demand for seasonal fabrics and traders to stock up, are now in a balanced production and sales situation, so they should try to open up as high as possible.

2. Even in the case of insufficient orders, the downstream enterprises with slightly poor business will try to open as high as possible in order to consider the problem of workers for more than a month after the Spring Festival, and will not consider lowering the startup until the later inventory is under pressure.

Weak foreign trade orders may usher in changes

According to the data, in January 2023, orders from Europe to China decreased by 50%, while orders from North America decreased by 40%; Many enterprises in Zhejiang and other places are forced to reduce their labor costs because they cannot receive orders; In January 2023, Hong Kong's imports and exports fell by 30.2% and 36.7%, hitting a 70-year low in Hong Kong. This means that the decline in exports to Europe and the United States from January to February is about three times that of the overall decline in foreign trade.

In sharp contrast, the foreign trade sales of Southeast Asian countries increased almost entirely.

In January 2023, the total import and export volume of South Korea increased by 10.7% and 7.4% year on year; India's total import and export volume increased by 4.5% year-on-year; Vietnam's total foreign trade imports and exports fell 17.3%, rebounded in February, with a growth rate of 11%; Malaysia's total imports and exports increased by 2.7% and 1.6%; Mexico's total import and export volume increased by 25.6% year on year.

Although the demand rate of major consumer countries in Europe and the United States will shrink in the next few years, corresponding to the relatively severe foreign trade situation in China, China, as a "supply chain advantage+large volume" producer, is still more likely to survive in the severe winter due to the "fat thickness".

In January-February this year, the export growth of the six labor-intensive industries slowed down significantly, with an export share of about 14.5%. The year-on-year growth of the export value of textiles, clothing, footwear and toys was significantly lower than the overall export growth. The trend of some orders flowing to Southeast Asia or back to the United States does exist. According to a number of foreign trade data, this is a slow evolution of global regional industrial division that has lasted for many years, rather than a sudden or sharp trend this year or in the past two years. Behind this evolution, there is also the need for the transformation and upgrading of China's manufacturing industry and the global layout.