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Insight | Time: Jul 29 2020 1:20PM
Brief analysis on turnover in China Textile City
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Affected by COVID-19 pandemic, cotton grey fabric market entered dull season in advance in Apr 2020 which was even bleaker in July. Both fabric mills and apparel mills held pessimism sentiment on the market outlook, which can be reflected in the turnover in China Textile City. Total turnover in China Textile City performed weaker than that in 2019.

By Jul 20, the turnover of fabrics in Jan-Jul 2020 reached 1.1 billion meters, less than 1.754 billion meters in same period of 2019, down by 37.29% year-on-year. From the turnover trend, turnover growth rate of fabrics in Mar 2020 was slower than that in same period last year; while in Apr-Jun, the growth rate was flat without large fluctuations. By July, the turnover was slightly higher than that in same period of last year. The main reasons lie in that the passenger flow of China Textile City after recovery was less than half of that of the same period last year due to the epidemic, and new orders were insufficient; moreover, a large number of export orders were cancelled or delayed; in addition, the year-on-year increase in fabrics in Jul 2020 may be related to some traders' stocks piled up before.

Breakdown data
Chemical fiber fabrics turnover decreased before the start of Chinese NY Day holidays in 2019, but it showed upwards after the holiday; it was not much different from same period of last year but the growth rate was not as good as that in same period of last year after the holiday. The turnover stabilized in Apr-Jun and then recovered slightly in Jul. As of Jul 20, the chemical fiber fabric turnover reached 735 million meters in Jan-Jun 2020, down by 38.3% year-on-year.

The cotton fabric turnover was similar to that of chemical fiber fabrics, but the former increased slowly during Apr-Jun 2020 and then it gradually dropped. Till Jul 20, cotton fabric was 366 million meters, down by 37.6% year-on-year, with the decline smaller than that of long staple fabric.

Highlight: cotton grey fabric
According to statistics, 100% cotton fabric, polyester/cotton fabric, polyester/rayon fabric and rayon fabric are 72.26, 52.14, 52.35 and 95.78mln meters respectively in Jan-Jul 2020, down by 3.56%, 33.77%, 45.68%and 39.28% respectively year-on-year. It can be seen that the total sales of rayon fabrics in China Textile City were better than others in 2020, but cotton fabric had the least shrinkage compared with last year.

In conclusion, turnover in China Textile City performed weak in Jan-Jul. Considering that this is related to the impact of the epidemic and dull performance in traditional peak season, the data of chemical fiber and cotton fabrics decreased by nearly 40% year-on-year, of which cotton fabrics turnover decrease is the smallest, and rayon fabric turnover ranks first among the four varieties not least because of seasonal demand. However, according to the market's traditional dull and peak season and the performance of the data in mid to early-Jul, the turnover will still be weak in Aug.

Stated thus, the current market is still shrouded in pessimism. Both orders and prices of cotton grey fabrics may weaken further. Therefore, rigid-demand purchase and inventory control can still reduce the burden on the capital chain. In response to the problem that orders of cotton grey fabric mills are hard to recover, fabric mills are suggested to wait for coming traditional peak season, actively expand the domestic market, produce differentiated products or fabrics such as masks and protective clothing that are currently concerned by consumers, and enhance their core competitiveness; and it should be always pay attention to the epidemic, keep close contact with overseas customers and follow up on orders in time.

[RISK DISCLAIMER] All opinions, news, analysis, prices or other information contained on this report is provided by analyst of Zhejiang Huarui Information Consulting Co., Ltd (CCFGroup) as general market commentary and does not constitute investment advice. CCFGroup will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.
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