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Insight | Time: Nov 8 2022 10:08AM  Editor:Tina Kong
Some downstream plants begin to arrange holiday plans for LNY
 
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The spread of pandemic worsened again in some regions of China since end-Oct. Some major textile wholesale markets including Nantong Dieshiqiao (Production bases, sales venues and logistics centers of national home textile products) and Guangzhou Zhongda Textile Center (the biggest grey fabric market in China), Tongxiang Puyuan (the largest sweater distribution center in China) and Hunan Zhuzhou Lusong District (one of the largest clothing wholesale markets in China) were closed due to the pandemic lockdown. Impacted by the pandemic, the delivery of fabric orders taken before was stifled and the offtaking of new orders were suspended. Fabric mills saw sharply reducing business. By now, the pandemic in Dieshiqiao, Nantong has been eased, while the spread in Haizhu District of Guangzhou remained fierce. Guangzhou Zhongda Textile Center was still under lockdown, and the spread of pandemic in Lusong District, Zhuzhou of Hunan sustained fierce.


Except for the pandemic, the weather was another factor dragging down the demand. The temperature decreased limitedly since Oct. The expectation of cold winter weakened. Based on the recent weather forecast, the temperature will keep high this week.  


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Fabric mills witnessed sharply decreasing orders and operating rate. The operating rate of fabric mills has slipped to 56% last week, the rapid reduction for two weeks in a row, which has dropped by near 18 percentage points from earlier high. There are still more than two months to go before the Lunar New Year (LNY) holiday, while some DTY plants, fabric mills and printing and dyeing plants have started arranging the holiday schedule.

 

Under the weakening demand and the epidemic control, most market players hold a pessimistic view on the demand before the end of the year. Downstream plants will focus on controlling inventory and collecting the payment at the end of year. The operating rate of downstream plants will continue to decline and more mills will stop production entering December. Although the seasonal demand is expected to weaken gradually and most market players expected a further decline in prices, the positive impact from the possible adjustment in domestic epidemic policy and firmer crude oil market are also worth noting.

[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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