2021-11-25 08:21:39 CCFGroup Meager orders on downstream market recently is mainly due to the following 2 reasons: firstly, rapidly ups-and-downs of raw materials disrupted the market sentiment; secondly, supply increased with eased regulation of energy consumption but end-user consumption dropped. Fabric traders and end-users who made finished goods were hurt the most when prices of raw materials were volatile previously.Prices of raw materials surged when the regulation of energy consumption was strict in late-Sep and Oct, while buyers needed to prepare feedstock for the coming online shopping spree in Nov. As a result, many downstream players placed orders and even hoarded up a large quantity of fabrics. However, feedstock prices dropped rapidly later. Most fabric traders, especially those purchased for speculation, were held-up and saw serious losses. Some even canceled the oral orders with some fabric mills. In addition, reflected by some textile and apparel companies and fabric marketing sectors, sales of textiles and apparels for this online shopping spree in Nov were worse than past years. The finished goods stocks of some textile and apparel enterprises have been filled into the end of year, including the online shopping spree in Dec and the Spring Festival holiday (a little earlier this year on Feb 1, 2022, which is usually in mid-Feb or late-Feb by convention). That means the domestic sales of fabric mills are gradually coming to an end in advance. The only expectation of domestic players is export before the Lunar Chinese New Year (LNY) holiday. Some export orders will be placed in advance due to the Spring Festival holiday while the specific volume needs further observation. On one hand, demand for textiles and apparels may be hard to rise much amid the spread of pandemic outside China; on the other hand, prices of raw materials have declined but the dyeing fee and post-finishing charge have increased by near 20% and is high now. As a result, offers of grey fabric are very high. Some overseas customers may place orders in batch and some are likely to delay orders with long delivery after the Spring Festival holiday. As for fabric manufacturing market, sales have been very poor in recent half a month although stocks declined earlier. Stocks of grey fabric accelerated mounting. According to the survey made by CCFGroup, the operating rate of downstream fabric mills in Haining, Changshu, Xiaoshan and Shaoxing was falling, disfavoring rigid demand for polyester fiber. Actually, falling feedstock prices discouraged sales of polyester fiber too. Downstream buyers presented strong sidelined attitude and would rather cut the run rate than hoard up stocks. Players on polyester and downstream markets hold pessimistic view now. Coupled with shrinking processing fee of the whole industrial chain, downstream buyers are estimated to have one bottom-fishing before the Spring Festival holiday. By that time, inventory burden of polyester goods may mitigate periodically. However, it is still too early to say it as players' mindset will not recover until feedstock price stabilized. Even if buy-the-dip appears, it is simply a transfer of polyester inventory. Polyester companies are still expected to face big pressure to cut production during the Lunar Chinese New Year holiday. Keywords: