What is squeezing the profits of textile foreign traders?
Marine shipping’s “crazy summer”
Recently, Hapag-Lloyd, MSC , COSCO Shipping, Matson, Kanbara Kisen and many other shipping companies announced a new round of fee increases starting from mid-June. This is another solid response to the question “Will freight rates rise again?” since 2021, which instantly hits the hearts of foreign trade people.
Foreign Trader: Can you understand the anxiety of having the goods ready but unable to be shipped?
For example, for a cabinet shipped to the UK, the buyer has relented and will ship it if the shipping fee drops to an affordable level, but how to ship it now? On the other hand, I have to worry day and night that customers can’t wait and simply abandon the goods…
Freight forwarder: I am a mute who eats Coptis chinensis and cannot tell me about my sufferings.
No matter how high the freight is, it is not the freight forwarder who makes money. When shipowners increase prices, freight forwarders dare not follow the increase. They can only take advantage of their own profits. In addition, the freight forwarder has to pay the cargo owner. When a container leaves the United States, the freight forwarder must advance 60,000 to 80,000 yuan!
Shipping company: In the past few years, the shipping company suffered losses year after year, and Hanjin even went bankrupt. At that time, no one offered subsidies!
What’s more, due to the epidemic, all processes are longer than before. The European and American terminals are “clogged”. There are only so many ships, all queuing up to unload at the destination port. How can there be extra transportation capacity for Market is on fire?
The above is the true situation of the current container shipping market. This summer is destined to be the peak period in history for one scene after another of madness.
This year, the biggest difficulty for textile foreign traders in accepting orders is the crazy rise in sea freight and difficulty in shipping. Before 2020, the price of shipping a container to the UK was US$2,500, but now the price is quoted at US$14,000, an increase of more than five times. Most of the increased freight costs are absorbed by the companies themselves, thus severely squeezing profits.
Raw materials are “hot in price”
In recent times, the price increase of polyester can be said to be higher with each wave. , the polyester industry chain market led by PTA is still in full swing.
PTA: The PTA market fluctuated upward this week. The average weekly price in the East China market this week was 5,152 yuan/ton, a month-on-month increase of 1.40%;
MEG: The average price in the East China market this week was 5,068 yuan/ton. Yuan/ton, an increase of 1.85% from the average price last week, and the average price in the South China market was 5,078 Yuan/ton.
Polyester filament: Polyester filament went up this week, POY price was 7850 yuan/ton, increased by 325 yuan/ton; FDY price was 8025 yuan/ton, increased by 250 yuan/ton; DTY price was 9200 yuan /ton, increased by 400 yuan/ton.
Spandex: The mainstream reference quotation of spandex 40D in Zhejiang is 72,000-75,000 yuan/ton, which is 2,000-3,000 yuan/ton higher than a week ago. The current quotation of spandex 20D has also risen to 90,000-95,000 yuan/ton. This year Since then, the increase has reached 86%, and the increase has exceeded 150% compared with the same period last year.
The rising trend of raw materials is causing trouble to downstream companies and has a huge impact on their costs. According to feedback from a person in charge of a foreign trade company, since the price of raw materials has increased, the prices of some gray fabrics have also increased. However, it is currently in the traditional off-season and fabric prices cannot rise at all. Customers have intensified their efforts to lower prices and either produce at a loss or refuse to accept orders.
The exchange rate “trends into confusion”
Foreign traders also have a pain called – “The order is signed at 6.8, and the balance is paid. at 6.5”.
Recently, the RMB exchange rate has fallen a bit fast. On the 16th, the onshore RMB exchange rate against the US dollar opened slightly down by nearly 40 points to 6.4650. The RMB/USD exchange rate has also fallen from a high of 6.36 to the current level of around 6.46 in the past month.
Due to the recent acceleration of the decline in the RMB exchange rate, the daily exchange settlement operations of many foreign trade textile companies have been affected. The amount of foreign exchange settlement in June dropped significantly by more than 25% compared with May. The reason is that the company The boss hopes to wait for the RMB exchange rate to fall further before settling the foreign exchange in exchange for more RMB funds.
Observations from bank insiders also show that as the central bank steps up measures to stabilize expectations and the U.S. dollar index rebounds sharply due to the Federal Reserve’s hawkish signal, foreign trade companies’ foreign exchange settlement operations are increasingly weakening. Specifically, first, the amount of foreign exchange settlements of some foreign trade companies since June has dropped sharply by about 30% compared with May, followed by a significant increase in their foreign exchange deposits; second, more and more foreign trade companies have lowered their forward foreign exchange settlements. Swap execution price range.
Judging from the current stage, some foreign trade companies with relatively thin profits are more susceptible to exchange rate fluctuations, changing from meager profits to no profits or even losses.
The rise in industrial product prices is generally controllable, and the development of new foreign trade formats is accelerating
The rising prices of raw materials are compounded by factors such as the global epidemic, international shipping costs, and the RMB exchange rate. Due to the impact of the epidemic, the profits of textile companies have been continuously compressed. Some companies said that “everyone is rushing to make orders that make a few cents.” However, in response to the rising commodity prices and pressure on corporate profits, the official response is that my country’s industrial production capacity is relatively strong and the supply capacity of industrial products is relatively sufficient. The relevant departments have implemented policies to ensure supply and stability of domestic commodity prices, and the effect is currently also Appearing initially. Therefore, the overall impact of rising industrial product prices is controllable. At the same time, new business formats and new models are becoming new driving forces to promote the transformation, upgrading and high-quality development of my country’s foreign trade.
Liu Aihua, spokesperson of the National Bureau of Statistics and director of the Department of Comprehensive National Economic Statistics, held a press conference at the State Council Information Office on July 15.It was stated at the meeting that imported upward pressure on international commodity prices still exists, but my country’s industrial production capacity is relatively strong and its industrial product supply capacity is relatively sufficient.
Data released by the National Bureau of Statistics show that in the first half of this year, the industrial producer price (PPI) rose by an average of 5.1%, an increase of 3 percentage points higher than that in the first quarter.
Liu Aihua analyzed that the increase in industrial producer prices in the second quarter was mainly due to several factors. First, the economy continues to recover and demand continues to expand. The second is the imported impact of rising international commodity prices. In June this year, the international energy price index rose by 92.6% year-on-year, and the non-energy price index rose by 43.2%, both of which were relatively high. The third is the impact of the low base in the same period last year. Affected by the COVID-19 epidemic, PPI has continued to decline since February last year. Prices in each month of the second quarter fell by more than 3% year-on-year. Therefore, the year-on-year increase in PPI in the second quarter of this year has significantly expanded, providing many mid-stream and downstream companies, small and medium-sized enterprises with This has brought about greater cost pressure.
However, he also said that the relevant departments have recently implemented policies to ensure supply and stability of domestic commodity prices, and the effects are currently showing. In June, industrial producer prices rose 8.8% year-on-year, down 0.2 percentage points from May. Therefore, the overall impact of rising industrial product prices is controllable.
At the same time, my country’s foreign trade development in the first half of the year has delivered good results. Data released by the General Administration of Customs on July 13 showed that in the first half of the year, my country’s import and export scale of 18.07 trillion yuan hit the best level in the same period in history, and also increased by 22.8% compared with the same period in 2019. Monthly import and export has been 13 consecutive years. It has achieved positive year-on-year growth for the past three months, and the stable growth trend of foreign trade has been further consolidated.
However, foreign trade companies, including textiles, and small and medium-sized enterprises in the supply chain still face many challenges.
Ren Hongbin, Assistant Minister of Commerce, said at the State Council’s regular policy briefing on July 12 that my country’s foreign trade development situation remains complex. From an international perspective, the global epidemic situation remains severe, economic recovery is uncertain, industrial and supply chain risks are increasing, and trade issues are increasingly politicized. Domestically, my country’s foreign trade companies still face many outstanding difficulties.
Ren Hongbin believes that from a domestic perspective, my country’s foreign trade companies face four outstanding difficulties. First, the efficiency of international shipping is low and the price is high; second, the RMB exchange rate has increased, and companies are afraid to accept orders, and exports are not profitable; third, the price of raw materials has risen, increasing company costs; fourth, recruitment of workers in some areas Difficult and expensive to use.
However, the “Opinions of the General Office of the State Council on Accelerating the Development of New Forms and Models of Foreign Trade” were officially issued recently. Opportunities and new momentum for foreign trade transformation and upgrading and high-quality development also come from these new business formats and new models.
Data show that the scale of my country’s cross-border e-commerce has increased nearly 10 times in 5 years, and the scale of market procurement trade has increased 5 times in 6 years. There are more than 1,500 comprehensive foreign trade service companies, more than 1,900 overseas warehouses, and about 130 bonded maintenance projects for processing trade have been completed. </p
