Why Is Upstream Loss And Downstream Fabric Business Mixed?

Yang Zixiong, director of Shaoxing Xiong Ding knitting and Textile Co., Ltd., told reporters that the impact of crude oil prices on the chemical fiber fabrics is enormous. Because the crude oil market suddenly shifted to the low operational range from the high operating range, while the fabric enterprises generally had the mentality of buying up or buying down when buying products. Therefore, in the short term, the upstream PX and PTA production enterprises can only operate at a loss, while the downstream fabric enterprises are mostly on the sidelines.

"The price of crude oil is unlikely to keep falling, and when it falls to the bottom, it will be a good time to hoard goods."

Yang Zixiong added that if the fabric companies seize the opportunity, they can buy better chemical fiber products at a lower price at this time.

In Yang Zixiong's view, the fluctuation of oil prices has a great impact on the upstream and downstream enterprises of chemical fiber.

Due to the sudden collapse of oil prices, in the short term, the upstream chemical fiber production enterprises are affected by high price and low price sales, and losses are inevitable. Correspondingly, as oil prices continue to fluctuate, most downstream fabric enterprises are still waiting to see and will not rush to buy Fabrics.

In the interview, reporters found that the decline in crude oil prices for the chemical fiber fabric enterprises produced positive or negative effects can not be generalized.

For those chemical fiber fabrics enterprises with larger inventory, they are faced with the dilemma of buying at high price and selling at a low price in the short term. Therefore, the risk of loss is much higher than others. For foreign trade fabric enterprises, the fall in crude oil prices will help reduce unit price, expand exports and gain greater sales profits. For garment enterprises, they generally believe that the fall of oil prices will drive down the price of chemical fiber fabric products, and then lead to a fall in the cost of garment production. Therefore, most garment enterprises tend to buy more chemical fiber fabrics for later use.

Chemical fiber

Whether or not we should follow the fluctuation of the crude oil price, Li Kexin, director of the research and development center of Huafang Limited by Share Ltd, has different views: as far as we know, although the international crude oil price has dropped, the price of domestic chemical fiber fabrics has not been reduced much due to the information pmission lag.

When customers know that the price of crude oil has dropped, they often think that the price of chemical fiber fabrics should be reduced.

Such asymmetric information pmission will directly lead to the weakening of bargaining power between fabric enterprises and garment customers.

For intense

In order to maintain the order quantity, some enterprises can only sacrifice the meager profit of crude oil.

To make the profits of chemical fiber fabric enterprises compress, not only from the squeezing of downstream customers, but also by Zhang Bin, general manager of Shaoxing maimong Trade Co., Ltd., under the current background, the principle of buying raw silk and buying stocks by chemical fiber fabrics enterprises is similar.

Therefore, when crude oil prices continue to fall, fabric manufacturers often do not dare to easily sell goods.

"With my past experience, I think the fabric enterprises should be prepared for stockpiling in the near future."

Zhang Bin explained: "since the Spring Festival, chemical fiber producers generally do not have all the workers in place, the machines are not fully open and the production capacity is low. Therefore, they can not fully meet the needs of downstream enterprises for chemical fiber products. Therefore, we may store up goods at the raw materials factory before the Spring Festival, and then sell them at a higher price after the festival, so that we can get a certain price difference."

From a different perspective, we will come to a completely different conclusion when the oil price slump.

For fabric enterprises, on the one hand, they will lose money if they have larger stocks of chemical fiber fabrics. On the other hand, the falling prices of chemical fiber fabrics will make garment enterprises more inclined to purchase chemical fiber products and promote sales of these fabrics.