A 2,000 yuan surge in one day! Oil prices ignite the "core raw material" →

China’s textile industry occupies a leading position globally, and as synthetic fiber—the core raw material of the textile industry—its price is directly linked to crude oil. Since the outbreak of conflict between Iran and the United States, what impact has it had on domestic chemical fiber enterprises’ production?

Jiangsu Suzhou: Synthetic fiber prices rise; chemical fiber companies schedule production flexibly

CCTV’s Yang Zixi (Mainland China Central Television reporter): As crude oil rises and drives up the price of synthetic fiber, the overall polyester price has increased by more than 10% in the past month.

A person in charge of a chemical fiber enterprise in Shengze Town, Suzhou, Jiangsu, said that the factory is currently running at full capacity. After orders on hand are scheduled out for 30 days, though. However, since chemical fiber products all rely on basic chemical raw materials derived from oil refining, every round of crude oil price increases is directly reflected in the company’s production process.

Xu Qinghong, Head of Production, Jiny Group: With rising energy consumption and raw material costs, we need to schedule production flexibly and prioritize high–added-value orders. We plan to adjust product types in April based on fluctuations in raw material prices—for example, reducing the amount of polyester used, and possibly increasing the production of natural fibers.

From the overall market perspective, synthetic fibers have seen increases to varying degrees. For example, a major product category of polyester—polyester filament—this year rose from about RMB 7,180 per ton in March to RMB 9,300 per ton. Nylon has multiple product types with a weekly increase of over 6%, and some models have jumped by RMB 2,000 per ton in a single day.

Hu Liwei, Deputy General Manager of Sales, Jiny Group: Compared with late February, by the end of March the price increase of polyester raw materials exceeded 20%. To ease cost pressure, yarn prices are raised by about 15%. Some customers also ask for delayed shipments.

Some companies say they will not easily cut production lines for now. First, downstream demand for ongoing purchasing is still continuing. Second, restarting after a shutdown leads to higher losses. They are also offsetting the risk of price fluctuations through dynamic inventory management and by increasing procurement of different raw material varieties.

Zhejiang Keqiao: Raw material price fluctuations; fabric companies adjust quotes in real time

For textile companies, chemical fiber is the basic raw material for producing fabrics, accounting for more than 60% of total fabric costs. Keqiao, Zhejiang, is the world’s largest textile goods distribution center. When upstream yarn prices rise, how do downstream fabric enterprises respond?

In an outdoor goods fabric shop in China Light Textile City in Keqiao, if they encounter interested customers, the store manager will calculate their quotes based on real-time market conditions.

Ma Ziyi, a merchant from China Light Textile City, told reporters that the company organizes production based on orders. Many contracts were signed before the year, so any losses caused by raw material price increases for these orders can only be borne by the company itself.

Yang Weizhen, General Manager of Zhejiang Jinchance Home Textiles Co., Ltd., said their company has not yet passed the price increases on to downstream customers. Instead, they do so through pre-stocking, replenishment shipments, shortening delivery lead times, and other measures, while also speeding up research and development of fabric differentiation to strengthen their bargaining power.

Zhejiang: Responding to cost-increase pressure; textile and apparel foreign-trade enterprises adjust raw materials and market layout

The cost pressure brought by rising crude oil prices will be transmitted step by step along the textile industry chain to downstream sectors. How are the production and sales of textile products such as end–consumer ready-made garments and finished curtain products currently performing, and how has relevant foreign-trade textile companies’ operations been affected?

Lou Qiaoping, a merchant selling sun-protection clothing in Yiwu International Trade City, introduced that the shop’s sun-protection clothing has a nylon content of over 85%. In recent days, while raw material prices have risen, they are also facing a shortage of supply. Many orders cannot be fully filled by upstream factories.

Merchants said that to stabilize their customer base, they are also negotiating with downstream customers. For orders that have already been produced, they ship at the original price, and for subsequent new orders they will flexibly adjust the wholesale sales price according to market conditions.

In Haining, Zhejiang, a curtain company said that all the raw materials for their current products are chemical fibers. At present, the company is still using fabrics from earlier pre-stocking for production. But once that inventory is used up, the cost of re-procurement will increase, and they expect product prices to rise starting in April.

Zhou Huifeng, General Manager of Haining Buyan Cheng Textile Co., Ltd.: Typically one window is 3.5 meters wide. Curtains require 7 meters of fabric. For each window, the price will go up by about RMB 150.

Zhou Huifeng said that currently half of the company’s sales come from overseas markets. At present, their foreign-trade business in the Middle East has basically stalled, and the company is actively adjusting its overseas market layout.

Zhou Huifeng, General Manager of Haining Buyan Cheng Textile Co., Ltd.: We started laying out plans in March. First, we expand new overseas customers; customers from Southeast Asian countries are coming in more. Second, we increase exposure through live-streaming rooms to expand the overall scale of the domestic market.

Meanwhile, some companies producing new Chinese-style apparel said that the raw materials for ready-made garments are mainly natural fibers, and the proportion of chemical fibers is relatively lower. This also gives companies a certain buffer space.

He Rong, General Manager of Zhejiang Haining Zhongfang Fabric Technology Co., Ltd.: Some clothes use chemical-fiber materials to create a three-dimensional tossing/flocking effect. A cost increase for one garment is about RMB 5 to RMB 10. If the raw materials continue to rise, designers will directly change chemical-fiber materials into artificial silk.

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