Global shipping is in trouble, textile industry inventory imbalance

The world’s shipping industry is falling into its biggest predicament in 65 years! Port congestion and rising freight rates may continue to become the main theme in the first half of next year!

Since the outbreak of the COVID-19 epidemic, the disadvantages of backward port infrastructure around the world have become increasingly prominent. According to real-time data from Kuehne+Nagel, there are currently 353 cargo ships blocked in ports around the world, twice as many as at the beginning of the year. There are 22 cargo ships waiting outside the Port of Long Beach and Los Angeles in the United States, and it is expected that they will be able to unload cargo at the port in 12 days. Congestion brings with it problems such as rising commodity prices, delayed delivery, mismatching of market capacity, and “explosion” of freight rates.

One of the causes of global freight congestion is the varying degrees of border controls implemented by various countries in response to the epidemic, as well as the forced shutdown of many factories, endangering the smoothness of the entire supply chain and causing freight rates to soar on shipping routes in China, the United States and Europe.

In just two weeks, the queue of dry bulk vessels near Chinese ports has almost exploded due to port congestion and new Covid-19 restrictions.

According to AIS data obtained by dry bulk operator Lauritzens Bulkers, 7.5% of the world’s small dry bulk ships, including Handysize and Supramax, have been anchored near Chinese ports recently. This represents a 37% increase in just 10 days, equivalent to approximately 570 dry bulk vessels waiting to unload at Chinese ports. Two weeks ago this figure was about 400 ships, and the number of Handysize and Supramax dry bulk ships in the world was about 7,725.

What is more terrifying than high sea freight and port congestion is the increase in gray fabric stocking!

After mid-July, orders in the downstream chemical fiber weaving industry have gradually cooled down. Although the overall operating rate is still at a high level during the same period, a detailed analysis of the situation in each region and machine model makes it difficult to confidently claim that “the off-season will not be weak” again. In the second half of the year, what is more terrifying than the lack of orders and high sea freight is the increase in gray fabric stocking.

Judging from the current trend of various indicators, the start-up load of weaving is still at a high level in previous years, and the inventory of gray cloth and raw materials are still within the controllable range. Judging from the above three indicators, it can be determined that the current demand for polyester and even The loads and prices of PTA and ethylene glycol are supported, but one indicator that cannot be ignored is the order days. It is now basically close to the same period in 2020, and the off-season atmosphere is undoubtedly revealed. , it can be concluded that the relatively large support point of the three indicators is “gamble”.

　Although orders from Southeast Asia did return to a certain extent during the period, and weaving autumn and winter orders were also started in advance, more of the atmosphere came from inquiries and orders from cloth merchants, resulting in a “thriving” market scene. In fact, so far, terminals have Clothing has not started a large-scale order signing mode, especially for autumn and winter orders.

So what impact does the gray cloth in the weaver’s hands have on the raw materials? On the surface, the excessive amount of gray fabric in society has a drag on the start-up and prices of weaving, polyester, and even PTA and ethylene glycol. Of course, this is usually based on the situation that weaving orders are average and polyester prices are declining. Once merchants engage in intensive and large-scale selling of goods at low prices, it will be extremely detrimental to the entire chain. However, through communication with fabric merchants, if the “Golden Nine and Silver Ten” period comes as scheduled in the second half of the year or the price of polyester filament is strong, this part of gray fabric may not be considered until next year, and the impact on the market can be ignored for the time being.

AAA

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