Cotton textile and chemical fiber downstream holiday schedule-to start LNY earlier?

With the multiple outbreaks of epidemic, more textile plants shut down for Chinese Lunar New Year holiday (LNY), and the market has not anticipated any positive signs before the LNY holiday (late Jan, 2023), but when the plants will start the holiday is closely watched. It is still too early for plants to consider the holiday plan with more than 50 days approaching, but part of downstream fabric mills, printing and dyeing plants indeed starts the holiday this year, more in apparel plants. According to CCFGroup’s survey on the cotton textile and chemical fiber downstream plants holiday plan, it is found that fabric mills in polyester industry have shut for LNY successively in Nov, while cotton textile downstream plants have no clear holiday plan, mainly to have periodical holiday under the impact of epidemic or inadequate orders. But to have holiday in advance has become a consensus this year. The preliminary exposition on cotton textile and chemical fiber downstream plants holiday schedule is showed below, and it may be adjusted later according to the epidemic and market situation.

I. Cotton textile industrial chain operating rate drops gradually, and to start LNY earlier becomes a consensus

Now most cotton yarn and fabric mills reduced and suspended production amid epidemic control and the lack of downstream demand, and the operating rate in different regions was at relatively low level. However, few mills were on Spring Festival holiday since end-Nov, and most mills didn’t have clear holiday plans and arrangements. According to current market and epidemic condition, it is more like for mills to give holiday in advance. Downstream print and dyeing mills planned to be on holiday successively since mid-Dec. For instance, dyeing mills in Nantong of Jiangsu will be on holiday no later than mid-Dec. If the suspension of production in dyeing mills will facilitate fabric mills to give holiday waits to be observed. Now there was only nightshift in fabric mills in Nantong, and the overall operating rate reached 30%-40%. The overall operating rate in fabric mills in Lanxi kept at around 40%. The epidemic control in Zhongda market of Guangdong hasn’t released, and the orders in fabric mills in Foshan were not good with operating rate reaching less than 20%. The low operating rate in these main fabric mills showed scarce orders. In addition to epidemic control, both rayon fabric mills and cotton fabric mills were pessimistic about future market. The enthusiasm for stocking before New Year was not high, and mills mostly bought for rigid demand. More medium and small-scaled mills are expected to be on Spring Festival holiday since Dec, and the number may gradually increase in mid-Dec and late-Dec.

In comparison with downstream fabric mills and print and dyeing mills, the condition in spinning mills was slightly different.

1) Cotton yarn operating rate of mills in Xinjiang changed little. The transportation and operation in places including Shandong, Henan and Hebei were influenced further deeply by epidemic. The suspension of production in cotton yarn mills increased obviously due to epidemic control and difficult feedstock replenishment. As for the arrangement of Spring Festival holiday, cotton yarn mills didn’t have specific plan. However, according to current market situation, cotton yarn mills are firmly expected to give holiday in advance.

2) The expected close time of polyester yarn mills is varied. The current situation is as follows: 1. In Shijiazhuang and Jinzhou city in Hebei province, most spinners suspend production due to the epidemic, and the operating rate stays around 20% so far. Whether yarn mills will resume works later or close in advance for the Spring Festival depends on the evolve of the epidemic situation. 2. In Fujian and Jiangxi provinces, polyester yarn mills in main production areas are expected to be shut down until end-December or early-January. 3. In Jiangsu and Zhejiang province, small yarn mills begin to have holidays since November, and the close is supposed to increase in December. While large-scaled polyester yarn mills will shut around end-December or early-January. 4. In Hanchuan, Hubei, the operation of yarn mills is also affected by COVID, and production cuts and suspensions are witnessed. Yet the detailed close time of local yarn mills still depends on the development of the epidemic circumstances.

3) Currently, no detailed holiday plans are heard among rayon yarn mills. Yet, spinners in multiple areas cut production successively due to high losses, weak sales and bearish market outlook. In Wujiang, Jiangsu province, the production of vortex-spun rayon yarn is cut by 10%. In Peixian, Jiangsu, the operation of rayon yarn mills is also disrupted by the epidemic, thus the production is reduced by 20-30%. In Fujian province, spinners generally face high inventory and great losses, thus their production drops by 20%. In Xinjiang province, the current production cut among yarn mills is around 30% given the recent outbreak of Covid-19. In Shandong province, parts of yarn mills were shut for two weeks on account of the poor sales and the epidemic, so the overall production slumps by over 50%. In Zhejiang province, yarn trades also slow down meaningfully, making the production of spinners drops by 10-30%.

II. More chemical fiber downstream plants have confirmed holiday plan, but it may be adjusted later

1) Polyester downstream fabric mills have started holiday, and operating rate drops to below 30%

By now, 30%-40% of fabric and twisting mills in Zhejiang and Jiangsu has shut down for LNY since early Nov, and 20%-30% of the plants is forecast to start in end Dec and early Jan. In South China, the market is obviously under the impact of the epidemic. The loom operating rate has dropped to below 30% currently, and most of plants will draw to a close in mid or late Dec.

2) PET bottle chip downstream holiday plan changes little from previous years

Currently, PET bottle chip downstream plants holiday schedule has no big change compared with previous years. Beverage plants basically have no shutdown before the holiday as the plant scale is large and related to people's livelihood, and most of them have arranged the maintenance in Oct-Nov. Sheet plants may shut intensively around Jan 10-15, earlier around Jan 8-10; most will start one week earlier to have holiday. Part of sheet plants states that if the prices are appropriate, they will replenish and start holiday earlier.

3) Recycled chemical fiber plants have closed successively for holiday, and holiday time is earlier

For recycled chemical fiber plants in Hebei, big plant remains shut under the impact of the epidemic, and if the plant can be restarted, it may insist to year end. In Guangdong, one HC re-PSF plant has closed, and a few plants in Fujian plan to shut in early Dec. Most other plants plan to start holiday in mid or late Dec, and some plants in Jiangyin and Wujiang may be earlier in mid-Dec due to high inventory and lack of feedstock. HC re-PSF plants hope to insist till end Dec and early Jan. Only a few plants can do till mid-Jan.

In conclusion, there is still a long time to go before the LNY, and the holiday plan may be adjusted later according to the epidemic prevention and control and market changes. CCFGroup will continue to see the follow-up changes.