Textile industry will face a bigger test in May

Sudden outbreak of COVID-19 epidemic has brought unprecedented impact on China's economic development. The current global economy has fallen into a recession, and China's textile and apparel mills are also facing unparalleled challenges. The bigger test is yet to come in May.

1. Weavers cut output due to higher feedstock inventory.
In end-April, the common status of several products was that weavers have successively controlled production and prices lost value rapidly. Since export orders have basically cancelled, soft domestic demand was hard to support market development, and inventory has reached high level, demand is mainly expected to be unlikely to warm up, so production cut is expected to increase further.

VFY: It is currently known that two units of Jilin Chemical Fiber will be shut for maintenance in May, and the duration is about two months, without excluding other plants' maintenance, so the O/R will be lower or reduce to 86%-88%. In the case of production cuts, the tempo of rising inventory will slow down, and it is expected that the inventory will increase by about one week in May.

Rayon yarn: the number of days for May Day holidays was increased and it was not ruled out that most of mills may have 7-15 days leave. The O/R may be lower at 20% and can recover somewhat in the second half of May. Overall production control efforts in May may be greater than that in Apr, and inventory is expected to increase by a week in May.