Downstream grey fabric inventory burden was widening

Sep 06, 2023

Downstream grey fabric inventory burden was widening. Operating rate of downstream plants remained high compared with the off-season in past years, which was mainly because of the following reasons: firstly, there is expectation toward peak season in Sep-Oct, especially toward domestic demand. Secondly, the worry of production loss due to the summer power rationing and the Asian Games. The Asian Games will be held from Sep 23 to end-Oct, just the golden period of peak season in the second half of 2023. Once the production is limited, the delivery of orders bounds to be impacted. Therefore, factories need to hoard up stocks in advance. Thirdly, the depreciation risk of finished goods may be small when the feedstock price fluctuates little. The losses are not heavy based on spot raw materials now. Downstream plants still insist on production. The profit change of downstream products should be noted.

Operating rate of DTY plants and fabric mills inched down in recent two weeks
The stocks of grey fabrics are accelerating mounting with ongoing high run rate but are controllable now

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