Players waiting for the start of domestic demand peak season in August

By convention, domestic demand is expected to start seeing peak season in the second half of year from late-Aug. According to the survey made by CCFGroup, the production of summer wear has been almost finished in some large apparel companies, and some have started preparing the production of autumn and winter clothes. A large OEM clothing company in Shanghai has provided feedback that the autumn/winter orders for upstream branded clothing are expected to be placed at the end of Aug, after which they will begin mass production. A small clothing company in Shaoxing has also mentioned that they have concluded the production of summer short sleeves and are gradually preparing to manufacture autumn sweaters. Additionally, some fabric traders have expressed certain expectations for the peak season in the second half of the year, believing that domestic demand will gradually pick up around late-Aug, leading to gradually better sales. Overall, as it enters Aug, the market's anticipation for the arrival of the peak season has become even stronger.

Grey fabric and fabric companies have restocked for the peak season. Sales of warp knitted fabrics are moderate in Haining and some orders for autumn and winter circular knitted fabrics are placed. The operating rate of DTY plants, fabric mills and printing an dyeing plants remain stable recently, which was at 77%, 68% and 72% respectively by Aug 3.

Impacted by rising feedstock cost, price of grey fabrics also moves up. The underselling apparently reduces on grey fabric market.

After end-Aug, there is a high probability of domestic demand picking up and a release of orders. However, the extent of the domestic demand release needs to be closely monitored. Based on the current market situation, there is still significant pressure on exports of textile and apparel, and it is difficult for orders to meet expectations. The market focus has mainly shifted to domestic sales, and there is also a phenomenon of many foreign trade enterprises transitioning to domestic sales this year. In terms of the domestic market, it is expected that the intensity of clothing orders will be similar to or slightly higher than that of the first half of the year, while orders for home textiles may not reach the levels of the first half of the year as the peak demand from hotels subsides.

As for the polyester polymerization rate, it was at 92.4% by Aug 3, mainly because some polyester companies cut the production of PET fiber chip. In addition, the capacity of new units in Jul is calculated into the total polyester capacity in Aug. As new units did not run at full capacity, the polyester polymerization rate was dragged down. Polyester companies may see eased cost pressure in short run after feedstock price dived, and the pressure of falling run rate will be mitigated. The polyester polymerization rate is expected to sustain above 92% in short run, which may be around 92% in Aug. In Sep, it is suggested to pay attention to the improvement of demand in peak season, the production limit on the Asian Games and the influence of run rate change in PET bottle chip plants on the whole polyester polymerization rate.