What Is America's Fear Of Tariffs? Do We Still Have Room For Decline In Textile Market?

In recent days, the United States has made many moves, first to cut interest rates for the first time in ten years, and then Trump "changed face", announcing that the United States will impose a 10% tariff on China's total value of $300 billion from September 1st. The two message, like a deep bomb, quickly disturbed the calm market. Because the Fed's interest rate cut is expected to be lower than expected, international oil prices maintained a downward trend in the previous trading session in early August 1st, weakening the intraday weakness. With the announcement of Trump on the morning of 2 Beijing time, the international oil price plunged sharply. Due to the high correlation between crude oil and PTA, what is the performance of PTA market as the price of crude oil changes dramatically?

In July 22nd, PTA was affected by the early fermentation of the Huatai OTC option. The damaged Sino Tuo company is facing serious credit problems. Jinshan FMC has been unable to issue the letter of credit. The processing products of Hon Bang petrochemical and Liwan polyester have ceased to be sent out, and Sinopec Group has issued a business interruption with the Sino Tuo company's business cooperation. Subsequently, PTA futures closed for two consecutive days, and the downtrend lasted for a week. PTA futures fell from 6318 yuan / ton at the beginning of the month to 5272 yuan / ton, a drop of 16.55%, which is close to the lowest value of 5154 yuan / ton in nearly a year. A large PTA rally was expected in the market. In July 30th, PTA began to rebound steadily.

But with the collapse of crude oil prices, PTA's confidence was shattered, and it continued to head down. The lowest price has been down to 5180 yuan / ton. On the other hand, the supply of PTA will increase in the second half of the year. It is expected to reach 5 million 900 thousand tons, including 2 million 200 thousand tons of new Feng Ming, 1 million 200 thousand tons of China and Thailand, 1 million 200 thousand tons of Hengli petrochemical, and 2 million 500 thousand tons of Hengli petrochemical.

The "raw blood" of upstream raw materials has blown the whole textile industry chain. In this troubled times, what kind of mentality is the downstream market and how to face the market decline?

It seems that adding to the bad is actually a false alarm.

The United States has imposed a 10% tariff on China's $300 billion commodity, which is more of a blow to people's confidence in the future economic situation. People buy gold safely, and they can see that people are not optimistic about the future of the market as a whole. As far as our textile industry chain is concerned, the reaction to levy tariffs is also very strong, which is evident from the fall of PTA diving.

This year, more than half of the textile market is still no decent improvement, the lack of terminal orders, the market shutdown to reduce the rate of start-up is more common. Even the master who pulled the goods on the market changed their jobs because they did not live. In the off-season, the market has been plaguing every textile person. The advent of tariff increases is a bit of a disaster. But in fact, the impact on our textile industry is more false alarm.

As early as we had imposed tariffs on US $250 billion, almost all our textiles were included. The new 300 billion dollar product will not be much of textiles, and most of the textile products we export to the United States will be made of garments. At present, the number of garment enterprises in China has been greatly reduced, and many have moved to Southeast Asia and Africa. That is to say, the US tax increase is more "jump out and frighten us", which will not have much impact on our textile industry.

It seems that challenges are actually opportunities.

Nietzsche said: anything that can't kill you will make you stronger. This sentence is also applicable to our textile industry. After many US tariffs, foreign trade market contraction and market off-season, our textile people have already taken the usual view of any international market changes, learned to work hard and learn to seek opportunities in challenges.

The collapse of crude oil prices has pulled down the PTA that will go up, and the raw materials will also enter the downstream channel. This is undoubtedly good news for weaving on the line of profitability and loss. According to feedback from a billet dealer, the current market has improved over the previous period, but the selling price is going along with the cost line, that is, not making money to stock. But now there is a downward trend in the price of raw materials, which will add a balance bar to the grey cloth merchants. On the other hand, the appreciation of the US dollar and the depreciation of the RMB also give the "long drought" foreign trade market a little "sweet dew". If the foreign trade order in the early stage is returned in the near future, it can be exchanged for more than one thousand yuan for ten thousand US dollars.

There is also a good news from the US interest rate cut. So far, 23 countries have announced interest rates cut. Although the United States is not the first one, it has the biggest impact. Following the announcement of the US interest rate cut, Brazil and the UAE immediately followed up the announcement of the rate cut. The pace of global interest rate cuts will be opened up if many countries are in such a consistent pace. Is China following up?

China's GDP growth rate in the two quarter has reached a low level in recent years. The international situation is changing. The market has a steady mentality and a large amount of funds are transferred to the real estate market. It is also reasonable for the state to cut interest rates, put money into the market and save the manufacturing industry. Our textile industry will also benefit from it and get a breathing space in the off-season.

In 2018, our GDP has reached 65% of the United States. History tells us that whenever the total amount of GDP in the country is close to 70% of the US, it will lead to the suppression of the United States. In recent years, the frequent launch of China has already demonstrated the mentality of the United States, and there will be more future moves. Our textile industry has been on the ups and downs for decades. It does not depend on a single market. Besides, we have a domestic market of 1 billion 400 million people.