September is the season for purchasing new cotton, but the head of the provincial cotton and linen company went to Xinjiang on June 10th to inquire about the market.
The behavior of cotton and linen companies is not difficult to understand. Since August last year, cotton in China has entered a price increase channel, reaching a peak of 35000 yuan/ton in February this year. But after March, cotton prices entered a downward trend, and by April, they were averaging 500 yuan every three days /The speed of the ton has plummeted sharply, now dropping to 24000 yuan/ton, a drop of nearly 30%. Cotton prices fluctuate greatly, and textile and clothing production and export enterprises cannot afford such turmoil. At present, several cotton spinning enterprises in the province have reduced or stopped production.
Injured in the capital game, Sichuan clothing exports sharply decline by 60%
Why is the fluctuation of cotton prices like a roller coaster in just one year?
In the second half of last year, the international market recovered, but domestic cotton production decreased by 9% due to drought, leading to expectations of a rise in cotton prices. Subsequently, speculative capital entered and large enterprises hoarded goods, pushing up cotton prices layer by layer. Speculators have been squatting in the fields of Xinjiang before the new cotton purchase season, thus controlling the market cotton prices and quantities. On the other hand, under the pressure of the World Trade Organization, the United States will cancel cotton planting subsidies in 2012. In order to prevent cotton farmers from losing money, the United States has become the operator of the rising global cotton prices; In addition, the control of cotton exports by India and Pakistan, the main cotton importing countries in China, makes it difficult to stabilize market prices through imported cotton.
In March of this year, the country introduced a minimum reserve purchase price of 19800 yuan/ton for cotton. This is undoubtedly a significant bearish trend for speculators, and the futures market immediately took a sharp turn. The high prices in the spot market were transmitted to consumer terminals in February of this year. The acceptable price fluctuation range for European merchants is 2 %-5%, "Zhou Yali, Vice President of the Provincial Textile Science Research Institute, analyzed from the situation of the Canton Fair that the orders for textile and clothing in Sichuan have significantly decreased, and most enterprises are accepting orders at a loss. Due to inflation factors, the demand for clothing in China has declined, ultimately leading to a decrease in cotton prices.
In this capital game, cotton hoarding enterprises suffered losses of billions of yuan. Sichuan textile production enterprises are small in scale and do not have the financial strength to stockpile goods, but they cannot escape the fate of being passively "beaten". According to data from Chengdu Customs, in this round of significant fluctuations in cotton prices, Sichuan's clothing exports sharply decreased by 60% from January to April.
Cotton spinning enterprises have insufficient production and cannot see the market clearly. They only accept small and urgent orders
Several cotton spinning enterprises in the province have reduced or stopped production. Jiang Deping, Executive Director of Sichuan Tianjiao Cotton Spinning Factory, said that the factory's monthly output is 6 million tons. Last year, the production to sales ratio was 100%, but in the first few months of this year, it has dropped to 90%, and the enterprise is passive in inventory.
Buy up, not down. During the transition from cotton to cotton yarn, if the cotton price drops by 10%, cotton yarn that is still expected to be produced will experience a price drop of at least 20%.
Most enterprises in the province have received small and urgent orders this year. The external orders for the first quarter have been completed, but new orders have not yet arrived. Foreign orders have been transferred to countries and regions with lower costs. Tianjiao has a client who is in the South African market. Its headquarters used to be in Shanghai, but it has now moved to Hanoi, Vietnam.
The reporter conducted market research and found that domestic clothing retail prices have not decreased due to the sharp drop in cotton prices. Liu Li, the owner of a clothing store on Yuefu Street in Chengdu, said that the price of ready to wear clothing in Guangdong is 10% -20% higher than before this year. The industry believes that the increase in clothing prices is mainly due to the digestion of last year's cost increases. Many clothing trading companies are concerned that the sharp drop in cotton prices will lead to a "devaluation" of finished products, and life will not be easy.
Feng Jinhua, Director of the Light Industry and Textile Department of the Provincial Economic and Information Commission, stated that currently cotton spinning enterprises are generally operating at a low capacity. Due to the unclear market situation, companies have a strong wait-and-see attitude.
Improve product added value, actively transform to adapt to the market
How can companies cope with the significant fluctuations in cotton prices?
Zhou Yali, Vice President of the Provincial Textile Science Research Institute, suggested that enterprises should strengthen their technological innovation capabilities, accelerate the increase of product added value, and seek a way out by exploring new markets; Strengthen the adaptability of various production materials and avoid the risk of exclusive dependence on cotton and its products; Enterprises should also strengthen market forecasting and not blindly engage in vicious low price competition.
Tianjiao is planning to invest 100 million yuan this year to purchase advanced equipment such as long spinning machines with collective yarn shedding and fully automatic winding machines. Jiang Deping said that the company will complete the technological upgrade and transformation in November. At that time, advanced equipment will account for 70% of the company's total production capacity %The production capacity has increased to 170000 spindles, a 40% increase from the current level; At the same time, it will also achieve "two increases" and "two decreases": a significant increase in product added value, a 30% -50% increase in production efficiency, and a 5% decrease in unit energy consumption and comprehensive costs respectively %And 10%.
This cotton yarn production enterprise, which used to rely on foreign trade companies for exports, is actively building its own export team and exporting its products to emerging markets such as South America and Southeast Asia. The textile industry is rapidly rising in these markets, but mostly relies on the supporting Chinese industrial chain.
Transforming the development mode is not a slogan, but should become a guide for enterprise action, "said Jiang Deping. Currently, new products have been produced one after another. Due to the increase in added value, the new product is 5% more expensive than before the technological upgrade, but orders have already been saturated. Production of July orders has begun and preparations for autumn products are underway.
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