Textile Enterprises Are Caught In Heavy Hesitation And Wait-And-See

　　 Fluctuation of cotton price makes enterprises at a loss

In less than two months from September 15 to November 10, domestic cotton prices rose by more than 70%. However, under intensive regulation, the "high fever" of cotton prices took a roller coaster ride. Since November 11, the cotton price has been adjusted rapidly, with a correction of up to 25%. Under the sudden rise and fall, Textile enterprises I was caught in a heavy hesitation and wait-and-see.

The future market will still run at a high level

The rise in international cotton prices, adverse climate in some production areas, speculation and other factors contributed to the soaring cotton prices in mid September. China's cotton price index (328 level) rose sharply from 10966 yuan/ton at the beginning of last year. On September 25, it rose 420 yuan/ton, breaking the 20000 yuan/ton mark, and cotton prices entered the "second era" in an all-round way. By November 10, cotton prices continued to enter the "three times". On the same day, the highest quotation of cotton futures contracts in Zhengzhou Commodity Exchange (hereinafter referred to as "Zhengzhou Commodity Exchange") reached 33720 yuan/ton, a record high since 2002.

On November 8, the National Development and Reform Commission, together with the Ministry of Agriculture, the Ministry of Railways and other seven departments, urgently proposed six measures, opening the prelude to intensive regulation of cotton prices. From November 8 to 10, for three consecutive days, Zheng Merchants Exchange issued seven notices to introduce "deleveraging" measures, including increasing margin, limiting the maximum trading volume, and canceling the 50% discount on the service charge for opening positions. As soon as the policy of "raising fees and raising guarantees" came out, the profitable funds fled one after another.

November 11 has become the "inflection point" of this round of rising cotton prices. The 1105 contract, the main force of Zheng Merchants Exchange's cotton futures, has fallen sharply since the same day. The settlement price on November 18 was only 26955 yuan/ton, which dropped nearly 7000 yuan per ton in a week. On November 11, the domestic spot price also fell, with several single day reductions of more than 1000 yuan per ton.

However, it seems to rely on administrative means to suppress Cotton price The rise is difficult to sustain.

This year, China's total cotton output is about 7 million tons, and 1/3 of the total cotton consumption still needs to be imported. The imbalance between cotton supply and demand has not been fundamentally changed. According to the assessment of the United States Department of Agriculture (hereinafter referred to as "USDA"), since 2005 to 2006, the global cotton consumption has been greater than the output, and cotton stocks have been in a tense state for a long time. USDA predicts that the world cotton inventory will decline for the fourth consecutive year from 2010 to 2011, and reach the lowest level since 14 years. The global cotton supply and demand is still tight.

The continuous increase of cotton planting costs determines that cotton prices are unlikely to decline significantly. According to the survey of China Cotton Association, including the land price and labor price, the cotton planting cost of cotton farmers was 1100 yuan per mu in 2008, 1288 yuan in 2009, 1600 yuan in 2010 and more than 1900 yuan in 2011.

Considering the tight supply and demand situation of international cotton prices, the huge supply and demand gap of China's cotton, and the important strategic commodity attributes of cotton itself, it should be said that the frequent dumping and stockpiling actions to curb the price rise will not last for a long time. After several rounds of dumping and storage, China's official reserves have reached a record low of about 300000 tons Cotton regulation The means are obviously inadequate. In the future, the Chinese government is likely to re-enter the market to replenish its inventory, which will certainly exacerbate the tension in cotton supply.

With the arrival of the traditional peak season of the textile industry at the end of the year, downstream demand will also increase. In the short term, the tight supply and demand pattern of cotton is difficult to be alleviated, the cost of cotton planting is rising rapidly, and the overall agricultural products have entered the upward channel, which will support the cotton price to maintain a high level.

Textile enterprise polarization {page_break}

As the main raw material of cotton textile enterprises, cotton accounts for 60%~70% of the cost. Based on the industry's average profit of 12%, for every 1% increase in cotton price, the enterprise's profit will decline by 0.53%. The price of cotton has risen too fast, but it is difficult to keep pace with the price of finished goods. As a typical export-oriented industry, textile enterprises are "frustrated" at both ends. It is not easy for consumers to absorb the rising costs by raising the prices of products. Due to the price increase of textile enterprises, many export orders were lost. After the cotton price accelerated in September, the export of cotton textiles fell 12.2 percentage points month on month. At the 108th Canton Fair, which closed in November, the cumulative turnover of textile and clothing fell by 2.6% compared with the 107th Canton Fair. The export of textile and clothing accounts for 70%~80% of the output value of large-scale enterprises in China's textile industry. The bad export situation increases the difficulty of industry recovery.

In order to alleviate the pressure of rising costs, textile enterprises look for cheaper or cheaper alternatives. However, the stimulative effect of the cotton boom has made polyester and other alternatives rise sharply in varying degrees. The roller coaster of cotton price makes it difficult for enterprises to predict the medium and long-term production and operation costs. In order to avoid the embarrassment of more production and more losses, domestic textile enterprises easily dare not accept orders, especially long orders with fixed prices. This not only increases the difficulty of long-term planning of the industry, but also seriously affects the later production and operation of textile enterprises.

The sharp rise and fall of cotton prices will accelerate the upgrading of the polarization of the textile industry. Large enterprises have strong bargaining power. In addition to large reserves of raw materials and strong capital strength, the higher cotton prices have little impact on the production and operation of such enterprises. The most affected will be the vulnerable SMEs in the industry. Because of their relatively weak economic strength and low bargaining power, they are more vulnerable to the adverse impact of price increases. With the change, industrial resources will gradually flow to large enterprises with high added value, and industry reshuffle is inevitable.