In the blink of an eye, time has entered August, and more than half of 2020 has passed. Affected by the new coronavirus pneumonia epidemic, coupled with the traditional cotton spinning off-season, the current market appears to be even more sluggish. News of suspensions, reductions, and holidays are common in the textile circle of friends. “Is there still spring for the yarn market this year? The difficult days are so difficult that we can no longer support it.” I believe many people will have this question, especially because this year due to the impact of the COVID-19 epidemic, the production and sales of most textile companies have been sluggish. Difficulties in capital turnover, coupled with the Sino-US trade war and the disordered rhythm of the off-peak and peak seasons, have caused some textile companies to stagnate. In the first half of the year, the operating conditions of all textile companies were poor. At present, some companies have entered the shutdown stage, and most employees mainly take vacations. It is expected that more companies will stop production in August. In the future, there are still many uncertainties in the cotton spinning market. Can spring come earlier? Let’s talk about some views on the current industry.
Domestic economic growth is picking up month by month
According to data released by the National Bureau of Statistics on July 27, the profits of industrial enterprises increased by 4.8% year-on-year in the second quarter, compared with a decrease of 36.7% in the first quarter. Especially in May and June, profits increased by 6.0% and 11.5% respectively, and the growth rate accelerated month by month. Data shows that China’s economy is slowly recovering.
According to customs statistics, my country’s cotton imports in June 2020 were 90,000 tons, an increase of 29% month-on-month and a year-on-year decrease of 44%; while my country’s cotton yarn imports in June were 150,000 tons. tons, a year-on-year decrease of only 6.5%, but a month-on-month increase of 50%. Domestic enterprises’ demand for cotton yarn has increased significantly.
Market participants believe that the large increase in the number of imported yarns is one of the manifestations of the rapid recovery in market demand. In May and June, domestic sales orders postponed due to the epidemic were fully released, and consumer demand for cotton yarns with counts of 40S and below (including OE yarns) rebounded in a short-term “retaliatory” manner; while some domestic small and medium-sized yarn mills were slow to resume work and production and lacked raw materials. Due to reasons such as high costs, low and medium count yarn output, and insufficient inventory, purchasing on-site, bonded or customs-cleared Vietnamese yarn and India-Pakistan yarn has become an inevitable choice for textile and garment enterprises and middlemen.
Foreign trade orders have picked up, and demand for high-grade cotton has picked up
Since August, according to feedback from some intermediary trading companies, the recent demand for mid-to-high-end Xinjiang cotton from spinners has been relatively good, especially for double 28 or above Corps machine-picked cotton. The frequency and quantity of purchases have increased. Many companies The sales basis has also been raised by 100-200 yuan/ton.
With the rebound of foreign trade orders, some companies have increased their orders, and the yarn orders tend to be mid-to-high-end, and the digestion of high-quality Xinjiang cotton has increased significantly. Therefore, varying degrees of Added replenishment of high-grade lint. Due to concerns about the impact of the epidemic on the transfer of cotton from Xinjiang to warehouses, the shipment volume of high-quality resources from some warehouses in the mainland has also increased accordingly.
Industry reshuffle is accelerating, and overcapacity is expected to improve
Some people in the industry have reported that the survival of the fittest among domestic textile enterprises is accelerating. According to the author’s survey of textile enterprises in Shandong, Hebei, Guangdong and other places, since July, many small and medium-sized enterprises have completely withdrawn from the textile industry, suspended production, and taken holidays. The number increased to more than 30%. However, there are still some companies with strong strength and high technological level that are still accelerating their development. These companies have seized the market gaps left by the exit of small and medium-sized enterprises.
The withdrawal of backward production capacity will have a positive impact on improving the long-term overcapacity situation in the cotton spinning industry. The impact of the epidemic has accelerated the withdrawal of production capacity with low profitability and low product competitiveness from the market, which has long-term significance for improving the industry’s production capacity layout direction and product structure optimization.
Judging from the above situation, China’s textile market is slowly recovering. In the process of rapid recovery in demand for imported yarn and recovery in foreign trade orders, domestically produced The spring of yarn will be getting closer and closer.
In fact, yarn is waiting for an opportunity to reach an inflection point. Maybe it will be in September-October of the “Golden September and Silver Ten”; maybe it will be after the overseas epidemic is under control, maybe it will be when the Sino-US trade dispute makes some progress. In short, just when everyone feels pressure is coming, market opportunities may also be coming. </p
