Recently, the cotton textile industry chain has entered the stage of restocking and stocking up before the Spring Festival. Traders and cotton textile mills are rushing to purchase lint, while weaving factories and middlemen in various textile cities are rushing to purchase cotton yarn and gray fabrics. According to relevant surveys, for more than half a month, domestic large and medium-sized cotton textile companies have continued to increase cotton inventories. As of December 25, the average cotton inventory was close to 3 months, a significant increase from the end of November.
At present, the operation rate of large and medium-sized spinning mills is relatively high, exceeding 90% in coastal areas such as Jiangsu and Zhejiang. The front row orders are full in late January, especially carded and combed 50S and above. Yarn production and sales are active. Although the start of OE yarn shipments is not obvious, yarn mills have achieved flat production and sales or low-profit production. However, cotton textile companies in Shandong, Jiangsu, Zhejiang, Henan and other places have reported that since December, spinners have been less enthusiastic about accepting large orders and have even declined orders. They are especially cautious about export orders to Europe, North America, and Australia in the first quarter of 2021.
Why don’t cotton mills accept long-term orders? The author summarizes the following points (not discussing the accumulation of treasury and the pressure on working capital):
First, there are concerns that the epidemic in Europe and the United States will continue to get out of control in the first quarter of 2021. According to trading companies in Shanghai and Zhejiang, affected by the recent “lockdown” in some European countries and Japan, some textile and clothing orders signed in October and November have encountered execution difficulties, and with the emergence of the new coronavirus in the United Kingdom, South Africa and other countries, Due to the impact of mutations (increased infectiousness by 40%-70%) and insufficient vaccine production capacity, market sentiment continues to rise;
Secondly, shipping rates soared in November and December, and containers It is difficult to find cabinets. In addition, China’s exports of electronic products, auto parts, small commodities, etc. have rebounded strongly, and export costs have increased rapidly. This puts great pressure on textile and clothing companies that rely on “small profits and quantity” to win;
Third, considering that the Federal Reserve’s “unlimited” easing in 2021 will increase the pressure for RMB appreciation, textile and clothing companies are worried that the limited profits from long-term and large orders will once again be swallowed up by sharp fluctuations in the exchange rate;
Fourthly, judging from the external market, domestic industrial chain, and internal and external market trends of cotton futures, cotton prices in 2021 are “easy to rise but difficult to fall.” However, foreign buyers and retailers under the raging epidemic not only generally lower prices, Moreover, the execution of contracts is relatively strict. From the perspective of rising costs and reducing contract risks in the future, spinning mills are cautious about accepting long-term and large orders. </p
