This week, the prices of cotton by-products in northern Xinjiang are: cotton meal 2,450 yuan/ton, cottonseed oil 6,600 yuan/ton, cotton shell 950 yuan/ton, cotton seed 2,300 yuan/ton; the price of cotton by-products in southern Xinjiang: cotton meal 2,350 Yuan/ton, cottonseed oil 6550 yuan/ton, cotton hull 1000 yuan/ton, cottonseed 2360 yuan/ton. For cotton processing enterprises, due to the obvious upside down in prices and poor market outlook, enterprises in southern and northern Xinjiang can only limit production or suspend production. The main reasons are:
Excess production capacity of cotton by-product processing
Overcapacity is the main tone of Xinjiang’s cotton by-product processing industry this year, which is mainly reflected in three aspects: Aspects: First, there is a lot of new production capacity. The new cottonseed processing capacity in Xinjiang is about 800,000 tons; secondly, the transformation of old equipment is about 700,000-800,000 tons; thirdly, zombie companies or production capacity recovery, about 700,000 to 800,000 tons. More than 1 million tons. The total new processing capacity of the three is more than 2.6 million tons, which is obviously a huge pressure on Xinjiang’s cottonseed processing capacity, which is only about 6 million tons. This part of the production capacity requires not only the purchase of cottonseed, but also the need to gain market share from the downstream product market, which raises the price of cottonseed and lowers the sales price of the product. This is the background and main premise for the dilemma of cotton secondary processing this year.
Vicious competition strikes again
With overcapacity, vicious competition is almost inevitable. The most prominent performance is cottonseed procurement. Competition in a small area has become fierce. Cottonseed procurement prices have been rising. In less than half a month, cottonseed prices in northern Xinjiang have increased from 1,850 yuan/ton to 2,700 yuan/ton, and in southern Xinjiang from 2,200 yuan/ton. Yuan/ton increased to 2,700 Yuan/ton. This competition is also reflected in product sales. As the market gradually calms down, cottonseed processing companies are competing to lower prices. The price of cotton hulls fell from 15,000 yuan/ton to 9,500 yuan/ton, and the price of cotton meal fell from 2,800 yuan/ton to 2,350 yuan/ton.
Weak risk awareness and lack of hedging means
Behind the competition, it reflects the weak risk awareness and lack of hedging means of cottonseed processing enterprises. When purchasing raw materials, companies do not make market predictions, gamble on the future market, beggar their neighbors, and concentrate risks without knowing it. Processing companies are firstly afraid of not being able to guarantee their annual processing capacity, and secondly, they are afraid that their neighbors will snatch up all their raw materials, but they are not afraid of risks. Neither the coping strategies of peers nor the receptivity of downstream users are considered. As an agricultural product, the typical characteristic of cottonseed is that it is concentrated on the market and consumed throughout the year. When the listing price is high, the risks are obvious. As the entrance to the product chain, cottonseed does not make forward-looking predictions about the market and enters the market at a high price. In trouble.
What about product sales? Either we need to make sales closely to some old customers, or we have to tighten our prices and never ship at a loss. I know nothing about futures, and there is no linkage of interests between upstream and downstream. The result is that without benefit sharing, there is no risk sharing, and old customers become leeks and wool. With a gambling mentality coupled with a herd mentality, this year’s cotton processing enterprises are like a small boat drifting on the sea, with the risk of capsizing at any time.
The strategic planning is unclear and the market positioning is inaccurate
The dilemma of cotton processing enterprises actually reflects the deeper problems of the current enterprises, which is the lack of strategic planning. Lack of clarity and inaccurate market positioning. Either they can’t find their own market advantages, or they don’t make good use of their own advantages, and the industry is in chaos. At a glance, there is not much difference between cottonseed processing companies.
Some companies rely on capital advantages and do not practice internal skills and accumulate skills. Instead, they try to disrupt the market and fish in troubled waters. Some companies rely on technological advantages, but instead of continuing to specialize in products, increase added value, and better serve end customers, they try to rely on their own product pricing power to raise the acquisition threshold. Some companies rely on market advantages, not to delve into the market, analyze the market, and improve the social value of the industry, but to transfer risks. Some companies rely on their own flexibility and flexibility to try to compete with state-owned enterprises and large companies.
The current situation of the market is caused by various reasons, and participants play a vital role in it. The healthy development of the industry requires everyone’s public efforts to make progress together. One flower blooming alone is not spring, but a hundred flowers blooming together is spring. The garden is full. At present, Xinjiang’s cotton secondary processing enterprises have basically achieved a hundred schools of thought contending and a hundred flowers blooming. This pattern is hard-won. However, with the emergence of new entrants, new technologies, and the new normal, especially the friendly industry environment in recent years, the mentality of some participants has undergone major changes, with both good and bad tendencies, and the industry needs to pay sufficient attention. </p
