There is a lot of speculation and hoarding behind the price increases in the textile industry.
“As soon as the National Day came back, the entire textile circle was in chaos. Upstream cotton, cotton yarn, etc. All raw materials are rising rapidly, with prices rising every day.” Xing Weiqi, general manager of Shijiazhuang Weibaolai Textile Co., Ltd., was worried when interviewed by reporters.
Due to the rapid rise in the price of textile raw materials, a large number of traders adopt the strategy of “high quotation, low transaction”, holding back the market, waiting for the price, or even choosing to break the contract; in RMB Under the expectation of appreciation, imported yarn is also in a “closed” state without quotation. In order to ensure production and delivery, a “fabric rush” has also begun in the textile industry.
Raw material prices have skyrocketed, and the “fabric rush” is raging
A spinning company in Shaoxing, Zhejiang is responsible for Zhong Tao told reporters that the first half and second half of the cotton yarn industry can be called “ice and fire”. “In the first half of the year, the company was almost bankrupt, but now it is too busy to touch the ground. All customers are urging fabrics, and every day Home textile factories, printing and dyeing factories, and gray cloth factories are all blocked, and the entire industry is rushing to buy.”
According to statistics from Business News, April 2020 – In September, domestic lint cotton prices maintained an overall upward trend, with domestic lint cotton prices rising by 1,811 yuan/ton, or 16.31%. However, after entering October, the increase in cotton prices suddenly accelerated. As of October 19, the average price of domestic lint cotton spot market was 14,948 yuan/ton, an increase of 2,020 yuan/ton from the price on October 1, an increase of 14.62%; an increase of 17.03% year-on-year. %.
This means that the increase in cotton prices in just ten days after the National Day has exceeded the increase in the past six months.
In terms of yarn, driven by the “Golden Nine and Silver Ten” and cotton prices, the price of cotton yarn has increased by 3,000 yuan/ton compared with before the festival, and the price of 60-count high-count yarn has increased by 4,000 yuan/ton compared with before the festival. Yuan / ton.
As of October 16, the price of C32S yarn reached 21,500 yuan/ton. The closing price of the main cotton yarn contract CY101 of Zhengzhou Commodity Exchange that day was 21,685 yuan/ton, rising within a week. 820 yuan. As of October 15, China’s yarn inventory index closed at 7.6 days, directly cut by 2/3 from 21.5 days a week ago, setting a new low in the past three years.
“Closed without quoting”: Hype and hoarding
Zhong Tao pointed out that the rise in cotton prices in Xinjiang this year stems from There is a rush to buy seed cotton. As the cotton processing capacity of gins continues to increase, Xinjiang’s cotton processing capacity is relatively surplus, but cotton resources are relatively limited. This has led to many cotton farmers maintaining a mentality of reluctant to sell seed cotton. In order to ensure the purchase volume this year, gins , I can only bite the bullet and raise the price to buy it.
There are serious phenomena of “closing orders without quoting” and hoarding goods in the cotton spinning industry. On the one hand, due to the rapid rise in prices, a large number of traders generally adopt the “high quotation, low transaction” strategy, holding back the market and waiting for the price to sell; on the other hand, the expectation of RMB appreciation has increased, and many importers are betting on RMB appreciation. , Therefore, imported yarn is basically in a “closed” state without quotation, artificially causing a “out of stock” phenomenon.
According to industry insiders, some cotton/cotton yarn traders, while encouraging their peers to “close the market without quoting”, are quietly selling cotton and cotton yarn in stock, and The quantity is not small.
Although domestic and foreign orders have improved significantly, and cotton spinning mill production has accelerated significantly. However, the previous destocking under pessimistic market expectations has resulted in most companies’ inventory levels being very low, and the increase in raw materials. Prices have intensified the panic among enterprises, and enterprises that are in a rush for delivery are even more urgent. In order to ensure production, even if there is still inventory, textile enterprises have begun to grab and stock up on fabrics.
Profits are being squeezed, and textile companies are in a dilemma
It is worth noting that for such a round of price increases affecting many categories It seems that most companies in the textile industry chain, both upstream and downstream, are not happy. On the contrary, a large number of companies are worried and even miserable.
“If the price of raw materials continues to rise, then spinning mills will face the embarrassing situation of ‘losing a thousand yuan for spinning one ton of yarn’. If things go on like this, some factories will Only some production workshops can be closed,” Zhong Tao said.
Sun Linan, who is mainly engaged in printing and dyeing, is also troubled by the rising prices of raw materials. Her company is in the process of shrinking and may reduce production and control orders. “We buy After finishing the gray fabric, we go to print and dye it. Now the prices of yarn and gray fabric are rising sharply. We are faced with the problem of rising costs. It is very difficult to transfer all of this increased cost to consumers. Only part of it can be transferred, and the rest It must be borne by our printing and dyeing companies. The profits of our industry have always been very thin. The rising prices of raw materials have squeezed most of the profits. If the RMB appreciates again during foreign exchange settlement, there will be nothing. Unlike clothing companies, their profits are slightly higher. , it may still be able to bear it.”
Xing Weiqi obviously cannot agree with this statement, “The price of upstream raw materials is too high, but the price activity of downstream fabrics and clothing is very high. Far inferior to upstream, the cost of cotton yarn, printing and dyeing has been rising, and processing plants are very difficult to work.”
He pointed out that although the market has picked up recently, the foreign trade market It is far from as good as everyone imagined. He predicts that the orders for the whole year will be reduced by 1/3 compared with previous years.
Data map
A textile industry person pointed out that with the skyrocketing prices of raw materials, cotton gauze, and fabrics, textile and clothing exports are in a dilemma.
First of all, at present, most foreign brands and retailers do not accept the increase in quotations from textile and garment enterprises and foreign trade companies. The increase in raw materials and gauze is difficult to pass on to end orders, and export-oriented enterprises cannot bear The capacity is relatively limited, so they have to either “abandon the order” or absorb the rising costs of cotton, cotton yarn, etc. on their own. No matter which choice they make, the production enterprises will be very painful.
Secondly, in August and September, many companies received orders for Thanksgiving, Christmas or “Double 11” domestic sales orders from European and American markets, and the prices of cotton, cotton gauze, etc. The increase has caused profits to significantly shrink or even fall into losses. These orders are likely to be unable to be executed. Textile and clothing companies are suffering between executing the contract or negotiating with the purchaser to terminate the contract or breach of contract.
The second wave of the epidemic is coming, so we are even more cautious
Recently The weather is getting colder, and various epidemics are ready to break out. The new crown epidemic has caused a second wave of raging storms around the world. Foreign countries, especially European countries, have fallen into panic dominated by the epidemic.
Originally, because of the upcoming Christmas, foreign trade orders began to be issued intensively. Many textile bosses felt that the few profitable ones this year had finally arrived, but who had ever With the second outbreak of the epidemic, postponed or even canceled orders began to appear.
The money cannot be received, the cycle is lengthened, and the production line cannot be empty, etc. All these problems give the boss a headache, which reduces the money he could have earned. Therefore, even when faced with the orders they have received, many bosses are still hesitating and waiting to see whether it is better to accept the order or not.
The rise and fall of the exchange rate has always been a pain in the hearts of textile foreign traders. If the time of foreign exchange settlement is grasped well, it is possible to make a fortune, but if the timing of foreign exchange settlement is not grasped well, it is possible to make a fortune. It is possible to lose a sum of money in vain. A cloth boss in foreign trade said: “Many export companies have received orders until the end of the year or even next year, and the prices have been locked. If you are not careful, it may be in vain!”
If we are really careless and the RMB exchange rate rises, it will be a dilemma for the cloth boss who has just received a large number of foreign trade orders. Whether he should increase the price is also worrying. Thought-provoking question?
On the one hand, if customers do not accept the price increase, they are likely to move to other suppliers who have not increased the price. The current price war is very fierce, and many companies have The epidemic hit and orders decreased, and everyone wanted to grab these “scarce” orders to make up for the losses in the first half of the year.
On the other hand, the price of raw materials has begun to rise recently, coupled with the ups and downs of the exchange rate. If the price does not rise, then this part of the meager profit will also be lost due to the increase in the exchange rate and the price of raw materials. If you eat it, it will probably be wasted in the end!
This year is really torturous for the textile industry!
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