Affected by the epidemic, export orders for cotton yarn, clothing and other products have decreased. Especially due to the “two-sided attack” of rising cotton prices and falling yarn prices since August, the domestic textile industry is in trouble. When the new season cotton is about to be launched and the internal economic cycle starts, what is the development trend of the domestic textile industry? Can the activity of cotton and cotton yarn futures and options markets, especially the continued growth of cotton yarn futures trading volume and delivery volume, help textile companies get out of trouble? In order to understand the above issues, from September 21st to 25th, the reporter followed the research on the cotton spinning industry of institutional investors organized by the Zhengzhou Commercial Exchange and China Reserve Cotton Information Center Co., Ltd. to stabilize the enterprise and protect agriculture, and conducted a survey on the textile and clothing production in Henan and Shandong. The company conducted on-site visits with cotton storage and trading companies.
High cotton and low yarn, textile companies It is difficult to survive in a difficult situation
Based on the reporter’s field research in Henan and Shandong, combined with the understanding of the current situation of textile enterprises in Jiangsu, Zhejiang, Guangdong and other places, it was found that the current domestic cotton and There is a serious inversion in the price of cotton yarn. Except for some companies that produce high-count yarns and low-count yarns for specific purposes, most textile companies are at a loss in cotton yarn processing, with losses ranging from 500 to 1,000 yuan/ton. This has led to the entire textile industry The industry’s operating rate is generally insufficient, and about 50% of textile companies have reduced or even stopped production.
From the analysis of the process of changes in the operation of textile enterprises, before April, the operation of textile enterprises was still very good, and most enterprises had good profitability. However, after that, the profit margin gradually declined, and now it is almost This is a loss for the entire industry. The main reason is that domestic cotton prices have continued to rise since April, with a cumulative increase of about 1,000 yuan/ton. During the same period, domestic cotton yarn prices generally dropped by about 500 yuan/ton. One rises and another falls, and the operating profits of textile companies have shrunk significantly.
“The textile industry is becoming more and more difficult to work in. Many companies are taking one step at a time. I have never encountered a worse market situation than this in more than ten years of working in the industry.” Shangqiu, Henan The person in charge of a textile company with 100,000 spindles said that many textile companies started operations to maintain market share and retain factory employees, but they don’t know how long they can last. If the market does not improve, then it is estimated that there will be more in the next step. of enterprises have reduced production suspensions.
In Guangdong, Zhejiang, Jiangsu and other places, some large-scale textile companies have relatively high startup rates, while many small and medium-sized textile companies have suspended production and operations. Although large enterprises have high operating rates, they are also deep in losses. In addition to relying on the funds they have accumulated to maintain market share and retain employees, the enterprises’ hard production has not brought back much profits, and most enterprises are in a state of “bleeding”.
From the analysis of the sales of products of textile enterprises, the market shows a polarized pattern. Among them, sales of high-count yarn and low-count yarn were smooth, and some companies that produced these cotton yarns achieved slight losses, and some even achieved profits. However, the sales of bulk goods such as 32-count yarn were average, and the companies that produced these cotton yarns suffered deep losses. At the same time, foreign trade textile enterprises are facing operational difficulties. Sales of combed 40-count yarn and other yarns are not smooth, and some enterprises have to stop production. Textile enterprises that produce blended yarns have relatively greater living space. On the one hand, blended yarns are used for domestic sales. The demand for yarn is strong. On the other hand, the production cost of blended yarn is lower than that of pure cotton yarn.
“At present, life is very difficult for both large-scale textile companies with long industrial chains and small and medium-sized textile companies.” Henan Tongzhou Wei Gangmin, chairman of the cotton industry, told reporters. However, he also said that in the medium to long term, the market is improving step by step. For example, when the COVID-19 epidemic was severely affected, the operating rate of domestic textile companies dropped to one-third of the normal level. However, currently, although the epidemic in Europe often rebounds and the epidemic in India is still spreading rapidly, the cotton yarn, clothing and other markets are still promising in the short term. There are no driving factors for the improvement in consumption, but since June, demand has gradually recovered, and the operating rate of textile companies in some areas has increased from 20% to 50%, or even 70%.
Use and procure at any time, enterprises “show their unique talents” to overcome difficulties
The more difficult the time, the more we can see the development potential of a company. Some textile companies adopt flexible raw material procurement and product sales methods, develop new products that are urgently needed by the market, and make full use of cotton, cotton yarn futures and option tools, etc., which not only reduce the procurement cost of the main raw material for production – cotton, but also ensure the quality of the products. Smooth sales and win when the textile industry as a whole is in trouble.
“New cotton is about to be launched. Although the price of cotton fluctuates, the focus of operation is constantly moving upward. The price of cotton yarn is stable with some decline. The operation of textile enterprises downstream in the industrial chain It has always been the focus of more attention in the market.” Li Youyin, chairman of Henan Weishi Textile, said that cotton yarn production profits are meager and even in a breakeven state. In order to maintain normal production, companies mainly control production costs by adjusting production structures. For example, there are differences in the peak and valley prices for local electricity consumption. During peak price periods, the machine will be shut down for rest, and during low price periods, it will be restarted for production.
The person in charge of some textile enterprises in Shangqiu, Henan Province told reporters that in the face of the current sluggish cotton yarn price situation and the shrinking demand for downstream cotton cloth and clothing, cotton yarn prices are expected to rise in the future. When the probability is low, many textile companies adopt the on-demand method in purchasing raw materials.� Insufficient, coupled with the upcoming increase in new cotton, sufficient inventory of old cotton, the obvious trend of high cotton prices and low yarn prices, and unclear Sino-US trade relations, the textile industry’s raw material and product inventories will continue to be at low levels.
The person in charge of a textile company in Shangqiu, Henan Province said that the difficulties faced by textile companies this year are far greater than during the financial crisis in 2008. The substantial reduction in spinning profits or even losses has forced many companies to think about We must try our best to control risks and significantly reduce cotton and cotton yarn inventories. It is a helpless task, just to reduce the capital occupancy rate.
Judging from the situation in the cloth fabrics, clothing and other industries grasped by the reporter, the downstream demand for cotton yarn still needs to be restored, and it will be difficult to support textile companies in increasing raw material and product inventories in the short term. At present, the foreign trade orders of cloth fabric companies have decreased significantly, and some companies whose products are mainly exported have experienced difficulties in capital turnover. At the same time, companies have also encountered many problems when turning to domestic trade orders, mainly because domestic demand is not strong. In addition, due to a large number of export companies seizing the domestic market, market competition has become more intense. Manufacturers have reduced costs and profits, and these companies have actively lowered prices, causing the prices of fabrics and gray fabrics to fall one after another. Under such circumstances, some companies have to accept orders even at a loss in order to survive. For apparel companies, affected by the impact of the epidemic and the instability of the related political and economic environment, the overall order volume has dropped significantly year-on-year, and it is common for large orders to become smaller, and long orders to become shorter.
From the perspective of market psychology, combined with the actual observations of reporters in textile companies, there is a certain rigid demand in the cotton yarn market, and the demand for some varieties is acceptable. The reason why the inventory is low , has a lot to do with the expectations and psychology of textile companies. At present, there are two major variables in the cotton yarn market, one is the control of the new coronavirus epidemic, and the other is the impact of the US ban on Xinjiang cotton. Textile companies are worried that these two major variables will exist for a long time, so they dare not easily increase raw material and product inventories.
“In the medium to long term, changes in the epidemic are still the core of future market development.” Wei Gangmin said that from the analysis of the domestic situation, the marginal effect of the epidemic is positive, but the epidemic situation in the international market Repeatedly, there is great uncertainty.
The heads of some textile companies told reporters that the impact of the US restrictions on the use of Xinjiang cotton is slowly emerging and is far-reaching. For example, in the future, many export orders will explicitly require the use of imported cotton. Although most companies currently sell their products mainly for domestic sales, with the emergence of external demand orders in the future, the use of Xinjiang cotton will become a big problem. It is expected that relevant agencies will issue additional cotton import quotas in the future to meet the needs of textile companies, and will also increase the purchase and storage of Xinjiang cotton to alleviate the problem of lack of cotton consumption in Xinjiang.
The pattern changes and updating business concepts becomes a trend
“From textile Considering the overall operating situation and development trend of the industry, the temporary shortage of terminal demand, epidemic problems, fluctuations in Sino-US trade relations, etc. are not the main problems. Excess production capacity and backward business models and technical means are the most important problems that need to be solved. Domestic The textile industry is likely to take advantage of the current situation in which the entire industry is in trouble to ruthlessly eliminate backward production capacity, and industry reshuffles may occur.” Some heads of textile enterprises in Luohe, Henan said during the discussion why most large enterprises can produce at full capacity, Small and medium-sized enterprises with strong product characteristics do not find it difficult to survive, and the production of enterprises that use cotton and cotton yarn futures to reduce costs and risks is relatively normal, because the domestic textile industry pattern has undergone major changes.
According to the reporter’s understanding, since the second half of 2018, the production situation of domestic textile enterprises has gradually deteriorated, and the overall production capacity has shown a trend of “great advancement and small retreat”. The backward production capacity has been advanced by large enterprises. The production lines are crowded, and it is estimated that this development trend will accelerate in the future, which will lead to yarn processing profits remaining at a low level for a long time, and even falling into a dilemma of continuous losses.
During a survey in Yuncheng, Shandong Province, the reporter learned that changes in terminal sales models and diversified demand for product varieties, as well as many changes in order frequency and yarn material demand, on the one hand required The production of textile enterprises follows the market demand. On the other hand, the business ideas and products of textile enterprises are required to have their own uniqueness. For example, fast fashion clothing products require the raw material-cotton yarn to have unique characteristics.
Some people in the industry said that although it is still difficult for domestic textile enterprises to survive, the most difficult days have passed. Coupled with the gradual recovery of market demand and the full play of the functions of cotton yarn futures, the textile industry The ability of enterprises to bear risks has been improved. </p
