After a week of intense research, the author has a clearer understanding of the cotton and textile industries in some areas of Shandong. As China’s largest cotton consumer and yarn producer, Shandong Province’s textile industry plays an important role. At present, under the combined influence of factors such as the epidemic and Sino-US economic and trade frictions, Shandong’s cotton spinning industry chain is encountering challenges.
The overall operating rate of enterprises has dropped, and the amount of cotton used has dropped significantly
Shandong Province, as the leader of the national cotton spinning industry, has a very representative cotton spinning industry. . According to statistics from the National Bureau of Statistics, Shandong Province’s yarn output from January to December 2019 was 3.5343 million tons, ranking first in the country. Shandong Province’s yarn production declined in 2019 due to the impact of Sino-US economic and trade frictions on foreign trade orders. Entering 2020, under the dual influence of the epidemic and Sino-US economic and trade relations, the living environment of enterprises has become even worse. While the operating rate has dropped, cotton consumption has also declined significantly.
In communicating with the companies I visited, the author found that the startup rate of companies showed differences in size and region. Within the same region, companies with large scale and strong risk resistance have higher startup rates, while small-scale companies with relatively single product structures have lower startup rates. A purchasing staff member of a company said that the company’s products are of low quality and the raw materials used in production are mainly reserve cotton. In 2018, 7,000 tons of reserve cotton were auctioned, and in 2019, about 4,000 tons were auctioned. This year, the auction volume was only 700 tons. A person from the company said: “Our company’s cotton consumption has dropped significantly, and the situation of surrounding companies is basically similar.” According to data from the National Cotton Market Monitoring System, in 2019/2020, domestic cotton consumption was 7.0136 million tons, a year-on-year decrease of more than 970,000 tons, a decrease of 12.2%.
Cotton prices fluctuate upwards while yarn prices weaken and fall
When visiting companies, the author learned that the most troublesome thing for companies is that the prices of cotton and cotton yarn are “contrary to each other” However, the price of upstream cotton raw materials continues to rise, but the price of downstream cotton yarn has shown a slight downward trend. As the benchmark for the cotton market, the price of Zheng cotton has risen from around 10,000 yuan/ton to about 13,000 yuan/ton, an increase of more than 30%. Driven by Zheng Cotton, spot prices also rose slightly. However, under the suppression of consumption, the rise in raw materials failed to drive the price of downstream cotton yarn to rise effectively, which undoubtedly put great pressure on enterprises. The current market price of a certain conventional yarn is 18,500-18,800 yuan/ton. The reserve cotton is used to spin the yarn, and the cotton ratio is about 1.1. The raw material cost of spinning yarn alone is 13,000 yuan/ton. After calculating the processing cost, the company has no profit. Even a small loss.
In addition, the price of foreign cotton in some producing areas is now lower than that of domestic cotton. For example, the standard port price of Brazilian cotton is about 12,110 yuan/ton, and the price after tax is about 13,600 yuan/ton. The price difference between domestic and foreign cotton is When the price is around 1,000 yuan/ton, companies can ensure competitive advantages through quality and cost control. If the price difference between domestic and foreign cotton exceeds this level, domestic yarn will lose its competitive advantage. Judging from the current market development trend, cotton prices continue to fluctuate upward, while yarn prices continue to be under pressure due to the slow recovery of consumer demand.
The “Golden Nine and Silver Ten” peak season is not prosperous and is lower than corporate expectations
In 2020, after entering the “Golden Nine and Silver Ten” peak production and sales season, corporate operating conditions have indeed emerged Some improvement. A large textile company in Shandong said that it encountered a sharp drop in orders in early August. At that time, product inventories continued to rise and sales were under great pressure. Since the end of August, orders have shown clear signs of recovery, and corporate production has basically returned to normal. Although production has remained normal, profits have been very low. “The peak season is not busy” is the downstream status quo reflected by most companies. According to the survey, the raw material inventory of Shandong companies varies in size. Some companies maintain it for about 7-10 days, some companies maintain it for 1-2 months, and some companies even only have 3-5 days. The purpose is to reduce the risk of raw material fluctuations. and reduce the pressure on capital occupation. There are also differences in cotton yarn inventories, but the inventory scale is higher than that of the same period last year.
There are many companies making foreign trade orders in Shandong. During the research process, we learned that companies with a large proportion of foreign trade export orders are in a difficult situation. Affected by the delay in bringing the epidemic abroad under control, the recent order volume has declined. Although there has been recovery, the recovery rate is slow and far from reaching the level of the same period last year. Now, orders from countries in Asia, South Korea and the Middle East have recovered rapidly, but the European and American markets are still not improving.
Cotton begins to be harvested for the second time, and the selling price of seed cotton is lower than expected
Xiajin County, Shandong Province is a major cotton-producing province. In the past, the cotton planting area reached 400,000 mu, accounting for about half of the entire cultivated land area. This year, the cotton planting area in Xiajin County is only 180,000 mu, and these are some plots with inconvenient watering and heavy saline-alkali. China’s cotton planting area has changed, from the Mesopotamia and Mesopotamia to the Xinjiang region. Against this background, the planting area and output of real estate cotton have dropped significantly, and the quality has also declined. According to cotton farmers, the output of seed cotton per mu this year is about 500 kilograms (it was hit by hail in the early stage, and some cotton plants were damaged, which affected the output). The price of seed cotton is about 3.3 yuan/jin, and the total income from one mu of land is 1,650 yuan. According to 400 yuan per mu of land, Calculating the material cost of 1,250 yuan, the income from one acre of land is 1,250 yuan (not counting labor costs), which has no planting advantages compared with corn and wheat.
“Those who are determined not to seek easy success will succeed, and those who do not seek refuge will advance.” The development of the cotton spinning industry has never been smooth sailing. The situation of the cotton spinning industry in the second half of this year is still not optimistic, and the end of the year may become a watershed for enterprises.At this time, whether many textile companies can show their talents across the sea is worth paying attention to in the future. </p
