Hubei is a major province in the cotton spinning industry in my country. According to the application information data of textile enterprises with sliding tax quotas released by the Economic and Trade Department of the National Development and Reform Commission, the textile scale of Hubei Province in 2018 was close to 6 million spindles, and the annual cotton consumption exceeded 610,000 tons. The annual output of cotton yarn is close to 520,000 tons, ranking fifth in the country.
As the epicenter of the epidemic, Hubei is currently The social production and living order in the province has completely returned to normal, but local cotton textile companies are still facing great pressure on production and sales, and some companies are trapped in the dilemma of reducing production and suspending production. The overall situation is not optimistic. Faced with difficulties, how do Hubei textile companies save themselves? How do you view the trend of cotton prices?
In the downturn of the market, there are insufficient orders and spinning companies are struggling to survive
Hubei The spinning scale in Zaoyang area ranges from 700,000 to 1 million spindles. Most of them are small enterprises, which mainly produce mid- to low-end yarns. Due to the impact of the epidemic, the overall operating rate of enterprises has declined. Judging from the company’s raw material and product inventory, the average cotton inventory of spinning companies has been maintained at about one and a half months, maintaining a normal level. Cotton yarn inventory has shown signs of accumulation and is at a higher level than in previous years, mainly due to low downstream orders and high sales pressure.
A local company with a capacity of 30,000 tablets said that since resuming work and production on March 14, the factory has maintained With a 100% operating rate, in order to adapt to the current domestic market demand, it mainly produces carded 32S, 26S and other yarns. At present, the company’s lint inventory is about 2 and a half months old, which is basically the same as the same period last year. The average monthly yarn output is 400 tons. Affected by factors such as the global epidemic, cotton yarn sales have been hindered, and companies’ finished product inventories have increased. Therefore, the company has expanded its sales market from the original Guangdong to Zhejiang and other places to reduce the current pressure on cotton yarn inventory. It is understood that the company mainly uses the “Double 29” Xinjiang machine to pick cotton. The purchase price is between 12,350 yuan/ton and 12,400 yuan/ton, while the sales price of cotton yarn is 19,750 yuan/ton, and the product profit is limited.
“During the epidemic, Hubei’s resumption of work and production was slower than other regions in the country. It was not until April that enterprise production and operations fully returned to normal. , but the epidemic spread rapidly abroad, and the situation of foreign trade orders across the country became increasingly severe. Not only did a large number of foreign trade orders default, but there was also a serious shortage of new orders, and corporate sales faced great pressure. When the epidemic was at its worst, Hubei cotton yarn was also sold in other parts of the country. I have encountered rejections,” said the owner of a Hubei spinning company.
The market is down, and companies have to adapt to survive. The person in charge of a textile company in Wuhan said that in the past few years, the company has focused on the mid-to-high-end cotton yarn market and purchased the world’s most advanced cotton yarn production equipment. It mainly produces combed 80s and 100s yarns. The main reason is that the company is not in the low-end yarn market. Having advantages and producing high value-added products is the core and direction of development. However, the sudden attack of the epidemic disrupted the development rhythm of the enterprise. Restricted by foreign trade exports, the high-end yarn market has declined sharply, and it can only develop the domestic mid- to low-end market. “Production equipment worth tens of millions of yuan to produce mid-range yarns such as 40-count combed yarn is really overkill,” said the person in charge of the company.
However, it is not easy to break into the domestic mid- to low-end market. According to the company, foreign trade orders are mostly for high-end yarns, while the domestic market is mostly for mid- to low-end yarns. Affected by the foreign epidemic, corporate orders are now mainly for the domestic market. As the country returns to normal production order, traditional companies that have been deeply involved in the domestic market have maintained stable orders and full production due to their stable customer relationships. However, some companies that are engaged in foreign trade or produce mid-to-high-end products are facing pressure It is very big. As an outsider in the domestic sales market, it is not easy to squeeze into this circle.
Cotton prices fluctuate slightly and the advantage of imported cotton is no longer there
Although the epidemic has caused an overall downturn in the textile market, the operating conditions of cotton trading companies in Hubei are better than expected.
The person in charge of a trading company in Hubei said that most local textile companies purchased high-priced lint for production years ago. Due to the epidemic, As a result, cotton prices fell sharply, orders decreased, and some companies faced great operating pressure. However, the company has been operating well since resuming work and production in April, and the overall impact on the company is relatively small.
According to the person in charge of the company, the company’s operations were better than expected during the industry’s off-season, mainly due to the following three reasons: First, cotton prices this year have been relatively stable since April. After textile companies resumed work and production, they had little impact on cotton trade, and sales were even better than the same period last year. Second, the price difference between domestic and foreign cotton is small, and textile companies give priority to domestically produced raw materials in purchasing raw materials. cotton. It is understood that the current price of lint cotton in my country is about 12,000 yuan/ton, and the price of Indian cotton shipped to Hubei is 11,800 yuan/ton. Compared with domestic cotton of similar quality, the price advantage of imported cotton is not obvious; third, the part that has been greatly affected by the epidemic Enterprises have difficulties in funding, and cotton reserves can effectively alleviate the financial pressure on enterprises in production. Coupled with the blockade and control in Xinjiang, Xinjiang cotton transportation has been blocked, and the sales of cotton from inland warehouses have been accelerated.
It is understood that the company’s raw material procurement mainly adopts the “sales-based ordering” method, with fixed-point procurement, fixed-point sales, and procurement. At the same time, we select some cotton that meets the company’s customer group indicators to reduce the company’s procurement risks from the source. At the same time, the company implements employee responsibility from source procurement to post-sales.Controls can greatly reduce business operations risks, thereby ensuring the normal operation of enterprises.
Industry insiders analyzed that looking back at cotton prices this year, the vibration range of the Zheng Cotton 2009 contract in the first three months was basically maintained at 11,000 Yuan/ton ~ 12,500 yuan/ton, which provides a good opportunity for the development of the cotton spinning industry. The price of upstream raw materials is stable, which virtually provides guarantee for downstream processed finished products. Trading companies said that chemical fibers have been affected by sharp fluctuations in crude oil prices, and their prices have changed greatly, while cotton prices have been relatively stable. Although the price of pure cotton yarn has declined slightly due to market supply and demand, textile companies can absorb it through the production process. In addition, the price difference between domestic and foreign cotton has narrowed, and textile companies have given priority to domestic cotton in raw material procurement, which has played a role in supporting domestic cotton prices to a certain extent.
In view of the cotton price trend in the later period, Hubei enterprises believe that the current cotton price is in a situation of “bottom at the bottom and top at the top”. In the situation, there are just different views on the head space. Under the interaction of the macro environment, the epidemic situation, and Sino-US economic and trade relations, cotton prices will still be difficult for a period of time. Despite the current grim situation in the cotton spinning industry, industry insiders are relatively optimistic about the price trend next year and remain confident in the future development of the cotton spinning industry.
Spinning companies whose main products are exported believe that it is not easy to convert exports to domestic sales. Traditional companies that have been deeply involved in the domestic market have maintained stable orders and production due to their stable customer relationships. Keep it fully loaded. </p
