The cotton textile prosperity index in June was 48.94, with the decline narrowing for two consecutive months. This month, the off-season effect of the domestic textile market has gradually emerged, and the order pressure on textile companies has increased. In terms of raw materials, in order to reduce capital and inventory pressure, procurement is mainly based on buying as needed; in terms of production, the operating rate this month increased slightly month-on-month, and gauze production increased compared with the previous month; in terms of product sales and inventory, conventional products sold better than refined products. For carding products, textile companies sell them at low prices, hoping to collect funds as soon as possible. However, orders are relatively light, production exceeds sales, and product inventories are still increasing.
Domestically, on June 30, the National Grain and Material Reserves Bureau and the Ministry of Finance officially issued an announcement. The much-anticipated rotation policy has finally been implemented. This round of reserve cotton implements a “circuit breaker” mechanism: when the cotton spot price index in the domestic market is lower than 11,500 yuan/ton, trading will be suspended from the next working day, which will strongly support domestic cotton prices. According to a survey by the China Cotton Textile Industry Association (hereinafter referred to as the China Cotton Textile Industry Association), more than 70% of the companies surveyed believe that rotating overseas cotton storage is beneficial to textile companies. At the same time, some textile companies said that traders currently have more auction reserves, squeezing the auction and storage space of textile companies. During the rotation period, the enthusiasm of auction and storage companies was high. As of the date of publication, all transactions have been maintained, and the price increase has gradually returned to rationality.
In terms of foreign trade, according to data from the General Administration of Customs on July 14, the overall performance of my country’s foreign trade import and export in the first half of the year was better than expected. In the first half of this year, the country’s total exports of textiles and apparel totaled US$125.19 billion, a year-on-year increase of 3.16% (a year-on-year increase of 6.75% in RMB), and the industry’s overall exports have returned to positive growth. Among them, the cumulative exports of textiles from January to June were US$74.103 billion, a year-on-year increase of 27.81% (a year-on-year increase of 32.37% in RMB); the cumulative exports of clothing were US$51.08 billion, a year-on-year decrease of 19.39% (a year-on-year decrease of 16.67% in RMB). The main reason for the growth of textile exports is still driven by the export of epidemic prevention materials. Textiles such as clothing and home textiles are under great pressure due to weak foreign consumer demand. my country’s export-oriented textile companies are struggling.
Due to the sluggish recovery of foreign consumption and the slow recovery of orders, many foreign trade companies have chosen to “convert exports to domestic sales” to develop the domestic market. In response to this situation, the General Office of the State Council issued the “Implementation Opinions on Supporting the Conversion of Exported Products to Domestic Sales” to support the domestic expansion of marketable export products, and strive to help foreign trade companies tide over the difficulties and take a breather while waiting for overseas recovery.
Raw material procurement index
June The raw material procurement index was 51.57, returning to the prosperous range. In June, domestic and foreign cotton prices maintained a fluctuating upward trend within a range, with the average monthly price difference between domestic and foreign cotton prices being about 300 yuan. In the first half of June, affected by factors such as the lack of significant recovery in domestic and foreign demand, Trump’s statement that he would take repressive actions against China, and market concerns caused by the rebound of local epidemics in the country, domestic cotton prices fluctuated in a range; cotton reserves will be released in mid-to-late June. The news initially attracted widespread attention in the market, and factors such as the speculation about the locust disaster in India stimulated a slight rise in domestic cotton prices. The reserve cotton rotation plan was officially finalized on June 30. Some textile companies said that taking into account the current product structure, they will purchase and use reserve cotton, but due to market and financial pressure, they will not purchase in large quantities. Non-cotton fibers continue to maintain weak performance. The main reason is still sluggish downstream demand. Although occasionally good news stimulates price increases, raw material prices have not received rigid support. At present, many chemical fiber companies have announced plans to suspend production and reduce production to stabilize prices.
Specific data, the average price of domestic 3128 grade cotton that month was 12,172 yuan/ton, an increase of 280 yuan/ton from the previous month; the average price of the CotlookA index was 67.79 cents/pound, an increase of 2.21 cents from the previous month. / pound; the average price of mainstream viscose fiber is 8,888 yuan/ton, an increase of 51 yuan/ton from the previous month; the average price of 1.4D direct-spun polyester staple fiber is 5,845 yuan/ton, an increase of 97 yuan/ton from the previous month.
Raw material inventory index
June The raw material inventory index was 49.08, an increase of 0.43 from the previous month. In order to minimize inventory pressure, textile enterprises in June focused on raw material procurement for rigid needs. According to tracking data from the China Cotton Association, raw material consumption increased by 4.78% month-on-month, and raw cotton consumption increased by 4.78% month-on-month. Inventories fell by 2.9% month-on-month, and non-cotton fiber inventories fell by 1.01% month-on-month. The market has not seen a significant improvement this month, product inventories continue to accumulate, corporate liquidity pressure remains unabated, and raw material procurement is more cautious. According to the China Cotton Industry Association questionnaire, most textile companies expect that the market situation will remain weak in July and raw material inventories will continue to remain at a low level.
Production Index
June Production The index was 50.75, and product output increased month-on-month. The results of the China Cotton Industry Association’s questionnaire show that this month’s machine start-up rate and yarn and cloth output increased month-on-month. Affected by the epidemic in the first half of the year, domestic consumer demand dropped significantly and downstream purchases were light. Except for a rebound in March, the production pace in other months has decreased month-on-month and is now at a low level. Employees have implemented a rotation system. In order to stabilize employment, some textile companies have increased the proportion of low-count yarn production this month, so the startup rate and output have increased. According to the China Cotton Industry Association,�Some textile companies are considering cutting salaries to reduce expenses, but they are also concerned about whether employees will leave after the salary reduction.
Product Sales Index
June The product sales index is 48.22. The market has entered the off-season this month, with product prices shifting downward and sales sluggish. Domestic sales are the main focus, and destocking is still the main direction of work. According to the China Cotton Trade Association, the current orders from textile companies are mainly domestic small orders and replenishment orders. Sales pressure has increased with the arrival of the off-season. Conventional products are processed by price reductions, but downstream purchases are still lukewarm. Some textile companies said that inquiries for foreign trade orders had increased, and orders were placed sporadicly. The orders were mainly for epidemic prevention materials or functional products with antibacterial properties. From a product perspective, conventional products sold better than high-count yarn products, while demand for combed cotton yarn was still low. At present, the impact of the epidemic on orders is gradually decreasing, mainly because the recovery speed of domestic and foreign consumption is slower than expected.
Product Inventory Index
June The product inventory index is 48.17, indicating increased inventory pressure. According to a survey by the China Cotton Industry Association, 40.57% of the companies surveyed said that product inventory increased month-on-month, mainly because the output of conventional products increased, but the sales speed was not as fast as the production speed, and textile companies continued to accumulate product inventories. It is understood that textile companies are psychologically prepared for product sales and inventory this month, so they are not too worried. However, product inventory takes up a lot of working capital, causing a tight cash chain. It is expected that textile companies will continue to cut prices and sell goods in July to alleviate the problem. Inventory pressure.
Enterprise Business Index
June The business operating index is 46.60. This month, most textile companies chose to ship at low prices or even at a loss in order to reduce inventory and circulate funds. Raw material prices have fluctuated and risen, and product prices have been weak, which has increased operating pressure on textile companies. In addition, the problem of difficult and expensive financing still plagues textile enterprises. The textile industry is asset-heavy and labor-intensive, requiring large capital investment. If the capital chain is broken, it will cause a chain reaction. It is hoped that relevant departments can increase financing support. Help textile companies survive the “epidemic winter”.
At present, the recovery of domestic and foreign consumer demand is less than expected, and substantial improvement will still take a long time. These situations are within the expectations of textile enterprises, and further measures will be taken to increase revenue and reduce expenditure. The external situation will remain severe in the second half of the year, and it is still unclear when foreign economic activities will return to normal. Judging from the current customs data, foreign clothing demand is still at a low level. However, it is believed that as the economies of most countries restart, residents’ consumption and production activities will gradually liberalize. , the demand for textiles will pick up, and the foreign trade situation will improve.
Note: China’s cotton textile industry prosperity index is collected from nearly 500 sub-cotton textile companies across the country , refer to the national manufacturing PMI and other index formulation methods, and calculate by weighting multiple major indicators. When the index is higher than 50, it means that the prosperity of the cotton textile industry in that month is better than that of the previous month. If it is lower than 50, it means that the prosperity of the current month is not as good as last month. moon. </p
