After cotton surges, the operating situation of textile enterprises becomes further severe

Reasons for the rise in cotton prices

Analyzing the reasons for the rise in cotton prices is closely related to the recent amplification and hype of Xinjiang cotton transportation pressure. Industry insiders analyzed that strict inspection of overloading will have a greater impact on cotton warehouse receipts and spot prices. In the future, Xinjiang cotton The transportation situation depends on the transportation policy. If the transportation capacity continues to be tight, it will affect the cotton supply of mainland fabric companies, thereby affecting prices. Coupled with the push by textile companies to replenish their stocks, it is possible for Zheng cotton to be bullish. In addition, the RMB exchange rate continues to fall, other commodities have experienced large-scale increases, and factors such as huge amounts of money flowing out of the property market and stock market into the futures market have also had a greater impact on cotton. However, although the financial attributes of cotton may cause commodity prices to deviate significantly from the intrinsic value, such deviations are generally short-term. In the long term, supply and demand are still the main factors in determining prices. ​​

Weak downstream demand

According to the China Cotton Industry Association, there is currently very little reserve cotton left in the early auctions by textile companies. Some textile companies have a need to replenish their stocks, but textile companies are unable to absorb the sharp increase in cotton prices. The “Double 29” Xinjiang cotton delivery price is about 16,000 yuan/ton. Taking into account the 500 yuan/ton transportation subsidy, the factory cost reaches 16,500 yuan/ton (an increase of about 2,000 yuan/ton compared with the use of reserve cotton). The current prices of carded 32S and combed 40S are around 22,800 yuan/ton and 26,000 yuan/ton respectively, which is only about 100 yuan/ton higher than the beginning of November, far less than the rising rate of cotton prices. Textile enterprises report that the recent sales of pure cotton yarns have been weak, and combed high-count yarns are rarely interested. Enterprise orders are not in good shape. In particular, the sales of polyester-cotton yarns have dropped significantly, and large orders are rare. ​​

Domestic cotton prices have skyrocketed, but international cotton prices, represented by U.S. cotton, have not risen. At present, the price difference between domestic and foreign cotton has once again widened to about 2,000 yuan/ton, and Xinjiang cotton transportation out of Xinjiang is not efficient. Coupled with import cotton quota restrictions, domestic production capacity of C32S and below count cotton yarns continues to decline, and the proportion of small and medium-sized enterprises reducing production is still increasing. Low-count yarns from India, Pakistan, Vietnam and other countries will once again enter the Chinese market in large quantities. Conducive to the development of fabric enterprises. ​

Textile enterprises have a heavy cost burden on raw materials and the operating situation is further severe

Entering November, domestic cotton prices continued to rise after a slight shock. At this time, international cotton prices stabilized, and the price difference between domestic and foreign cotton expanded to about 2,000 yuan/ton. Judging from the domestic cotton spot price index, the standard cotton price index loosened slightly at the end of October, but the short-term decline did not effectively alleviate the problem of expensive cotton for enterprises. In fact, cotton market prices are still strong. According to the company, the price of Xinjiang cotton from Xinjiang to the factory is as high as 16,200 yuan/ton, and the price of cotton in the main cotton producing areas in the mainland is also close to 15,800 yuan/ton. ​

Internationally, the price of the CotlookA index has been stable and slightly decreased from October to November. It is currently maintained at around 75-80 cents/pound. After discounting 1% tariff, the RMB is about 13,000-13,800 yuan/pound. Ton. Judging from the quotation situation of imported cotton ports, the recent Indian new cotton has a high moisture content, the overall quality is not optimistic, and the export volume is limited. The quotation is around 15,000 yuan/ton; while the quotation of US cotton has increased steadily, and the new US Department of Agriculture The report reduces the production of US cotton, which will definitely help boost the price of US cotton. The factory price of US cotton is about 16,000 yuan/ton; the current import demand for Australian cotton is relatively strong, and the price of cost-effective cotton is 16,850 yuan/ton. According to customs data, my country’s imports of Australian cotton ranked first in September. In the first nine months, my country imported a total of 655,000 tons of cotton, a year-on-year decrease of 43.6%. ​​

Compared with the strong price of cotton, the price of viscose staple fiber has lost support since the end of October and has been declining. As expected by the market, the market’s rigid demand is insufficient, and the price of viscose staple fiber is too high. , the decline deepened. The price trend of polyester staple fiber is exactly the opposite. After several months of decline, it stopped falling and rose after mid-October. In early November, consistent with the price trend of bulk commodities, the prices of chemical fiber raw materials for fabrics generally increased, and the market for most chemical fiber raw materials was relatively active. ​​

The association understands from all aspects that currently spinning and weaving enterprises are still facing the dilemma of insufficient downstream demand, insufficient openings, weak production and sales, high pressure to destock, and further deterioration of the business situation.The steps are serious. In particular, the current high cotton price poses a huge challenge to controlling production costs. The price increase of subsequent products is subject to various restrictions. Generally speaking, cotton procurement is not active at present. Wait-and-see inquiries are the main focus. Fabric companies are also cautious in accepting orders. From the perspective of the futures market, the recent price fluctuations of Zheng Cotton’s 1701 contract have intensified, and New York cotton futures have performed optimistically in the past two days. Individual companies have reported that with the increase in the next round of spinning raw material replenishment, cotton prices are less likely to fall, and there are also Some believe that downstream demand has not started and there is no strong support for rising raw material prices. Therefore, as the end of the year approaches, fabric companies need to be more prudent in their operations, focusing on market development and increasing the added value of products while trying to control production costs.

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