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Insiders Remind Us To Be Alert To The Operational Risks Of Cotton Textile Industry

2010/5/26 10:16:00 19

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Recently, the cotton textile industry has seen a rare situation of booming production and marketing.

The phenomenon of rising prices of raw materials and the improvement of business situation is another phenomenon.

After the global financial crisis in 2008, the Chinese government adopted a positive fiscal policy. The Chinese economy took the lead in getting out of the doldrums and embarked on the road of recovery.

Since the beginning of 2010, China's textile industry has experienced a slow export and hindered domestic sales. With the influence of the external market and domestic demand policy, there has been a rare situation of rapid recovery.

However, behind this phenomenon, the risk of cotton textile industry is also rapidly accumulating. The deep reason is worth the attention of the industry.

Every time the price of raw materials increases, the market situation improves. This appearance is a true lie. We must guard against the risk of cost postposition.

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The accumulation of costs has accumulated the operational risks of the industry.

Historical experience has proved that, at this stage, the long and high cotton prices are unreasonable under the domestic and international cotton supply and price system, and can not stand the test of time.

But the "last stick" of high cotton prices is often picked up by most cotton textile enterprises.

Of course, a lot of cotton traders sometimes get hurt.

The futures price of Zhengzhou futures in May 21st was 18160 yuan in July, and the spot cotton price in some areas even exceeded this level.

If it affects a variety of enterprise inventory and commercial inventory of 2 million tons of cotton (assuming), cotton prices fluctuated 4000 yuan, will have 8 billion yuan of profits evaporated, enterprises will be large losses.

The impact of this cost postposition will cause great harm to the healthy development of the industry.

　

The excellent situation at the present stage of textile mills is caused by the phased expansion of demand.

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At this stage, due to the positive development of the domestic and international textile business situation, some industries are in short supply.

Due to the zero inventory management strategy of related industries and the pressure of textile enterprises to reduce inventory due to capital pressure, the demand has increased step by step and the supply contradiction has been expanded.

Most textile enterprises have low inventory of raw materials such as cotton because of capital pressure.

Under the condition of ample market supply, the cotton textile enterprises can choose a larger margin and have less pressure in meeting the needs of cotton blending, and the market price is relatively stable.

However, due to the weak supply and demand of the market and other local factors, such as Xinjiang cotton's foreign trade is not smooth, and futures hedging, it is easy to cause partial supply shortage.

The accumulation of some textile enterprises or cotton enterprises has made this imbalance even more exaggerated.

　

The risk pfer ability of cotton textile industry is weak.

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In the industrial chain of textile industry, the technological superiority and brand advantage of cotton textile industry have relatively weak influence on increasing the profit margin of products.

Although the risk of the yarn and cloth market as a semi finished product is not too great, there is a comparative advantage in the adaptability of the latter, but due to the full competition in the industry, the average profit margin of the industry is relatively low.

This increases the risk of time and cost of raw materials and WIP as variable cost.

At this stage, the price of cotton is at a high level. The underlying reason is that the supply and demand balance is relatively fragile, and the capital characteristics of the futures market have raised the price of the cotton market.

Recently, some experts have objected to the introduction of iron ore futures, which means that monopoly capital or hedge fund will enter the field and make the upstream raw material cost impossible to control.

The gap of domestic cotton and the imperfect mechanism of replenishment will easily lead to unreasonable elevation of cotton prices. Most cotton textile enterprises in China do not have effective ways and means to resolve risks, resulting in the operational risks of domestic cotton textile enterprises.

This situation needs to be explored in many ways, and safeguards should be established to resolve industry risks.

In terms of raw materials supply, especially cotton, it is believed that one is to improve macroeconomic regulation and control measures and increase market supply; two, we should establish reasonable expectations and reduce market speculation atmosphere; three, we need to take special measures to improve local weaknesses; four, we need to improve our balance and establish a long-term mechanism.

As a manager of textile enterprises, individuals believe that enterprises must have a sense of risk when they first recognize the situation and identify the root cause. Two, they should establish their own coping mechanisms, keep plans for different market changes, three, push back costs, and do some stress tests; four, change the operating mechanism and pfer risks.