Cotton Prices Rise, Garment Industry Forging Upgrade Pformation

Cotton prices are rising every day and raw material costs are rising steadily. In the short term, the trend of cotton price rising has not been reduced. How should clothing enterprises cope with it? Seeking to make breakthroughs through independent innovation and brand building. The two articles in this edition are written for the new thinking of the garment enterprises in trouble.

The global financial crisis from 2008 to 2009, coupled with the following external demand downturn and exchange pressure...

For a long time, it has been a mainstay of our economy. Export-oriented enterprises, including the textile industry, have been tortured and battered for many difficulties.

In 2010, when our country took the lead in getting rid of the haze of the financial crisis, the steady development of economic development and the gradual revival of the external demand market, the market's demand for cotton and other textile raw materials also came to a sharp turn of 180 degrees.

In an instant, it is an unprecedented cost pressure for China's textile industry, which is not able to cope with the problem, even for raw materials.

Over 30% cotton prices rose year on year

After nearly two years of market downturn, I have learned from the bitter experience. My foreign oriented enterprises are beginning to seek new growth mode. Most enterprises really realize the importance of brand and independent innovation ability.

Then, in 2010, the market that quickly warmed up seemed to want to give some breathless opportunities to China and even the global textile industry.

Customs data showed that textile and garment exports totaled 39 billion 210 million US dollars in the first quarter of this year, up 14.76% over the same period last year. At the same time, statistics show that domestic textile and apparel sales in the first quarter totaled 151 billion yuan, up 23.9% from the same period last year.

With the demand of both domestic and foreign markets, China's textile industry has failed to feel the joy it deserves. Instead, it has to face the double demand of cotton spinning raw materials resulting from the rapid reduction of cotton production and market demand.

A set of data shows that by the end of May, the average selling price of standard cotton in China exceeded 17 thousand yuan / ton, up nearly 18% from 14 thousand and 500 yuan / ton at the beginning of the year, and the more alarming thing is that the price has reached a record high since 2004.

In fact, the uplink of cotton prices has been significant since last November. Especially in the 5 consecutive months since December 2009, cotton prices rose by 30% over the same period last year, and cotton prices rose by an average of 32% on average from 1 to April this year.

Spinning enterprises difficult to enjoy internal and external needs to warm up joy

According to the reporter, as the upstream industry of clothing production, cotton spinning (cotton fiber processing has become the production process of cotton yarn and cotton yarn), the textile products with good performance, especially low cost and simple technology, have always been the top priority in China's textile industry.

There are advantages and disadvantages in everything. It is precisely because of its low price and simple technology that the market entry threshold of textile industry is relatively low. In addition, the impact of extensive growth mode on textile industry in China, the vicious competition in the market of price war is frequent, which finally leads to a slight profit in cotton spinning production.

A textile industry has revealed to reporters that "in the case of the market, the cotton price of the textile industry must be controlled below 13 thousand and 700 yuan per ton. If crossing the border, the profits of the textile industry will be very small. However, the cotton price in May has exceeded 17 thousand yuan / ton, and even more to 17 thousand and 600 yuan / ton.

As a result, the impact of this upward cotton price on the production cost of textile industry can be imagined.

In line with this view, Xu Wenying, vice president of the China Textile Industry Association, once said through the media that "1/3 of the cotton spinning enterprises in the whole country now account for 96.7% of the profits of the whole industry. This shows that most cotton spinning enterprises basically have no profits and are more difficult to operate."

"Of course, the textile enterprises that hoard goods can enjoy the uplink of cotton prices, not to mention spinning enterprises can also shift the cost pressure to the downstream textile production.

But the problem is that under the influence of bad weather, cotton production is expected to be strong this year, and the global cotton planting area will shrink.

On the basis of the expansion of market demand at home and abroad, the stock of spinning enterprises is fully released through overtime production, and now, there are few enterprises that have stockpiling goods.

The person told reporters.

According to the data, with the demand of the market, textile enterprises started to start a large area, and cotton purchase intention increased. For example, the key textile enterprises such as Botou economy and Dongguang Li Ke increased their production in the first quarter by more than 20% over the same period.

The background of this rapid growth is that the global cotton consumption is nearly 14% higher than the total output, but the stock is 19% lower than last year, the lowest in 6 years.

The unbalanced market supply and demand structure originated from the global cotton production reduction last year. According to the data, the cotton planting area in the United States from 2009 to 2010 was about 3 million 600 thousand hectares, and the planting area decreased by about 7%. However, in the major cotton producing countries, China, the United States, Brazil and so on reduced to varying degrees in addition to the 3% increase in planting area in India.

Raw material prices increase sharply, affecting upstream and downstream

Du Yuzhou, chairman of the China Textile Industry Association, has spoken out, "the average profit margin of China's textile industry is 3.9%, but this figure obscures the plight of China's poorer textile enterprises.

The industry's 2/3 profit margin is only 0.74%. "

"The fact is also true. The cost of production, besides the rising price of cotton and other textile raw materials, needs to consider other production materials, such as oil, because it is an important factor affecting the price of polyester fiber, nylon filament and other chemical fiber products.

With international oil prices breaking 80 US dollars / barrel (up to the end of the year, Brent's slight return to US $78.82), the pressure of the textile industry is increasing by many pressures.

The above reporter told reporters.

"Compared to textile enterprises, the downstream textile products are probably more difficult to produce, after all, spinning enterprises can also pass costs to maintain certain profits.

However, we have to admit that even though our textile industry is stepping up its efforts to develop new economic growth models, the vast majority of downstream enterprises such as clothing and textile industry still rely mainly on low price advantage to occupy the market share for a long time.

Therefore, if they are not forced to do so, they will not take the risk of shrinking market share and compensate for the increase in production costs by raising the factory price.

We have to endure the upstream and downstream attacks and make use of small profits to maintain production. "

The person told reporters.

In this regard, a report describing the current situation of textile industry in Yantai, Shandong is provided for illustration above.

The article said, "non cotton producing areas in Yantai, Shandong, because of the strong dependence on raw materials of cotton spinning, the cotton price increase has been greatly affected in this round.

Especially in the lower reaches of the industry, weaving, clothing and other enterprises bear the pressure of increasing costs. Compared to previous production costs of weaving, clothing and other enterprises increased by 10%-15%, but cloth and clothing factory prices rose slightly, resulting in the processing enterprise profits fell by 3%-4%.

Management throws the store, the distribution effect appears.

Prior to this, the China Cotton Association quoted the NDRC news as saying that it had confirmed that the additional 800 thousand tons of cotton import quotas were issued in May this year, and will continue to increase import quotas according to market changes and textile demand.

According to the latest report released by China Cotton Association, the relevant departments will actively coordinate the pportation of cotton producing areas, and will introduce relevant control measures to meet textile demand and maintain market stability.

Public opinion immediately responded that the relevant policies might include the sale of 600 thousand tons of state reserve cotton and 1 million tons of import quotas.

What's coming is that the price changes of major agricultural products in the 200 main producing counties in from June 1st to 10th showed that the price of seed cotton had dropped slightly in the early June, when the price was 6.67 yuan / kg, which was 0.02 yuan / kg lower than that in late May, or 0.26%.

In the same period, the tension of international cotton supply seems to have loosened. First of all, the lifting of the ban on cotton exports in India, and the cotton production in Pakistan, which began to produce more than 2 million 500 thousand tons in July, will be processed and listed one after another.

However, Wu Wanli, general manager of the China textile net, told reporters that "the goal of national macroeconomic regulation and control is to stabilize the market and avoid price inflation and plummeting, so as to promote the healthy development of all sectors of agriculture, industry and Commerce in the industrial chain.

Textile and garment export situation has not fundamentally improved, textile enterprises can not bear too high cotton prices, the state has strong macro-control capabilities, and has increasingly improved regulatory means. But we are cautious about the effectiveness of macro-control in the second half of the year. The demand for textile cotton is strong, cotton stocks are becoming more visible and the cotton production situation in the new year is not optimistic, and other factors will continue to support cotton at a high level, and cotton fundamentals will continue to rise slightly in support of the basic stability of cotton prices.

Similarly, the textile industry told reporters that "the latest data from June can clearly feel the effectiveness of national macroeconomic regulation and control.

The international market situation is changing. Finally, it is difficult to make a final conclusion, especially the uncertainty of European debt crisis and the two bottom of the economy.

But beyond that, we can be sure that the national management has enough capacity (including policy guidance and adequate national cotton reserves) to guide the healthy development of the textile industry and will help the struggling enterprises in the right time.

Finally, Wu Wanli also told reporters, "at present, the cotton textile industry has relatively excess capacity, and the demand for cotton is bigger. The most fundamental solution is to change the production mode of the cotton spinning industry.

For cotton spinning industry, instead of entangling the cost of raw materials such as cotton, it is better to change the product mix and increase the added value of products.

Specifically speaking, combined with the characteristics of our own enterprises, we should eliminate backward production capacity, reduce production and upgrade raw materials.

While actively adjusting the product mix, enterprises can also make technological innovations through various links such as spinning, weaving and dyeing in the industry chain, and rely on high value-added products to enhance market competitiveness. If necessary, they can suspend production with high production cost and marginal benefit.

Textile enterprises can increase the use of chemical fiber products when they are short of cotton production, and develop products of different fiber combinations and differential fiber products to maintain normal production and operation. This is undoubtedly a wise choice.

In June 22, 2009, the A index of cotton prices representing the 229 class cotton prices in the mainland was 13134 yuan / ton; the B index of the national cotton price representing the 328 grade cotton price in the mainland was 12818 yuan / ton.

In September 1, 2009, the A index of cotton prices representing the 229 class cotton prices in the mainland was 13215 yuan / ton; the B index of the national cotton price representing the 328 grade cotton price in the mainland was 12907 yuan / ton.

In January 1, 2010, the A index of cotton prices representing the 229 class cotton prices in the mainland was 15236 yuan / ton; the B index of the national cotton price representing the 328 grade cotton price in the mainland was 14926 yuan / ton.

In June 22, 2010, the A index of cotton prices representing the 229 class cotton prices in the mainland was 18340 yuan / ton; the B index of the national cotton price representing the 328 grade cotton price in the mainland was 17954 yuan / ton.