Cotton Prices Go Crazy And Impact On Textile And Garment Industry

At this time, it should be the busy season for clothing manufacturing industry for dry goods in winter.

Dongguan is a famous textile and garment manufacturing city, and the clothing industry is facing a crisis.

Reporters in Humen and other clothing manufacturing town survey found that at present, some small garment enterprises in Dongguan have been unable to bear the pain of rising costs, or close down or go out of business.

The situation is so grim that even the industry was unaware of it several months ago.

What is more frightening is the dilemma, when we do not know the end.

Cotton prices rise crazily

Dongguan Humen international cloth trading center responsible person Huang Yihong clearly remember that since last October, cotton will gradually show the momentum of price increases.

"I didn't expect so much, so fast."

Huang Yihong said that with the change of cotton textile industry during the peak season and cotton production, cotton prices will show varying degrees of change every year and every quarter, but this year the price is "skyrocketing", which is quite rare.

Ouyang is the boss of the London textile trading company.

He said that from October last year to the first half of this year, the price range of different cotton categories reached 40%-50%.

At present, the market price of two tons of cotton per ton is about 17000 yuan, compared with 14000 yuan at the beginning of the year, and 25% in the half year.

Public information shows that the average price of domestic grade 3 lint is also about 30% higher than that of the beginning of the year, while the futures market continues to watch cotton prices. The price of zhengmian main CF009 contract is as high as 18340 yuan / ton, a record high.

Insiders predict that cotton futures prices may exceed 20000 yuan / ton.

Mr. Shaw, the head of a weaving enterprise in Humen, analyzed this rare rise, mainly the supply of dissonance.

"Since 2008, cotton prices have been sluggish, many cotton farmers in Xinjiang and other places have lost a loss, and their confidence in planting has been frustrated, so a large amount of planting area has been reduced in 2009, resulting in a decrease in total cotton production this year.

It coincided with the rapid recovery of the garment industry after the financial tsunami, which required a large increase in cotton production, resulting in an imbalance in production and supply.

According to Mr. Xiao, according to the data, China's cotton output in 2009 was 6 million 400 thousand tons, which was 1 million 100 thousand tons less than that in 2008, with a drop of nearly 15%.

Mr. Shaw also pointed out another reason.

He said that last year, cotton production in Xinjiang and other major cotton producing areas decreased by nearly 1/4 due to climate disasters and other reasons, which further aggravated the contradiction between supply and demand imbalance.

At the same time, the international cotton price is also on the rise channel, just as India and other cotton exporting countries suspended cotton exports, cotton prices in the short term is difficult to fall.

"The superposition of these factors has led to no reason for cotton prices to rise."

Mr. Xiao said.

"Cotton prices will continue to rise.

On the one hand, a lot of cotton suppliers have been reluctant to sell, which will be sold at a high price, which will lead to a tighter supply in the cotton market. On the other hand, it is only the beginning of autumn and winter clothing manufacturing, and one or two months in the future will be the real demand season.

Mr. Xiao analyzed.

It is precisely because of the serious imbalance between supply and demand, this year's textile and garment industry, the relationship between supply and demand also had a "dislocation".

Ms. Su, the head of a medium-sized cotton yarn manufacturing company in Humen, said that in past years, cotton suppliers came to Humen to "pull ties and run big orders", but this year, she has personally gone to the supplier company for the three time.

"Moreover, the obvious attitude of the other side has become a lot stronger, which is unthinkable in previous years."

Ms. Su has posted a message on her company's website and several e-commerce websites: she is eager to buy a lot of high-quality cotton because of the surge in orders.

Unspeakable pain, though unsaid, has been revealed.

An industrial chain dilemma

The rise in cotton prices has directly led to the rising price of the most important raw materials, such as cotton yarn and cotton cloth. At present, the "rising price trend" has almost extended to all the raw materials and processing fields of the textile industry.

The reporter has learned that cotton to cotton products have to go through so many processes: Cotton enters cotton mill to produce cotton yarn, cotton yarn goes into textile mill to produce grey cloth, cotton yarn or grey cloth goes into clothing, socks, towels and other consumer goods production enterprises.

It is obvious that cotton prices have a direct impact on cotton yarn enterprises.

However, cotton yarn enterprises can not "absorb" cost pressure.

Facing the situation of high cotton prices, the textile industry has to carry on the price to the downstream through the way of cost pfer.

"Cotton yarn industry is closest to the cotton production in the upper reaches of the industrial chain, so although they have to bear the price rise of cotton, they obviously have more advantages."

Ouyang said that on the whole industry chain, cotton yarn price increase largely exceeded cotton.

Ms. Su did not deny this.

She said that the company must guarantee the corresponding gross profit rate, and not only the cotton price increases, other raw materials, labor costs are also rising, so we must substantially increase the factory price of cotton yarn.

As the lower reaches of the textile industry, the garment industry will face the "hot potato" thrown by the textile industry.

Yueh boss, who has been doing garment business in Humen, Dongguan, told reporters that clothing companies are facing pressure of cost growth and profits have been affected.

However, the cooperation between fabric distributors and garment enterprises seems to be more closely related.

Ouyang said that the cooperation between fabric distributors and garment enterprises is very frequent, and basically in Dongguan is mainly small and medium-sized. Therefore, in order to maintain stable customer relationship, the two sides will basically swallow up the price of cotton yarn in proportion to 1:1.

As a result, the pattern of the entire apparel industry chain in this cost crisis has been relatively clear: Although the cost of cotton yarn industry is rising, it relies on direct cooperation with cotton producing areas, and has strong voice, not only does not drop profits, but it can take the opportunity to raise prices and improve profits.

The weaving and clothing industry had to divide the hard boiled potato.

Obviously, in the whole industry chain price competition game of the textile and garment industry, the upstream industry has the advantage.

However, He Weihong, the boss of Dongguan ice crystal Clothing Co. Ltd., does not think so.

He Weihong said that although the price of raw materials is rising, clothing enterprises can pfer costs through terminal price increases, and ultimately only pay customers for cotton.

Many enterprises also agree with this view and say that the increase in the price of cotton yarn has led to the rise in clothing costs, and the increase in garment prices in the second half of the year is at least 15%.

In this way, the Loom factory sandwiched in the middle is the ultimate victim.

Insiders pointed out that although the price of grey cloth has increased over the years, the increase is obviously less than that of cotton and yarn, only about 5%.

The survey of China Textile Industry Association shows that since March this year, as cotton prices continue to rise, some smaller and less capital enterprises have stopped taking orders, and many looms have been shut down gradually, and the operating rate is decreasing.

Who will buy the price list?

However, as the downstream of the textile industry, the garment industry is bound to face the butterfly effect upstream.

"The tide of rising prices of downstream garment enterprises is likely to break out in the second half of this year."

A salesperson who made wholesale cloth told reporters that the rise in cotton prices reflected in the downstream clothing products, generally takes 4 -6 months.

Starting in May, textile mills have entered the peak season for autumn and winter clothing production. The amount of cotton used in autumn and winter fabrics is even larger. At present, cotton prices remain high, so that clothing prices are likely to increase in the second half of this year.

Although garment companies say they want to raise their prices, there are not many companies that dare to take the lead in raising prices.

He Weihong said that the clothing prices of the factory increased by 5% this year, but judging from the price rise of raw materials, the price increase mentioned by He Weihong is only "testing market reaction".

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Insiders say that the competition in the clothing market is fierce and consumers can not pay the bill. The bill of cotton prices must be paid by the whole industry chain.

"Nowadays every enterprise is facing the same situation, such a big trend, but every enterprise's countermeasures are different."

Guo Zhigang, general manager of Xiao Hu Han Ni, said that enterprises will optimize the links in R & D and design to control the pressure brought by the rising cost.

"But we are brand new and are affected by the climate.

Today, the impact is very obvious, sales decline a lot.

At the same time, the company's demand for product quality is even higher, especially children's clothing.

Guo Zhigang said.

He said that the price of products is rising. It seems that the enterprise has made money, and the gross profit margin has increased. But actually, it has been consumed in the raw material department, and the factory will consume a considerable part in the production process.

However, in addition to reducing quality and increasing quality, it can also adjust low price fabrics, produce simple styles, and promote sales at low prices, with high price and low price, which can provide consumers with multiple choices.

Compared with brand clothing, some small and medium-sized garment enterprises are having a hard time, and raw materials are rising to a dilemma. "Raising prices is a fear of scare away customers, and it is difficult to digest the cost pressure of raw materials rising without raising prices."

A small clothing business owner said.

Small garment factory has failed.

The impact of rising cotton prices on the clothing industry in Dongguan has not been expected by many people in the industry.

Every negotiation with suppliers is like a war.

We used to order goods once a month or 20 days, and now we don't dare to stock raw materials for more than 3 days.

Chen Weifeng, the head of a garment enterprise mainly relying on foreign trade orders, told reporters that they had to shut down some production lines because of too much risk and sharp reduction in profits.

Due to the fear of high risk, according to a press survey, many small garment factories in Dongguan have gone out of business or closed down.

"Do not make money now, and risk is big. If you don't pay attention to it, you will lose all the profits you made in the past few years."

A garment company who has already been in a semi shutdown state has begun to "retreat".

He Weihong also said that seven or eight clothing factories he knew before had gone bankrupt.

It is hard to maintain failure.

"Brand enterprises are different, their profits are higher, and the cost impact is not so great.

Moreover, after having the advantage of channel, it is easier to pass on the cost to consumers.

He Weihong has some advantages over other small garment factories.

According to him, he has a stall in the clothing city of Fumin, Humen, and has established good channels over the years.

"Generally speaking, dealers who make our products will not change their brands easily.

Therefore, dealers can still accept the price rise, but it is still necessary to sacrifice the profits of the manufacturers.

He Weihong said.

Even so, He Weihong intends to change the production mode and reduce costs.

When he interviewed Wei Hong, he dismissed half of the workers a few days ago.

"My idea is that the factory is only responsible for the design of production, and production is outsourced.

This year's production field is too tired.

It can only reduce workers' cost reduction. "

He Weihong said that at present, the factory's practice is to let the workers rent the sewing machine home, and then deliver the goods on time, so that the labor cost and management cost of the workers can be reduced.