Cotton Prices Continue To Skyrocket &Nbsp; Public Textile Enterprises Dare Not Take Orders To Be Forced To Stop Production And Cut Production.

In November 3rd, the Zhengzhou commodity exchange (CZCE) cotton futures 1105 contract opened at 29460 yuan / ton, closing at 29715 yuan / ton, up 1075 yuan / ton compared with the 2 day settlement price, and 1457718 hands, 346260 positions.

While cotton prices continue to rise, the cost of spinning enterprises is also rising.

Kim Feida Securities Department staff told reporters that as the continued appreciation of the renminbi plus the explosion of cotton prices, the company's cost continues to increase.

Rising prices of raw materials, textile enterprises stop production and reduce production

As far as the cost of the products up to 100%, the net profit of the company has to slide again and again.

Kim Feida 2010 Third Quarterly report shows that the basic share

Kim Feida said that the reasons for the change in performance were the rapid increase in cost factors such as domestic fabrics, accessories, exchange rates and employment. Two, the net profit of the previous year included 2 million 900 thousand yuan of non recurrent proceeds from the sale of shares.

Kim Feida internal staff told reporters that cotton, Renminbi, wages have risen, so that the company's profits shrink again.

Cheng Chuanwang, the head of Yancheng City Xing Long Yuan weaving mill, said that if the price of raw materials increases again, we may also have to take a holiday.

According to the understanding of the northern Jiangsu textile factory, about 1/3 of the enterprises are now on holiday.

This disguised shutdown is not the worst, and about 1/5 of the small factories have simply started selling machines.

Taking the 32 degree cotton yarn with a large amount of weaving in local cotton textile enterprises as an example, last year's price was still 18 thousand yuan per ton. This year, it has risen to 36 thousand yuan per ton and has increased 1 times.

For many small weaving factories, the cost of raw materials accounts for about 85% of its production cost, and the substantial increase in the price of cotton yarn means that the cost of weaving mills is almost synchronous.

Kim Feida internal staff said that because of excessive cotton prices, fabric prices continued to rise, and the price of the company's products can not be raised too fast, which makes the company's profits fell sharply.

It is understood that in view of the fact that the company is in the condition of zero inventory, the company takes the strategy of how many orders it buys and how many fabrics it will buy to ensure that the company will not lose money.

Insist on producing more textile enterprises only for short-term orders.

The price of raw materials has gone up, the wages of workers are increasing, and the price of grey cloth produced by enterprises can not increase at the same time.

The profit margins of small weaving mills were continuously squeezed. Until September this year, as the price of raw materials went up further, they were squeezed to the profit threshold. Some enterprises began to face the situation of commencement or loss.

Some owners of textile enterprises even said that they had planned to completely stop production after the inventory of cotton yarn was used up and sold the machine.

In addition, some textile companies are still insisting on production, but most of them accept short-term orders, hoping to keep up with the surging price of raw materials.

The above staff said that this year's orders increased compared to 2008 and 2009, but because the company can not predict the future trend of cotton prices, in order not to lose money, the company received short-term orders, as long as the order after March, unless the product price is set high, otherwise the company will not pick up.

Before the decline of cotton prices, for some strong textile enterprises, they can rely on abundant inventory to cope with the current pressure of rising prices or directly develop their cotton planting base, and for small and medium-sized textile enterprises with tight funds, they can only choose to cut production or stop production.

The "helplessness" of RMB appreciation

A clothing company in Shenzhen said that enterprises are already in a difficult position on the top of the mountain.

The first big mountain is the recent heated exchange rate fluctuation.

The second mountains are rising prices of raw materials.

The third largest mountain is an endless stream of international trade barriers.

The head of the company said that the profits of garment enterprises were very low, only between 3% and 5%, and the appreciation of the renminbi would cause most SMEs to have no profit.

Because of the fierce competition, textile and garment enterprises are hard to pfer them to consumers in the face of the rising price of raw materials, thus reducing the profits of enterprises.

Textile enterprises from Chongqing said the price of cotton reached a new high in the last few days, up more than 80% compared with the same period last year. Some high quality cotton yarn has risen to 48000 yuan a ton, and the space of textile enterprises to compress costs by their own ability has been very limited.

Under such circumstances, the fluctuation of exchange rate is undoubtedly worse. It is estimated that many enterprises will suffer serious losses or even go bankrupt.

Kim Fei Da also felt helpless about the appreciation of the renminbi. The above staff told reporters: "the company's exports are all settled in US dollars. Under the circumstances of exchange rate changes, the company can only rely on strengthening the recovery of accounts receivable to protect profits."

The appreciation of RMB and the price of raw materials are increasing. Analysts believe that the export of textile industry is already in dire straits, and this winter is facing a risk of collapse.

China's export enterprises may also shuffle the cards in this cold winter. Some enterprises with weak competitiveness and no product superiority may not be far away.

Zuo Xiaolei, chief economist of galaxy securities, believes that the renminbi will appreciate in the fourth quarter, and that the appreciation of RMB by 2% is regarded as the life line of many Chinese export enterprises.