Shandong: Cotton Textile Industry Faces Major Reshuffle

"I have been doing this line for 30 years. Cotton prices like this year have never been seen before." on the 18 day, Li Cunfu, sales manager of Heze Galaxy textile company in Shandong, said that the panic of cotton textile enterprises is even more serious when talking about the cotton price roller coaster this year. "Cotton price jumps and my heart jumps." Guo Jia, a boss of a weaving enterprise, has recently been a little annoyed. Besides the price fluctuation of domestic raw materials, the rise of international trade protectionism has also given him a headache.

Domestic day

In the early days, cotton processing enterprises, which were "hoarding" more, went to a more dangerous existence. At the same time, textile enterprises were afraid to take orders in the face of price drop.

Cotton price roller coaster prices

Downstream businesses are at a loss

In the second half of this year, the price of high fever cotton has already damaged the downstream cotton spinning enterprises. Cotton generally accounts for 60% to 70% of the cost of cotton textile enterprises, and its price increases affect the production cost of downstream industries.

Many small and medium-sized textile enterprises say that the increase in cotton prices has made the enterprises "overburdened". Once there is an embarrassing situation that "there are orders, no one does it, others do it, no money is made".

Cotton prices are down now, and this is still the case.

A Export Trading Company boss said: "cotton prices rise, we raise 20%, it is difficult for customers to accept and cancel the order, now cotton prices fall, downstream manufacturers are afraid to take orders, everyone is waiting for the market to stabilize."

Ma Junkai told the China Securities Journal reporter: "cotton prices all the way down, for the early hoarding of more cotton processing enterprises, is a big blow."

According to the insiders, from cotton to garment manufacturing is a complete industrial chain, cotton is spun into yarn, then woven into white embryos, printed and made into fabrics, and finally purchased by clothing companies to make garments.

Cotton is the basic raw material of textile and garment industry. Once its price rises, the whole industry chain will rise in price.

Cotton prices

It takes at least one or two months for a garment order to be shipped from order to shipment. During this period, no one can predict what will happen. The garment terminal of the industrial terminal is the most difficult day, and some weaving enterprises are afraid to take orders or even stop work.

Insiders said that cotton prices skyrocketed, textile enterprises were in deep water, cotton prices plummeted, and cotton processing enterprises became ants on hot pots.

In the small weaving enterprises in the northern part of Jiangsu, about 1/3 of the enterprises have been on holiday now, and about 1/5 of the small factories have simply started selling machines.

Internal and external troubles in cotton spinning enterprises

"Shortage of supply is the main driving force for cotton price rise."

Li Hongjun, director of the Preparatory Office of the Dezhou branch of China cotton reserve management company, told the China Securities Daily reporter that in the normal cotton production year, the cotton gap was around 4 million tons, and the reduction in 2010 led to a further increase in the cotton gap this year.

Driven by the contradiction between supply and demand and the international cotton futures market, domestic cotton prices have risen rapidly, which has caused heavy pressure on cotton textile enterprises whose cost is between 60% and 70%.

China Securities Journal reporter learned that, at a time ago, cotton per ton could sometimes rise by one thousand or two thousand yuan a day. In terms of the whole industry, the bearing capacity of each link gradually weakened, and the price increase of cotton yarn, cotton cloth and cotton products gradually decreased.

Ma Junkai said that the development of cotton textile enterprises is facing some uncertain factors. In addition to the rising prices of raw materials, the rise in labor costs is also a major difficulty.

"Cotton textile industry recruitment difficulty has always existed, the general textile enterprises operating rate of up to 80%."

Ma Junkai said that if the pay increase will be faced with cost pressures, as a labor-intensive industry, profits have been lingering low, and it is not difficult to raise wages for workers.

At the same time, the profits of export enterprises are also affected by various unfavorable factors such as exchange rate fluctuations and European debt crisis. The appreciation of the renminbi will directly reduce the profits of export oriented enterprises.

Recently, the US House of Representatives passed the "exchange rate reform to promote the fair trade act". The industry believes that the adoption of the plan is a reflection of the rise of protectionism in the United States. Many textile and garment enterprises lament: orders are more difficult to pick up, and profits are thinner.

Industry integration is hard to avoid

The impact of this round of cotton prices on Ma Yichen, general manager of Hangzhou Bole knitting and Garments Co. Ltd., is not as big as expected.

5 years ago, his company began to take the high-end line, enhance product value, highlight the brand, mainly for internal sales.

"It is difficult to have the price initiative, rather than the export price."

Ma Junkai believes that only by improving the added value of products, eliminating low-quality products and eliminating backward production capacity is the way out for cotton textile enterprises.

In the future, backward production capacity is most likely to be pferred to India. At present, the cotton planting area of India is 150 million mu, and the highest peak in China is about 120 million mu.

The reorganization and integration of the cotton textile industry is "coming rain." Li Cunfu, sales manager of Heze Galaxy textile company, Shandong, said that the sharp fluctuations in cotton prices will accelerate the restructuring of the cotton textile industry, promote industrial concentration and a small number of small and medium-sized enterprises will be eliminated, which is also the general trend of industrial restructuring.