Unbearable Cotton Prices &Nbsp; Chemical Fiber Company Layout Xinjiang Grab Resources

Faced with soaring cotton prices this year, the layout Xinjiang Preemptive Cotton resources Begin to become Chemical fiber enterprise New choice. In December 25th, Xinxiang chemical fiber (000949) announced that it will set up a wholly owned subsidiary of Xinjiang egret fibre Co., Ltd. in Xinjiang Industrial Park, to build an annual output of 100 thousand tons of new cellulose project.

27, a staff member from Shaoshan, Xinxiang chemical fiber group told the Securities Times reporter that the investment in Xinjiang was mainly to ensure that the company obtained long-term stable high-quality, high-quality new cellulose (cotton pulp) raw material supply. He said that before the acquisition of cotton raw materials from Xinjiang, and then shipped back to Xinxiang, Henan, and then processed into new cellulose (cotton pulp), as the company's further production of viscose staple fiber raw materials. This time, the company invested locally in Xinjiang mainly to get closer to the cotton producing areas and obtain more stable and reliable cotton resources. According to his understanding, other chemical fiber companies also have plans to invest and set up factories in Xinjiang.

Xinxiang chemical fiber is the second chemical fiber listed company officially announced to enter Xinjiang and layout upstream raw material resources. Prior to that, Shandong Hailong, a leading company in the chemical fiber industry, began to plan Xinjiang in 2007 and obtained a good investment income. In December 9th this year, Shandong Hailong announced that it would increase investment in Xinjiang by joint partners, and increase the registered capital of Xinjiang Hailong Chemical Fiber Co., Ltd. from 368 million yuan to 468 million yuan, of which Shandong Hailong will increase its capital by 55 million yuan, and Shandong Hailong will still hold 55% after its capital increase. However, on the 27 day, Shandong Hailong, a surnamed staff member, said that the capital increase only increased the registered capital of Xinjiang Hailong and did not determine whether to expand the scale of the company's production.

Since the beginning of this year, the sharp rise in cotton prices has caused varying degrees of negative impact on some chemical fiber companies with cotton pulp as raw materials. In the first half of this year, the gross margins of Xinxiang chemical fiber, Shandong Hailong, Hubei gold ring, Baoding swan, Australia ocean technology, Nanjing chemical fiber and Jilin chemical fiber all fell to varying degrees. In the first half of this year, Shandong Hailong even saw a sharp increase of 48.3% in revenue, but net profit fell by 32.1%. In the third quarter, the performance of the company only showed a marked recovery.

The price of raw materials is high, and the price of viscose staple fiber has dropped sharply, which is the main reason for the decline of many chemical fiber companies. Therefore, getting stable supply of raw materials has become a top priority for many companies. Shandong Hailong said that the supply of raw materials is an important reason for the company's original layout of Xinjiang. Because of the stable supply of raw materials and relatively low production costs, the overall efficiency of the Xinjiang plant is better than that of Shandong's headquarters.

The above mentioned personnel of Xinxiang chemical fiber also indicated that Xinjiang had enough cotton, pure varieties and good quality during the current period. In contrast, there are more and more cotton growing areas in the mainland, and there are more varieties of cotton. This leads to uneven cotton quality, thus affecting the production cost and final product quality. And there is another advantage of setting up factories in Xinjiang, which is to reduce the amount of funds that companies purchase during the peak season.

However, Shandong Hailong said that because the products produced in Xinjiang are still facing the mainland market, the change of product prices is more important to the performance of the company. He told reporters that the price of raw materials is at a historical high of 12 thousand yuan / ton, which is relatively stable and unlikely to fall in the short term. The price of the main products of the company is also relatively stable.