"Superposition Effect" Weighs Heavily On Chinese Textile Enterprises

Since March of this year, China

Wu Weifeng, assistant general manager of Jiangsu Su Mei Da Light Textile International Trade Co., Ltd., told reporters that the raw material price reduction has no meaning for the original orders that have purchased fabrics.

Only those orders from 1 to 2 months ago, because there is no fabric purchased, the price can be discussed, maybe a little lower, and some profits will be obtained.

Zhu Qinghua, a light industry researcher at CIC, believes that the main reason for the fall in cotton prices after March is adequate inventory and lower demand for downstream products.

"As the capital chain tightens and inventories increase, the operation of textile and garment enterprises is likely to deteriorate."

According to Zhu Qinghua's understanding, textile enterprises' capital chain is disconnected from the two links of procurement and sales, and it is difficult for enterprises to recover funds.

Wu Weifeng said that since this year, the central bank has raised the deposit reserve ratio for the four time, and the interest rate of loans has increased.

Influenced by many factors, such as fluctuations in cotton prices, tightening of credit policies and various kinds of cost increases, the current sales of textile enterprises are not smooth, and wait-and-see attitude towards lint procurement is maintained.

Qu Weihua, head of China Textile Limited by Share Ltd, said that because of the estimated cotton price may drop, the company did not purchase large quantities of cotton in the early stage.

Inflation is also damaging and losses are also lost.

Wang Qianjin, chief analyst of the first textile network, said that the decline in raw material prices may reduce the production and operation costs of enterprises in the medium to long term, but in the short term, it may have a negative impact on enterprises.

Wang Qian analysis: "the fall in cotton prices will affect and affect the entire cotton industry chain."

Because the price trend is not clear, enterprises will delay procurement, affect enterprise orders and corporate profits. This year, textile enterprises will face greater difficulties in making profits.

Cotton prices can neither rise nor fall.

For enterprises, the cost of rising prices has increased sharply, and profits have been cut.

Qu Weihua said: "the cotton price on the Shandong side has dropped to 22000 yuan to 23000 yuan / ton in the first two days, which has been 5000 yuan to 6000 yuan / ton cheaper than the original price, and the pressure on the cost of raw materials has been reduced.

Because it can't predict the price of cotton in the future, the company will purchase cotton in small quantities according to the order.

Although the order situation has improved, it has not improved much.

Because foreign customers are also waiting to see what the cotton price will go down to, and decide the order.

Wu Weifeng pointed out: "bargaining is a process of change, the price of raw materials has dropped, and customers will also keep the price down."

In addition, many cotton orders have been pferred to Bangladesh, India and other countries due to the availability of cotton and lower prices.

Accumulative superposition effect gradually reveals

Although cotton prices have seen a slight decline in recent years, the added value of products in China's textile and garment industry is low, plus labor costs rising, silver tightening and RMB appreciation. There is also a heavy inflationary pressure which makes Chinese consumers' consumption desire continue to decline, and domestic demand for textile and garment industry grows slowly, which is not conducive to improving the production and operation of textile enterprises.

These factors will "accumulate and superimpose", and the pressure on enterprises will gradually appear.

Wang Qianjin said that from last year to the first quarter of this year, these factors have more and more obvious restrictions on the production and operation of the industry.

According to his forecast, the profit index of textile and garment industry will not be released in the first five months of this year. The growth rate will obviously slow down. The two quarter and the three quarter of this year will be a difficult period for textile enterprises.

Zhu Qinghua believes that industrial development is still full of resistance, but the predicament of textile enterprises will not continue to deteriorate.

On the one hand, cotton prices will tend to be stable for a long time. With the gradual increase of downstream demand, the profit margins of textile enterprises will be gradually released. On the other hand, because of the sparse rainfall in the Yangtze River Basin, this year's cotton planting may have an impact. It is estimated that the current cotton inventory will gradually be consumed, and cotton prices will continue to warm up.