Cotton Prices Play Bungee Jumping, And Businesses Are At A Loss.

In order to reduce the losses caused by cotton price fluctuations, many home textile and garment enterprises will grow. Order Change to short order.

It is reasonable to say that the drop in cotton prices for domestic textile and clothing enterprises means the price of raw materials will decrease and the cost will be reduced. However, the heads of many textile and garment enterprises in Weihai are not happy. The fluctuation of cotton prices makes them feel at a loss.

Phenomenon: cotton prices rise and fall as if riding a roller coaster.

"How many pieces of grey cloth should be ordered in June? How many tons of cotton cloth do you want to buy?" how many raw materials have been ordered in these days becomes a headache for the head of a textile enterprise in Wendeng.

Mr. Yu said that cotton prices rose sharply last September to the beginning of this year, almost a day, and he dared not rush to reserve raw materials. In March, cotton at a high price began to slide, from the end of April to the beginning of this month. Cotton price The daily decline was once more than 1%, and the spot price dropped from 31 thousand yuan per ton to the current 24 thousand yuan.

Although he has worked in the home textile industry for nearly 10 years, Mr. Shi, director of the management department of a large home textile company in Weihai, has been unable to understand the ups and downs of cotton prices since last September.

Mr Shi said that after the sudden rise in cotton prices in September last year, Purchase raw materials Costs also rose sharply, or more than 40%. From March, cotton prices suddenly dropped, and the daily decline was once more than 1%.

Data from the China Cotton Association show that in May 26th, the cotton price index was 24 thousand yuan per ton, which was almost the same as that in mid October of last year. But behind the seemingly calm price changes, the market trend of cotton prices such as roller coaster in 7 months is hidden.

In September 2010, at the beginning of the new cotton year, cotton prices rose sharply under the combined influence of the expected reduction in cotton production and the bullish mentality. In just two months, cotton prices started at 18 thousand yuan per ton, and broke through the 20 thousand and 30 thousand passes in a row. From November 11, 2010 to November 11, 2010, cotton prices reached 31 thousand yuan per ton, with the highest increase of 75%. A rapid adjustment followed by a drop of 17% in 20 days.

Since the beginning of this year, cotton prices have shown the word "V". Since the beginning of the year, around 27 thousand yuan per ton has risen to 31 thousand yuan in March 8th, and then it has been turning downward all the way. In May 26th, it went out of the lowest point in the year, which has dropped 22% compared with the high point in the year.

Impact: cotton prices fluctuate greatly and enterprises are at a loss.

Cotton prices rise first and then fall. The huge fluctuations make home textile export enterprises at a loss, and bring pressure to survive. Many small home textile enterprises are facing a dilemma. Some enterprises have to abandon low profit orders and undertake short-term orders under 3 months.

In May 26th, Mr. Shi said in an interview that enterprises should spend between 1 and 200 million yuan on raw materials. Among them, the proportion of pure cotton and polyester cotton accounts for more than 50% of all raw materials. After the sudden rise in cotton prices in September of last year, the cost of raw materials purchased by them increased by more than 40%. With the addition of multiple factors such as the appreciation of the renminbi and the rise in labor prices, enterprises were faced with enormous cost pressures and did not dare to take orders. "Last year, although our exports amounted to US $about 60000000, there was little profit margin." Mr. Shi said.

But in March this year, cotton prices fell, but they were too afraid to lower their quotations. Mr. Shi said that now customers are quoted according to the current cotton price when placing orders. Once the cotton price is killed, a company will be caught off guard, so they have to undertake short-term orders within three months, so as to avoid the excessive fluctuation of raw material prices. In addition, raw material reserves are also very cautious to minimize the impact of price fluctuations.

"The price of cotton is rising and customers are on the sidelines. We have to compress profit margins and reduce quotations," said a person in charge of a medium-sized textile enterprise in Wendeng. The cotton price will fall, and the customers will further reduce the price. We will basically lose money. " Mr. Yu said that the reason why the enterprise was "hard to carry" was mainly due to the fact that under the background of increasingly fierce competition for labor force, we could not easily stop work and worry that workers could not be recruited in a short time.

Cotton prices are rising, making home textile enterprises "very hurt". Then, will the sharply reduced cotton prices push up the profit margins of the garment industry?

"The answer is no." In May 24th, Sun Chongtao, manager of the Weihai Dixie Group Import and export limited liability company, Linyi Dixie Huajin business, told reporters that an adult male cotton T-shirt was required to produce 0.3 kilograms of cotton yarn. According to the current price of 25 thousand yuan per ton of cotton, the raw material price of a pure cotton T shirt was about 7.5 yuan, plus labor costs, the cost reached 13 yuan, while the export price was $2, which was basically unprofitable.

In May 25th, Mr. Jiang, head of a small garment factory in Zhang Cun, said that because of the pressure on production cost, he had to close the garment factory with two friends who built his factory at the same time. During the interview, Mr. Wang, who has been engaged in garment processing for many years, said that many small scale garment factories have been closed down due to fluctuations in cotton prices. He predicted that if cotton prices continue to fluctuate, more small garment factories will be closed down or closed down.

Response: adjust product mix and create an independent brand {page_break}

The added value of home textile products further "shrink", so that home textile enterprises in the face of cotton price fluctuations can only sigh with regret. For this reason, some enterprises have adopted ways to adjust sales channels.

The reporter understands, although cotton price fluctuates very big, but as terminal product sale price is very stable. Insiders said that in the case of a sharp fluctuation in cotton prices, many home textile enterprises have adjusted their sales channels, reduced the proportion of exports, and began to increase domestic sales, hoping to reduce cost pressures. "The price of domestic sales is certainly much higher than that of exports, which in a way is also a curve profit model." The industry insider said.

Many garment processing enterprises are responding positively by adjusting the product structure.

Sun Chongtao said that in the past, the two departments of his undertaking mainly undertake foreign cotton products. At the beginning of this year, they began to try to adjust their product structure, mainly from cotton materials in the past to chemical fiber raw materials, and the profit margins increased. "The profit space of cotton clothing is only about 3%, and the profit margins of the garments made of chemical fiber materials can reach about 5%." He said.

In the interview, the reporter learned that some garment enterprises were converted into high value-added products such as outdoor products. In a garment factory in the region, cotton prices fluctuated and garment processing enterprises generally shouted "bitter", the reaction was "calm". "The profit margin of cotton products is around 3%, and the profit margins of our products can reach 10% or even more." The head of the enterprise said.

In addition, Weihai Textile Group Import and Export Co., Ltd. since the second half of 2010, "test water" agent brand clothing has become a new profit growth point for enterprises. "This brand is bought from the United States, the design team is our company, the product is mainly in the middle class." Sun Chongtao said that before that, the company also represented a top clothing brand and opened the market in the first tier cities. He believes that in the future, the creation of its own clothing brand will be the main direction for the future development of enterprises.

Bureau of Commerce: business pressure will increase or industry will be shuffled.

The impact of cotton price fluctuation on domestic textile and garment enterprises is more harmful than profits. In May 27th, when talking about the "roller coaster" of cotton price, Jiang Hui, director of the trade and management section of the city commercial bureau, said that the adverse effects had already appeared at the end of last year and were reflected in the 109 Canton Fair.

"In the past Canton Fair, large domestic textile and garment enterprises were the main participants in the exhibition. There were many enterprises that rent seven or eight booths at a time." Jiang Hui said that this year, many large scale home textile enterprises in Weihai did not participate in the 109 Canton Fair, and several large home textile enterprises registered also reduced their booths from seven or eight to two or three. On the contrary, small and medium-sized enterprises showed greater enthusiasm for exhibitors. In the 109 Canton Fair held in May 5th, 63 of the textile and garment enterprises participated in the exhibition, accounting for 80% of small and medium-sized home textile and garment enterprises.

Jiang Hui said that when cotton prices rise, the cost of downstream industries will increase demand; while cotton prices fall, the downstream will wait and see, and demand will be even more inadequate, which will lead to stagnant production. Under the influence of many factors such as the lack of foreign demand and the appreciation of the renminbi, both sides of the supply and demand have a strong wait-and-see mood, and the small and medium-sized enterprises have been subjected to greater business pressure. "Under such circumstances, large enterprises with strength and capability can adjust their product mix through changing export to domestic market, creating their own brands, and building factories in the mainland, so as to change the direction of sales." She said small and medium-sized enterprises with relatively weak strength still need to maintain their business by increasing orders.

According to past experience, cotton prices will likely continue to fall after new cotton comes into the market this autumn. But this year many cotton producing areas are suffering from drought. Therefore, the trend of cotton prices in the future is still uncertain.

Jiang Hui said that the fluctuation of cotton prices has already affected the order of the entire textile and garment industry. If it continues, it will cause the industry to reshuffle itself. Recently, the export tax rebate of the textile and garment industry in the industry will be reduced by 5%, and the implementation of this measure will accelerate the "shuffling" speed of the home textile and garment industry.