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Cotton Production Chain Enters A Vicious Circle Of "Falling Price"

2011/6/7 10:13:00 66

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Vicious Circle Of Cotton Production Chain

From last year to now,

Cotton price

Always erratic.

In May last year, cotton prices were 17000 yuan / ton, six months later, cotton prices soared, and the price per ton exceeded 30 thousand yuan. In February this year, cotton prices hit a record of 35000 yuan / ton.

Since April, domestic cotton prices have dropped rapidly on average at 500 yuan per ton per 3 days.

In two months, cotton prices fell back to 22000 yuan / ton, or nearly 30%.

Cotton prices that have plummeted and plummeted, let

Textile enterprises

Sitting on the roller coaster, I felt a sense of "sky and underground".

The downstream is mostly out of production.

textile mill

Printing and dyeing mill

And some small clothing enterprises such as downstream users have 60%-70%

Stop production

The output of textile enterprises is directly compressed by 40%-60%.

"If we save 3000 tons of cotton, we will lose 30 million yuan and a ton will lose ten thousand."

One cotton chief in Wuhan once said that when cotton prices rose, many enterprises hoarded large quantities of cotton at high prices, and some large enterprises hoarded goods up to 10000 tons, which means that they would directly lose hundreds of millions of yuan.

According to the briefing, one cotton organizing staff recently went to Jiangsu and Zhejiang to do market research and found that downstream users such as weaving factories, printing and dyeing factories and some small garment enterprises had 60%-70% shutdowns, and the output of textile enterprises directly reduced 40%-60%.

In order to avoid risks, a cotton production will be compressed by 1/3. In the past, 3000 tons will be stored every month, and two months after digestion.

"The whole industry is very difficult, more serious than the financial crisis in 2008."

Zeng Zhong said that cotton prices rose sharply last year, and downstream customers scrambled for goods.

Since April, when cotton prices began to fall, many textile enterprises took a wait-and-see attitude and could only buy a little bit.

He also pointed out that with the continuous increase of water, electricity, gas, oil and labor costs, enterprises are facing the pressure of sharp increase in production costs. In addition, the state has tightened money, and many small and medium-sized enterprises lack liquidity, making it even more difficult to survive.

In addition, let Zhong Zhong worry that falling cotton prices will dampen farmers' enthusiasm and thus reduce cotton production. Textile enterprises can only choose to import cotton. The cost of purchasing cotton accounts for about 70% of the total cost of the enterprise. The use of imported cotton will greatly increase the cost of enterprises. At that time, the survival of textile enterprises will be even more difficult.

Encountering export orders shortage

From the industry as a whole, the export orders for textiles have decreased by 1/3.

Cotton is the raw material of textile enterprises. Is the price of raw materials falling?

Why did it cause a major loss to the company?

"This is a misunderstanding," the industry said, from cotton farmers, traders, cotton spinning enterprises to clothing terminal enterprises, the textile industry is a "middle" industry, is the biggest loss.

Downstream customers are buying up or not buying, cotton is going up badly, orders are getting more, on the contrary, customers' orders will be reduced.

The textile industry also has the mentality of "buying up or not buying", which aggravates the wait-and-see sentiment of the downstream enterprises, so that the whole production chain has entered a vicious circle of "falling price".

"Affected by the slow recovery in European and American markets, reduced procurement, coupled with the appreciation of the renminbi and the rapid increase in raw material and labor costs, domestic cotton textile export advantages are not in place, and the order volume of textile enterprises is decreasing."

Zeng Zhong pointed out that China's textile industry still belongs to the export oriented industry, but the domestic textile enterprises are producing at a higher cost than the international 10%-20%, which makes China's textile industry face great challenges.

Zeng Zhong said that he was worried that the competitiveness of domestic textile products was greatly weakened due to high cotton prices in the early days.

"There is no order now."

Li Shilin, director of Wuhan Lin Sheng Textile, said that from the whole industry, the export orders for textiles have decreased by 1/3, and Lin Sheng's textile exports earn 15 million yuan, and there are no export orders at present.

"For our small businesses, this is an unbearable blow."

"Fatal blow"

"This is a fatal blow for small and medium-sized enterprises."

Zeng Zhong is quite worried that the fluctuation of cotton prices will be doubled. If the export tax rebate rate is further lowered, the prospects for textile enterprises will be worrying. "Let alone five points, even one or two points can not be adjusted."

Another textile enterprise leader believes that the steady rise of the RMB exchange rate has led to an annual reduction of about 0.5% of the profits of the enterprises. The rising prices of raw materials and the rise in labor prices also directly compress profits. Once the tax rebate rate is lowered, it will basically be "zero profit".

Sun Huaibin, director of the China Textile Economic Research Center, analyzed the reason why textile enterprises were so sensitive to the adjustment of export tax rebates, mainly because the textile enterprises were mostly small and medium-sized enterprises, and could not afford the blow of the loss of profits.

According to the introduction, the total export volume of textiles in China amounted to US $77 billion 51 million in 2010, and the export tax rebate was about 78 billion 500 million yuan.

Floating up and down one percentage point is related to the profit of about 5 billion 200 million yuan in the textile industry.

Because textile enterprises have been in a small profit for a long time, even a percentage point reduction means that a large number of small and medium-sized enterprises will slide under the line of life and death.