Blind Expansion Of Production Capacity - Tightening Of Textile Enterprises This Summer "Worse"

The 2011 International Cotton conference ended in June 16th.

The number of participants in this year's meeting increased by 1/3 over the previous session.

"Last year we made money, but this year it has been losing money. What is more terrible is that we can not see clearly and communicate later."

Shandong Wucheng cotton processing plant responsible person said.

"In addition to the relatively large scale of enterprises can take a while, 70% of enterprises have begun to cut production or limit production, the scale of 5000 spindles to 30 thousand spindles enterprises basically shut down."

Shandong Zouping Jinhua Textile Co., Ltd. deputy general manager Zhou Jun introduction.

The lack of funds in enterprises led to the shutdown, not only in Shandong, but also in Jiangsu, a major province of cotton spinning.

Jiangsu Yutong Textile Co., Ltd.

The first textile network survey shows that

With the decline of cotton prices, textile procurement has become extremely conservative and prudent in order to reduce risks.

Cotton consumption in China is about 10 million tons a year, the world's largest, accounting for 40% of the world's total consumption.

China's cotton spinning "North Wei Qiao Nan Hua Fang" refers to the industry leader Shandong Wei Qiao textile and Jiangsu Huafang textile (600273).

The provinces where the two enterprises are located are also cotton spinning provinces, with large and small enterprises distributing all aspects of the whole industrial chain.

The industrial chain is made up of one hundred million cotton farmers, twenty million textile workers and more than one million circulation workers.

The export volume and export volume of textile and clothing are the first in the world, of which textile and garment exports account for 33%, while textiles 26%.

Zouping is located in Binzhou City, Shandong province. The largest cotton textile enterprise in China is located in Binzhou.

Zhou Jun's Jinhua textile company is one of the numerous enterprises in the industrial chain. It produces 70 thousand to 80 thousand spindles per year and over ten thousand tons of cotton per year.

There are too many enterprises that stop production and limit production.

Zhou Jun said.

In 2010, cotton prices rose after September. But this year, cotton prices broke through 34 thousand yuan / ton in March this year, and spot prices dropped to 24 thousand yuan / ton, or nearly 30%.

Sun Huaibin, director of the economic research center of the China Textile Industry Association, said that with the decline of cotton prices, textile procurement has become extremely conservative and prudent in order to reduce risks. This has made the backlog of products in the cotton textile industry substantially increased and the number of enterprises increased.

"The price of cotton has come down, but customers are not placing the order," said Zhang, manager of Investment Department of JINDA holdings.

Sun Huaibin pointed out that since the price of cotton fell sharply, the inventory of textile enterprises also had a sharp drop in price, and the more the stock was, the more losses it had.

In March this year, the results of the paction between the China Fair and the Canton Fair also showed that both the export enterprises and the overseas buyers were cautious in their pactions. The short and medium bills accounted for 89%, and the orders for more than 6 months accounted for only 1.

The fall in cotton prices is very uncomfortable for companies that have always had high priced cotton stocks.

Many spinning enterprises now use high priced cotton (imported cotton or Xinjiang cotton) at the end of the year at around 30 thousand yuan.

"According to the current cotton price of about 25000 yuan per ton, the average amount of cotton per ton of cotton yarn is about 1.08 tons, and the cost of water, electricity, material and labour per ton of cotton yarn is 6500 yuan. The cost of spinning a ton of yarn is 33500 yuan, but the market price is only 31500 yuan per ton.

It costs 2000 yuan to spin out a ton. "

Zhou Jun calculates, "this will only balance the cost with Shandong's local cotton, and it may earn hundreds to one thousand per ton."

"Most enterprises still have stocks in their hands, usually in one or two months.

I have to keep up. "

A spinning factory owner in Xiajin smiled bitterly.

"And now the recovery is slow, and the benefits are not good enough. The funds are too tight."

The low cotton prices, the high cost inventory that has not yet been cleared, and the cautious purchase of fabric factories, and the tight capital chain have made the small and medium-sized cotton spinning enterprises extend their lifespan by stopping production or limiting production.

Blind expansion of capacity after making money is one of the reasons for the tight capital chain.

Before 2009, China's cotton textile industry has been very stable, even the financial crisis in 2008 has never made the industry so nervous.

Last year's soaring cotton prices encouraged the whole industry to "use profiteering to describe it."

Zhou Jun said.

Xiajin County cotton ranks among the eighth top 100 counties in the country. The head of a business in the county said there was a small workshop with an annual output of 5000 spindles in the nearby village. "Their boss bought an imported BMW car last year and doubled their production capacity."

The person in charge said.

"But this year it sold cars and stopped production.

About 7 of the enterprises are closed down.

According to Zhou Jun, many enterprises made money last year, and then began to buy Textile machinery and increase production capacity. They did not want to experience big fluctuations in cotton prices.

According to the latest statistics of the National Bureau of statistics, the output of cotton cloth in China was 2 billion 990 million meters in May 2011, which was 210 million meters lower than that of the previous year.

In the first 5 months of this year, the output of cotton cloth in China totaled 13 billion 930 million meters, a decrease of 770 million meters compared with that of the previous year, with a reduction of 5.24%.

"Production capacity has gone up too fast, and cotton prices have fallen, which has led to lower demand, so there will be capital chain breaking and enterprises will stop production."

Chen Tao, general manager of Louis Dreyfus Corporation China, said.

Louis Da FOK accounts for 10% of the world's total cotton trade every year.

In Chen Tao's view, the expansion speed of China's cotton textile enterprises is far greater than that of cotton spinning. The expansion of the money making business in 2009 made these small and medium-sized enterprises in a dilemma.

"The world's textile equipment needs to be bought by China, but the equipment has not been installed to the factory, or the installation has not started yet.

How can the seller's market not be upset if the market exceeds supply?

"Increasing expansion but decreasing demand is a vicious circle in itself."

Chen Tao said.

"From 2009 to now, preliminary estimates of China's veil production capacity have increased by about 10%."

According to Chen Tao, many enterprises still have a month's stock of high priced cotton, and high priced cotton yarn has one to two months' inventory.

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The repayment period is not yet.

Similarly, tight money is also the reason for the tight capital chain.

"Now the banks are starting to chase debts again.

"How can money be tight?" Chen Tao said.

As of mid June, the benchmark interest rate has been raised two times this year, and the deposit reserve ratio has been raised six times.

Following the twice increase in interest rates in 2010, the Central Bank of China announced the increase in benchmark deposit and lending rates in February 8th and April 5th this year.

Since June 20, 2011, the deposit reserve ratio of deposit financial institutions has increased by 0.5 percentage points.

This is the sixth time that the central bank has raised the reserve ratio this year. After this increase, the deposit reserve ratio of large financial institutions will reach 21.5%.

The repayment period is not yet, and the loan can not be repaid. "Many of the enterprises in our vicinity are lending to some private lending companies. Now they are not having good loans before, and they are making many disputes.

Before the mortgage is used for property, it is not yet paid, and it is found that there are disputes over property rights. Many enterprises now owe money and litigation.

Li Fei said.

Shandong and Qingdao are still envious of Jiangsu and Zhejiang provinces.

"They also have private lending. Now we have no money to lend. It's too difficult to lend."

"Hurry up and run the property certificate for the new factory building, otherwise the loan in August will affect the company."

A woman attending the conference is going through a telecontrol company to bank loans.

The woman is a financial officer of a cotton spinning enterprise in Xinjiang. The annual output value of the company is around 2 billion, but this year's loan is much more difficult than in previous years.

"We are big factories, better, do some collateral can loan, many small and medium enterprises can not be borrowed, can only be hard to support, can not afford to go bankrupt."

Wenzhou private lending is popular.

Small and medium enterprises that borrow money from banks do not have to pay their attention to private lending.

The head of a textile enterprise listed company said that the tighter the monetary policy of the country, the higher the deposit reserve ratio. 0.5%, many banks did not lend to SMEs at all. In order to maintain the normal operation of enterprises, small businesses had to choose three or four points of high interest loans.

"For enterprises, policies should have a digestion process.

All of a sudden, lending to small and medium-sized enterprises stopped lending, which had a great impact on enterprises. Many enterprises had no money to buy raw materials and no money to pay wages.

He believes that tightening monetary policy can also increase interest rates by raising interest rates. The pressure on SMEs is too high. After all, SMEs in the textile industry are more and more. If enterprises get more and more capital from banks, they will have to turn to private lending with high interest rates.

According to the May Wenzhou SME development promotion association data, Wenzhou private lending rate, short-term financing in 1 months is generally 5 to 6 points, 3 months or more medium and long-term financing also reached 3 points to 4 points.

In addition, in 2010, the scale of private lending in Wenzhou was around 80 billion yuan, and now it has exceeded 100 billion yuan.

Small and medium enterprises that borrow money from banks do not have to pay attention to private lending.

"For those who have orders, they are in normal operation and should be lending normally."

The listed companies executives said that most small and medium-sized enterprises generally indicated that it was difficult to support, and some of them had stopped production.

According to enterprises in Jiangsu, Zhejiang, Guangdong and other places, factory recruitment is only seven or eight of the previous year, and some even less than 50%.

In the Yangtze River Delta and the Pearl River Delta, wage increases generally range from 20% to 30% this year, showing a continuous upward trend of rigidity.

CIC securities analysis report pointed out that the current labor costs rise 20%-30% will affect the textile and garment industry 70% of the enterprises.