Cotton Mills Are Still Subject To Cotton Prices.

Red hot last year

Compared with last year's booming market situation, this year's market has made many cotton textile enterprises lament "ice and fire".

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From boiling point to freezing point, many enterprises are lack of mental preparation for the sharp turn of the market situation, and the current predicament is even more difficult.

Because domestic and foreign market demand continues to slump, the pressure of enterprise inventory is huge, and the adjustment of national macro monetary policy, cotton textile enterprises are generally faced with financing difficulties and tight liquidity.

Many enterprises believe that the cotton textile industry is facing a shuffle.

Crazy cotton

Why is the market suddenly turning?

From last September to now, cotton prices have experienced a sharp rise and fall. The general trend of the roller coaster and the range of its ups and downs are unprecedented.

Many old textile companies, who have many years of experience, lamented that they had never experienced such quotations.

Remember that in mid September of last year, when cotton prices climbed to 19000 yuan / ton, many textile enterprises said they could not eat.

Since then, cotton prices have soared to speak of almost everyone's expectations.

When cotton prices quickly crossed the 20000 yuan / ton, 25000 yuan / ton pass, and went straight to 30000 yuan / ton, many people in the industry were worried about the collapse of cotton prices.

Although the rise of cotton prices has led to the rise of cotton yarn prices, the cotton textile enterprises have gained tangible benefits and profit margins have been greatly improved. But sensible people understand that cotton prices can not rise indefinitely. Once the price of cotton has plummeted, the blow to cotton textile enterprises will be great.

In the less than two and a half months from last September to early November, cotton prices rose more than 67% at home and abroad.

After returning to the fundamentals of cotton prices, the contradiction between "insufficient production and demand" remained unchanged. Although there was a fall in November last year, cotton prices rose again in February this year and entered the "30 thousand Yuan era".

In March 11th, the B index of cotton prices representing the average selling price of lint cotton in the mainland reached 31198 yuan / ton.

It is widely believed that cotton prices will remain high this year, and the market once again shows its uncanny uncertainty.

Cotton prices fell all the way, one day a price, sometimes 3 days to drop four thousand or five thousand yuan, until the current decline in the reserve price, or more than 40%, and there is a downward trend.

Not only the spot price of cotton has plummeted, but also in the futures market, cotton prices have failed.

On the Zhengzhou Mercantile Exchange, the 1109 contract of cotton fell from nearly 34000 yuan / ton in February to 21000 yuan / ton, or nearly 40%.

In the international futures market, New York cotton futures contract settlement price in October reached 164.64 cents / pound in April, and fell to 100 cents / pound at the end of July, or nearly 40%.

Cotton yarn prices fell even worse.

The 32 pure cotton yarn has dropped from 40000 yuan per ton in early March to 25000 yuan per ton, and nearly 40% in 5 months.

Cotton textile enterprises generally suffered losses, and cotton yarn inventory has always been higher in recent months.

Meanwhile, as of the end of July, there were 1 million 370 thousand tons of cotton business inventories, up from 120 tons in the same period last year, much higher than 950 thousand tons and 900 thousand tons in 2008 and 2009.

From thousands of dollars a day to thousands of dollars a day, cotton is really crazy this year.

The industry chain that can not afford to hurt

The rise and fall of cotton prices has caused a serious blow to the whole cotton industry chain.

The instability of cotton prices first hit cotton farmers' enthusiasm for planting cotton.

Many cotton farmers are deeply worried because cotton prices are below 19800 yuan / ton in recent years.

On the one hand, some cotton growers have been hoarding cotton last year because they are reluctant to sell. They must lose money at the current price.

On the other hand, although cotton is generally growing well this year, cotton farmers will not be able to benefit from the rising cost of cotton seed.

Many textile enterprises are worried that "no cotton will be planted next year".

The impact of cotton price ups and downs on cotton textile enterprises is also disastrous.

First of all, the normal market order is disturbed.

When cotton prices rose, the market was permeated with hype atmosphere. Some enterprises were busy hoarding cotton and cotton yarn, resulting in the shortage of orders.

Demand is magnified, and crazy speculation obscures the true relationship between supply and demand.

When the price of cotton falls, the market is in a wait-and-see situation, the real market demand is suppressed, the order is suddenly reduced or even disappeared when the psychological effect of buying and selling does not buy or drop.

The normal production order of enterprises has also been disturbed.

The price of cotton yarn fluctuates with the sharp fluctuation of cotton prices. In order to prevent operational risks, enterprises dare not receive large orders or long lists.

The production of cotton textile enterprises is cyclical, and cotton is usually stored for about 3 months.

Some large enterprises have tens of thousands of tons of cotton, and when the price of cotton drops to 10 thousand yuan / ton, the losses of enterprises will be more than 100 million yuan.

With the declining price of cotton and cotton yarn, the characteristics of "high output and low output" make it difficult for most enterprises to avoid losses.

According to estimates, the current production of a ton of cotton yarn to pay 2000 yuan or so.

Faced with this situation, many SMEs can only stop production.

According to the survey, nearly 70% of textile enterprises in Yuncheng and Caoxian stopped production in Shandong, and only a few large and medium-sized enterprises normally produced or limited production.

Some enterprises are "reluctant to maintain", but "starting up means losing money. This year, the profits earned in the first two or three years are all lost."

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Who can be alone?

But not all businesses are so miserable.

Many companies that produce differential fiber yarns have a good life.

In the past few months, the cotton textile industry is extremely difficult, and the efficiency of the new fiber yarn production enterprises has steadily increased, maintaining a steady development momentum.

In Lingxian County, Shandong, a number of textile enterprises such as Hengfeng, Shengze, Baoding and Fuhua have vigorously developed new fiber yarns in recent years and explored a new road.

Depending on the product structure of many varieties, differentiation and new products, Lingxian County's new fiber textile enterprises are far from the impact of cotton price fluctuations.

According to statistics, at present, Lingxian County has more than 30 new fiber textile enterprises above Designated Size, with 1 million 200 thousand production capacity and 30% of the same industry in China. The new fiber textile varieties have reached more than 30 series and more than 500 varieties, covering more than 90% varieties in the market.

Other enterprises that rely on technical or managerial advantages to obtain higher value-added products are also less affected by the fluctuation of cotton prices.

Lu Tai A2011 China Daily reported that the company achieved a total revenue of 2 billion 980 million 813 thousand and 100 yuan in the first half of the year, operating profit of 623 million 59 thousand and 800 yuan, and a net profit attributable to the parent company of 491 million 647 thousand and 100 yuan, up 32.67%, 40.46% and 34.01% respectively over the same period last year.

As a leading textile and dyeing enterprise in China, Lu Tai has the advantage of technology and scale, enabling it to resist external risks better.

As a responsible person of the China Cotton Textile Association said, the current predicament of cotton textile shows the urgency of pformation.

It forces enterprises to improve product quality, eliminate backward production capacity and establish a truly differentiated development mode.

Only by improving the core competitiveness of enterprises and meeting the needs of the market can we minimize the impact of fluctuations in cotton prices.