Fujian'S Largest Cotton Textile Base Stops Production

Once known as "earn a BMW"

It has been claimed that Guangdong's cotton textile foreign trade enterprises were reduced to receive orders without profit.

The plight of China's export enterprises is evident from the cotton spinning industry.

The US continues to raise the debt ceiling, the European debt dilemma is difficult to see in a short time, and the demand for external markets is shrinking.

Let alone the pressure of RMB appreciation and domestic tightening policy, will cotton spinning enterprises become the first Domino to fall?

"It is difficult to digest in inventory.

In from August 16th to 18th,

The largest cotton textile base in Fujian Province, known as "the famous textile city", has been shut down by the whole industry in Changle.

This legend does not yield a kilogram of cotton "no cotton township" from scratch, after 20 years of development, has become one of the key areas of the country's three largest knitted fabric and one of the three million spindles base.

At a time when the market was booming, many small and medium-sized textile enterprises in Changle could earn a BMW every day if they could get workers in full production.

{page_break}

Sharp decline in orders, cotton mills are forced to stop production

"When the domestic garment industry is in a good export situation, the vast majority of our products are exported to Guangdong, Fujian, Zhejiang, Shanghai and other foreign trade garment enterprises. There is almost no sales in the mainland. Now, in order to deal with the decline of orders in coastal provinces and cities, we have to look for customers we are not familiar with in the central and western regions."

A chairman of a larger cotton spinning enterprise in Changle told reporters.

In August 19th, a reporter interviewed more than a dozen cotton textile enterprises in Changle. Several cotton spinning enterprises had already stopped production in advance, or were in a semi shutdown state. Some small businesses "small boats and good turnaround".

The general manager of several large cotton textile enterprises went to Chengdu, Xi'an and other mainland to look for order customers.

"We should pay close attention to the export situation of garment enterprises in Guangdong almost every day, and take the export situation as a weathervane whether we can increase production."

Chen Zongli, chairman of Changle Huayuan Textile Co., Ltd., told reporters.

According to the statistics released by Guangzhou customs in August 17th, 1~7 exported Guangdong textile and apparel 24 billion 480 million US dollars, an increase of 21.6% over the same period last year, but the growth rate slowed down in April, and the increase in exports of textile and clothing in July was 28.5 percentage points lower than that in March.

The statistics also showed that Guangdong exported textiles and clothing to Hongkong for 5 billion 800 million US dollars in 1~7 months, an increase of 2.9%, and exports to the EU 5 billion 230 million US dollars, an increase of 30.2%. Exports to the US $3 billion 850 million, an increase of 15.9%, and exports to ASEAN 2 billion 60 million dollars, an increase of 32.4%. The total four accounted for 69.2% of the total value of Guangdong textile and clothing exports.

In the same period, Guangdong exported US $1 billion 720 million and US $930 million to Latin America and Africa respectively, with an increase of 66.9% and 33.9% respectively.

It seems that there is another mystery in the good news of the situation.

A person from the Ministry of trade of Shanghai's largest import and export trading company told reporters that "this year's exports look good, but the main reason is that the price has increased, and the increase in volume is actually decreasing."

Wang Qian, editor in chief of the first textile network, also believes that the proportion of export growth has contributed more than 20% to the price increase, while the contribution of export growth has not been more than 5%.

The data from the first textile network are: in the first half of 2011, the average unit price of spinning in China's textile and clothing exports increased by 30.31% over the same period last year, but the volume of exports increased by only 5.75%. The average price of cotton fabrics increased by 41.73% over the same period last year, but the export volume was negative -1.89%. The export price of knitted garments increased by 20.3%, but the export volume increased by only 3.49%, while the average price of woven garments increased by 23.06%, but the quantity of exports was -0.1%.

Even the rapid growth of textile exports caused by this price factor may end in the first quarter of next year.

Wang said that when textile enterprises enter raw materials at high prices, the prices of products will rise. This factor will be digested in the first quarter of next year. When the export price rises, the growth of domestic textile exports will slow down to about 10%.

According to the analysis, the rapid growth in the first four months of this year is due to the large increase in domestic cotton prices. Since the gradual decline of cotton prices in March, the volume of orders has been decreasing.

According to Zheng Zuying, vice mayor of Changle, at present, there are 31 spinning enterprises in Changle, and 4 million 500 thousand of them are bloomed. In 2010, there were 10 enterprises with output value of 21 billion 443 million yuan and output value exceeding 1 billion yuan.

At present, the city is investing 12 billion 800 million yuan, construction of 31 projects, after production is expected to increase the spindles of 3 million 800 thousand spindles, the annual output value of 20 billion 500 million yuan.

At present, the quantity of Nissan spindles in Changle is about 2500 tons, the average daily output value is about 60 million yuan, and the output is stopped for three days, which means that the output value will be reduced by about 180 million yuan.

"This is also much more than we continue to produce, increasing inventory pressure, resulting in the loss of spindle price is much smaller.

Due to the high subsidies for high temperature workers and the increase of workers' wages on the hot summer days, according to the current cotton prices and veil prices, the continuous production is definitely losing money, and the extra inventory will also make the price of veil more unpriced.

Lin Baoguang, Secretary General of Changle cotton textile industry association, said.

{page_break}

What makes Changle cotton spinning enterprises feel worse is the high price stock.

Since September 2010, China's cotton prices have climbed steadily, rising from 18000 yuan per ton to 30000 yuan, and the highest price even reached 34000 yuan per ton, or nearly 90%. In March this year, cotton prices began to plummet all the way, from 34000 yuan per ton to the current 19000 yuan or 44%.

Cotton prices have gone up and down, and most textile companies have failed to get the benefits.

When cotton prices surged in the second half of 2010, textile companies had to cram for purchasing at least 20 days' inventory due to normal operation.

In the case of little increase in the price of cotton yarn, textile enterprises have to accept the cost pressure of "one price per day", while the middlemen who rely on hot money to make a ton of cotton can earn 10 thousand yuan.

However, in March 2011, cotton prices began to decline continuously, and the middle reaches of textile mills such as cotton mills were "stuck" by high priced inventories.

China cotton information network data show that China's yarn stock has been rising since November 2010, reaching a record high in June, reaching 35.2 days, far higher than the 8.96 days of the same period last year.

By the end of July, China's cotton business inventories totaled 1 million 350 thousand tons, up from 120 tons in the same period last year, much higher than the 950 thousand tons and 900 thousand tons in 2008 and 2009.

Cotton spinning enterprises in Changle naturally did not escape similar fate.

31 cotton spinning enterprises produce 2500 tons of all kinds of yarns, and now there are nearly 50 thousand tons of yarn stocks, with a stock of about 20 days.

"Even more frightening is that the production order of enterprises has been disrupted, and the price of veil has been fluctuating with the sharp fluctuation of cotton prices. In order to prevent operational risks, enterprises dare not receive large bills or long orders.

The production of cotton textile industry is cyclical, and cotton is usually stored for more than 3 months.

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

It is estimated that the current production of 1 tons of cotton yarn need to pay 2000 yuan or so.

Taiyuan Changle Taiyuan Textile Co., Ltd., Chen Hongda, director of supply department, told reporters.

A general manager who mainly produces cotton yarn told reporters that the company is striving to produce textile products of other raw materials.

"Unprecedented pressure on cotton spinning industry is definitely a big blow.

Processing cotton yarn is not as valuable as raw materials, and the cost of money can not be made.

"Last year, the processing fee of 1 tons can earn 10 thousand yuan. What is unexpected is that nothing will be done this year, and 1 tons of raw materials will be charged 10 thousand yuan."

The manager said.

In November last year, the company purchased a batch of lint at the price of 32 thousand ~3.3 yuan / ton, because no order, the workshop did not dare to start, and now these raw materials are still stacked in the warehouse.

The manager told reporters that the price of cotton yarn has been very stable in previous years. The market price is generally around 40 thousand yuan / ton, and the market price of cotton yarn has dropped to 28 thousand ~2.9 yuan / ton this year.

{page_break}

The death of industrial chain

"Cotton prices fluctuate too much, which has led directly to many small textile enterprises to break down or switch to other substitutes, such as producing polyester, viscose, acrylic and other textile materials."

The above manager, who produces cotton yarn, added.

Unfortunately, the impact of low cotton prices is further pmitted to other raw materials and textile fields, and the conversion can not completely solve the loss problem of cotton spinning enterprises.

"Although our company's cotton spinning accounts for only 3% of the total production, I feel the downward pressure.

The recession of cotton spinning will also directly drag on other textiles. The price of chemical fiber used for spinning is also dropping sharply. Although we have a small stock of cotton, we have a large stock of chemical fibers. Even if we do not produce cotton yarns, we still have to bear the losses caused by falling prices of chemical fibers.

Chen Zongli, chairman of Changle Huayuan Textile Co., Ltd., told reporters.

In the afternoon of August 24th, the domestic spot cotton price suddenly began to exert force, and the cotton price that had been slightly collated rose substantially in the concussion. On that day, the domestic spot cotton price index also rose to the top from below the state's declared purchase and storage price, and the cotton price of "diving" has been rising since mid February.

Among them, Zheng cotton main 1205 contract closed sharply increased 415 yuan / ton, closed at 21850 yuan / ton, increased more than 120 thousand positions; electronic matching market cotton prices overall synchronization increased sharply.

In the middle of March, it began to drop to the lowest point in mid August, and the price has already fallen below 19800 yuan / ton in the new year, and the high price stock in the cotton textile industry has begun to decrease gradually. Although the cotton prices will reduce the cost of raw materials in cotton spinning enterprises, it can alleviate the financial pressure brought by the previous high priced stocks to a certain extent, but it can not make up for the losses it suffered in the early stage. In addition, the bargaining power of the cotton textile enterprises to the downstream garment enterprises is relatively low, and the clothing enterprises require the cotton textile enterprises to adjust their prices accordingly as the cotton prices fall. Xiong Xiaokun, a light industry researcher at CIC, thinks cotton price is self.

According to analysis, the sharp rise in cotton prices in the short term is likely to be a technical rebound.

At present, Hebei, Shandong, Hubei and other provinces cotton growth is good, production is expected to be optimistic, such as cotton production in Hebei province this year to achieve a resumption of growth, the province's cotton planting area increased by 76 thousand and 600 mu over last year, an increase of 0.9%.

In addition, in recent years, the weather in Xinjiang is clear and rainfall is relatively small, and the overall growth of cotton is good. In the long run, there is still a relative surplus risk of cotton supply.

In southern Korla, Akesu, Kashi and other places, the individual bolls are generally 10~12. If the weather conditions are good in the late period, it is estimated that the yield per unit area of seed cotton can reach 400 kg / mu in some areas. It is estimated that some cotton ginning plants will start the seed cotton purchase scale on September 5~10.

In foreign countries, cotton production in India is expected to reach a record high this year. The supply of its second largest cotton producing countries will continue to increase, which may lead to a fall in global cotton prices.

Because the price of cotton in India is nearly half as low as that of the world, it has strong attraction for some textile producing countries in Asia that focus on cost control.

India has also eliminated quantitative restrictions on overseas cotton sales, allowing more exports of cotton to foreign countries.

From the perspective of the downstream industry of cotton, the textile industry, the textile enterprises have seen a slight increase in the storehouse tide, prompting cotton sellers to increase their mental health.

However, as the downstream orders did not increase significantly, the textile industry did not improve substantially. Most enterprises were still not very optimistic about the future market, and procurement was still more cautious.

At present, European and American orders are still decreasing.

Moreover, recently, the state has cut down tariffs on 33 kinds of imported goods, and the import tariffs of heavy, light, twill and plain cotton fabrics blended with unbleached chemical fibres have been cut from 12% to 6%, and the rate of reduction has been 50%. The provisional tariff rate adjustment of some commodities has been implemented since July 1st.

With the gradual implementation of policies and measures to control prices, the price of raw materials for cotton spinning has already fallen off the top of other commodities, and now the import tariff of cotton fabrics has been cut down, which further inhibits the impulse of China's domestic cotton textile products price rising.

"Our clothing export is competing with the rest of the world in the same market. Therefore, if the price of cotton yarn of cotton spinning enterprises in China is higher than that of other cotton spinning enterprises in other countries, we can only choose imported cotton yarns under the situation of reduced import tariffs, otherwise we will lose competitiveness in the apparel industry of Vietnam and Indonesia, which are lower in labor cost."

The general manager of a garment export enterprise from Guangdong said.