Who Is Paying The Price Of Cotton?

Recently, India, Bangladesh and other countries have introduced measures to create a favorable environment for textile enterprises under the background of sharp fluctuations in cotton prices. In addition to policy changes, terminals market The purchase of products also changed due to the rise and fall of cotton prices. In the current situation, who are the three governments of the government, textile enterprises and importers, who are paying for the fluctuating cotton prices?

　 Textile companies in various countries have no choice but to pay the bill.

Big fluctuations in cotton prices textile industry The negative impact is self-evident. Cotton prices in India hit a record high of 180 rupees / kg at the beginning of this year, but plummeted to 126 rupees / kg in early May (1 India rupee was about 0.02 dollars). The sharp drop in prices has made India's cotton trade fever plummet, and the supply of the market has been overrunning, which has caused the stock of the major spinning mills to pile up. It is understood that, in order to avoid increasing the burden of inventory, India Andhra Pradesh textile mill production capacity will be reduced by 20%. The industry estimates that the fluctuation in cotton prices has resulted in a loss of about 20 billion rupees in India's Andhra Pradesh spinning industry and a loss of about 110 billion rupees nationwide in India.

When high inventory meets low cotton prices, the operation of textile enterprises will undoubtedly be in trouble. Compared with India, cotton textile enterprises which rely almost exclusively on imports have suffered a more serious blow. At the beginning of this year, many Bangladesh spinning mills had already ordered cotton, and the cotton price was very high at that time. But no one has expected that cotton and cotton yarn prices have dropped almost every day since May. Today, these spinning mills are in a dilemma. On the one hand, if they fail to perform the purchase of cotton, they will be faced with the arbitration of the International Cotton Advisory Committee. And if the contract is fulfilled, it means that these spinning mills can only bear the cost of buying the cotton at high price and selling the cotton yarn at a low price. It is understood that so far, Bangladesh has nearly 200 thousand tons of imported cotton signed, the average price is 0.99 U.S. dollars / kg, and the country's domestic finished yarn prices have dropped to 3.30 U.S. dollars / kg.

　　 government Trying to turn the tide

The huge losses suffered by spinning enterprises are not desired by any big textile country. In order to deal with the fluctuation of global cotton prices, we should strengthen the competitiveness of the international market. In recent years, including India, Sri Lanka and Bangladesh, various forms of assistance have been provided to the textile industry of various countries. At present, the India government provides the textile industry with a 7.5% tax rebate to support the sustainable development of the textile industry. In order to solve the problem of slow growth in the textile industry, the government of India has put cotton and cotton yarn exports in the open general license management system, no longer any quantity restrictions, and has resumed preferential tax rebates for cotton and cotton yarn exports.

Looking at other countries, Sri Lanka has provided a 5% duty-free bonus to eligible textile export companies; Bangladesh has been introducing incentives for textile industry, such as cash award of yarn export 5%, cotton import development fund and so on.

And some countries that have not yet taken action are prepared to introduce relevant measures for cotton's fluctuation expectations. In the main cotton producing area of Sindh province in Pakistan, heavy rains in recent days have damaged at least 2 million bales of cotton. Pakistan towel manufacturers association is worried that cotton prices may rise again, because last year there was a similar situation after the flood, and the price was once 330 rupees / kg.

Pakistan textile department suggested that in order to stabilize cotton prices, the government should immediately ban cotton exports, while importing cotton from other countries, such as India and the United States. Usman Eli, President of the southern part of the Pakistan towel manufacturers association (TMA), suggested that the government should put forward a favorable strategic plan and convene a stakeholder meeting to find out solutions in time. Eli believes that only in this way can Pakistan textile industry survive and occupy a place in the international market.

　 Importers buy chemical fibre products

Large fluctuations in cotton prices also affect the interests of importers in Europe and the United States. But compared to textile manufacturers, these importers can still adjust the product line to reduce the negative side. At present, chemical fiber products are gradually replacing cotton products, becoming the first choice for some textile importers in the United States. The US Customs has released statistics on imports of textiles and garments in the first half of the year. Data show that in the first half of this year, various types of cotton garments imported by the United States decreased significantly and changed to the corresponding categories for purchasing chemical fiber clothing. Among them, women's non knitted shirts were more obvious, and cotton clothing dropped by 25.8% compared with the same period last year. On the contrary, the quality of chemical fiber clothing increased by 21.8%. Similarly, women's knitted shirts also showed similar results. Cotton grades dropped by 8.5% compared with the same period last year, while chemical fiber products increased by 20.5%. In addition, there are similar changes in men's, women's chemical pants and cotton trousers.

In fact, the importer's action is not only to avoid the fluctuation risk of cotton price, but also a prediction of market sales trend. According to the Ministry of Commerce, sales of clothing, which usually rose in the past year's return to school sales season, dropped by 0.7% in August. Some importers believe that under the background of the high unemployment rate and the economic weakness in the United States, consumers will tighten their purse tightly, unwilling to spend too much on clothing, let alone the high price of cotton clothing. Increasing the purchase volume of chemical fiber products may be more in line with the needs of the consumer market in the future.