Why Cotton Prices Are Not Cheap Because Cotton Prices Have Plummeted?

Right now is the peak season for the cotton market in Akesu, Xinjiang.

The home of Liu Xiangwu, a large cotton farmer in Sha Ya county, Akesu, is covered with sun dried cotton.

"A total of 100 tons of cotton has been left at home. The price is low. Let's see it again."

In order to hoard the more than 100 tons of cotton, he deliberately built a humble warehouse in the yard, which can store up to more than 130 tons of cotton.

Liu Xiangwu planted more than 600 mu of cotton per mu this year.

Compared with last year, cotton purchase price fell by more than 40% this year.

Is it expensive to buy expensive clothes?

Foreign trade is difficult to do, many foreign trade enterprises have begun to expand the domestic market. Apart from setting up shop on Taobao, supplying several physical stores is also a major marketing channel for them.

Reporters at a shirt shop in Jianguo Road in Hangzhou saw that the price of 100 yuan cotton shirts last year was priced at 120 yuan this year, even if it was 10 percent off, 108 yuan, 8% higher than last year's price.

"Before the old customers bought more than a counter price of 5 yuan, 10 yuan is OK, now even one yuan can not do."

Zhou Lili also acts as a brand shirt in Sijiqing's clothing market.

"We usually have two kinds of wholesale price and Taobao price, and the spread is almost doubled, otherwise the agent below can not do it."

She told reporters that the shirts priced at 120 yuan were basically 40 yuan from her, but 5 pieces were taken.

"A shirt earns a few dollars. We can't afford to run even if we go by volume."

She said that many wholesale traders in Sijiqing are directly stocking up from factories, and then they are wholesale to retailers everywhere, and then they are sold to consumers.

Stadium Road and a clothing store near the junction of Jianguo Road, lots of good, but recently posted a notice of pfer.

Shopkeeper Liu Xiaojie said that the pfer fee was 200 thousand, the rent was 185 thousand this year, and the annual increase was 10%.

The reporter found that the clothes in the shop were of general quality, and the summer wear at the door also offered a discount of 100 yuan and three pieces.

Reporters simply calculated that only one rent, next year will need 203 thousand and 500 yuan, earn 565 yuan a day, in order to pay the rent.

"Clothing retailers are basically working for the landlord, and your clothing is rising faster than the rent."

A lady who once opened a clothing store told reporters that apart from the rent, clothing stores are most afraid of inventory. If the money is not popular, they will lose money.

In addition, although the price of cotton has dropped, the fabric price is less than 20% in the clothing price. Compared with the rising labor and store rental costs, the price of clothing is generally easy to rise and fall.

Shrinking external demand offset fabric down, garment factory is also known as "recession".

The upper reaches of the finished garments are garment factories. Although the fabric prices are falling, the garment factories also have a lot of bitter water to offset the other rising factors.

"Those foreign businessmen who signed contracts with us at the beginning of the year knew that the price of fabrics fell, and they basically said," I can't pay you a deposit now, or you will postpone the shipment, or you will lower the price. "

Deng Feng bluntly said that the foreign trade business is not good at present. At present, the US economy is depressed, the European Union is in debt crisis, and the external demand is very depressed.

Deng Feng co operates a clothing import and export company with his friends. He is mainly responsible for receiving orders and checking goods in Yiwu, but Deng Feng still works in a garment factory in Yiwu.

"Before the workers were asked to bring in relatives, they could go to work in the factory. Now they bring a worker to introduce $200, and the workers are too hard to find."

He told reporters that the mid-range shirts they exported were generally 40~50 yuan / piece, fabric cost accounted for 30%, labor cost accounted for 60%, and the rest were warehousing, pportation and other expenses.

Take a 50 yuan shirt as an example. Europeans are big and generally need 1.6 meters. The Americans need 1.7 meters, and the fabric is controlled at less than 20 yuan. Even though the fabric price has dropped by 20% this year, it is about 4 yuan, but the clothing factory's OEM cost is almost 20 yuan, up 8 yuan from last year, plus warehousing and freight, and the cost of each shirt is about 5 yuan more than that of last year.

Deng Feng's partner Hu Chang, who worked in Yiwu for more than 10 years, said that the biggest pressure on garment factories is the rise of human cost. Now the wages of Vietnamese textile workers are 600 yuan, while Zhejiang's textile workers have to start at 3000 yuan, with a monthly high of more than 4000 yuan.

To save costs, they moved many low end orders to Vietnam this year.

"The same goods, in Vietnam, the cost of each piece of foundry is 6.5 yuan / piece, the cost in Yiwu is 9 yuan / piece, low-grade shirts are generally done over there."

Deng Feng told reporters.

The price of cotton is lagged behind. This year, we are still digesting high priced cotton last year.

In the upper reaches of Deng Feng and other garment factories, textile mills are having a hard time.

Mr. Chen of Wenzhou runs a cotton ginning mill and textile mill in Akesu. He said that from September to the end of November, the cotton market in Xinjiang will be listed. The general spinning mills will store enough cotton in the past three months. But the cotton prices rose all the time last year, making them hoard high priced cotton.

"Last year we cotton received a maximum of 14.5 yuan / kg, and the current cotton price is only 8.5 yuan / kg. This price difference means that you lose a few yuan when you spin a yarn. The more you spin, the more you lose. Cotton is also devaluing in the warehouse."

Mr. Chen said that 110 tons of cotton can be spun into 100 tons of cotton yarn, plus a variety of costs of around 7000 yuan. According to the purchase price of 14.5 yuan / kg cotton, the cost of 32 spinning costs is 44 thousand yuan per ton, but the factory price is currently only 29 thousand yuan / ton, and the loss of 15 thousand yuan for spinning a ton of yarn.

Drawing lessons from the hasty acquisition of high priced cotton last year, Mr. Chen only started buying cotton in October, with an average price of around 8.6 yuan per kilogram.

"According to the current cotton price, our spinning mill can still have a slight profit and will not lose money."

He said, now that the gate of Xinjiang's ginning factory is deserted, everyone is watching. Many cotton merchants have grabbed cotton at the price of 9.5 yuan / kg this year, and now they have to sell it at a loss.

Mr. Chen said that the pmission of cotton prices has a lag period, usually one quarter or half a year. Since most cotton mills use high priced cotton last year, the fall in cotton prices this year will be reflected in the spring clothes of winter clothing or next year. When the high priced cotton stocks are used up, the factory price of the cotton mill will be slightly reduced.

The three quarterly report has also revealed that most of the listed cotton textile enterprises are faced with difficulties due to the impact of cotton prices.

Such as ST Xinlong, ST Maya, ST de cotton and so on are all over $10 million loss, Huafang textile is a loss of 110 million yuan.

Huafang textile has been weakened by the weak peripheral economy, and the international cotton price has dropped sharply. The company's previous large quantities of high priced cotton stocks and high cost products have been forecast. The company expects net profit from the beginning of next year to the end of the next reporting period will continue to suffer losses, which will drop sharply compared with the same period last year.