Domestic And Foreign Cotton Price Differentials Affect Garment Industry Development

Since the fourth quarter of last year, the spread of cotton prices at home and abroad has continued to widen, which is as high as 5400 yuan per ton.

Export competitiveness decreases, and business efficiency declines. Cotton prices hang upside down and weigh heavily on textile industry.

"Production, domestic sales, exports, investment and economic benefits all showed deceleration or downward trend, and the current textile economic situation is more severe."

In May 31st

In the press conference on industrial economic operation, the reporter noted that with the intensification of the macro environment and the fact that the overall operation of the textile industry slowed down before April, the industry's judgement of the textile economic operation situation was less optimistic than that before the beginning of the year.

Sun Huaibin, director of China Textile Economic Research Center and spokesman of China Textile Industry Federation, emphasized the severe situation facing the textile industry this year through data interpretation.

The meeting pointed out that in the first 4 months of this year, China

The operation shows a trend of slowing down, which is manifested by the slow growth of production and investment, the narrowing of the export price of textile and clothing, the negative growth of export volume, and the sharp increase in industry profit growth.

In the first half of 2012, the industry continued to face higher external risks. Further improvement of risk control and response capability is still the top priority.

(the corresponding data are detailed in the 1 edition of the newspaper May 23rd. The textile industry is facing higher external risks).

According to Sun Huaibin analysis, in 1~4 months, China exported 71 billion 3 million US dollars of textile and clothing, an increase of 1.07% over the same period last year, which is a sharp drop compared with the year-on-year increase of 19.8% in 2011.

"1~4 months, China's textile and clothing exports decreased by 2.23% over the same period last year. This is a very dangerous figure, indicating that our foreign markets are losing."

Sun Huaibin said.

At the same time, the downward trend of domestic economic growth also slowed down the demand for textile and clothing.

In 1~4 months, the clothing retail sales in China increased by 11.6% after deducting the price factor.

Another serious signal comes from the decline in the economic efficiency of the industry.

In 1~3 months, the total profits of textile enterprises above Designated Size amounted to 53 billion 704 million yuan, down 1.77% from the same period last year, and the growth rate was 55.34 percentage points lower than that of the same period last year. The profit margin of sales was 4.5%, down 0.66 percentage points from the same period last year, and the deficit of Enterprises above designated size was 19.67%, and the amount of losses increased by 120% over the same period last year.

The industry situation is unfavorable, and the export situation is grim.

1~3, the three largest textile and apparel market in Europe, America and Japan dropped 6.55% from the global textile and apparel market year-on-year. The growth of international demand has been weak for a long time.

The demand of developed countries has decreased, and the textile industry of China's emerging economies such as Southeast Asia has also declined. For example, 1~4 months, China's exports of ASEAN's textile products increased by 59.66 percentage points year-on-year.

It is considered that behind the severe appearances, besides the lack of market demand and the increasing pressure from international competition, the spread of cotton prices at home and abroad has become an important factor in the export situation.

"The spread of cotton prices at home and abroad has weakened the international competitiveness of China's textile industry."

He pointed out that since September 2011, the price of cotton prices in the international market has dropped by about 1000 yuan, compared with domestic cotton prices. At the beginning of 2012, the difference between cotton prices at home and abroad was about 3000 yuan; and as of May 25th, the price of grade 328 cotton in China was 18853 yuan / ton, and the cotton price in the international market was 83.3 cents / pounds. After 1% duty and value-added tax, the price was 13393 yuan / ton, and the cotton price in the international market was lower than the domestic market price 5460 yuan / ton, and the price difference continued to widen.

Compared with India, another big cotton producing country, China's cotton price is higher than India cotton price of 7000 yuan / ton ~8000 yuan / ton, while Pakistan's cotton yarn price is even lower than that of China's cotton price.

The serious inverted cotton price directly causes domestic cotton spinning enterprises to bear too high raw material costs.

The serious loss of market orders resulted in an overall negative growth in the export of cotton textiles and clothing in China.

Statistics show that 1~3 months, China's cotton textile industry profits fell by 3.6% over the same period last year, which is just as bad for cotton spinning enterprises whose profits are not high.

At the same time, the 1~3 profit of chemical fiber industry, which is closely affected by cotton prices, has dropped by 46.6% compared with the same period last year.

It can be seen that the cotton price problem has also become the main reason that affects the overall profit of the textile industry.

In the face of the grim reality, sun Huaibin said that the textile industry hoped to distribute the quotas of imported cotton, and to tilt the production enterprises on the issue of the quotas, implement price fixing and storage, stabilize domestic cotton prices, and narrow the price difference between domestic and foreign cotton, so as to ensure the smooth operation of the textile industry.

"According to historical data and enterprise's reflection, domestic and foreign cotton price difference is controlled at less than 1500 yuan per ton, and the textile industry's economic indicators are expected to reverse the downward trend.

If the cotton price problem can be solved as soon as possible, although the external demand is sluggish and domestic demand is slowing down, the textile industry will still be able to rely on its own structural adjustment and pformation and upgrading to ease the problem of insufficient market demand.

"In the long term, we should deepen the reform of the cotton circulation system, improve the macro control mechanism of cotton, increase the quantity of cotton imports every year until the abolition of the dual management restrictions of cotton import quotas and sliding tax, so as to achieve the market docking of internal and external cotton prices and play a regulatory role in the market mechanism."

Sun Huaibin said.

At the same time, it is suggested that the departments concerned should effectively solve the "high and low deductions" (value-added tax levy 17% deduction 13%) which has long troubled the development of cotton spinning, cocoon silk and linen textile industry, and put the textile industry into the pilot area of the State Administration of Taxation on the management of approved tax deduction for agricultural products value-added tax in some industries, and timely raise the export tax rebate rate of textile industry, and curb the serious situation of the decline of China's textile and clothing exports.

At the same time, industry and enterprises should continue to accelerate pformation and upgrading, and strive to turn risks into opportunities.