Cotton Prices Expand Because The Industry Is Losing Money.

Domestic demand is sluggish.

The overall efficiency of the export industry has fallen sharply, and more and more small and medium-sized enterprises will face the risk of elimination. The price war in the textile industry has entered a stage of white hot, and the price of cotton is still prone to rise and fall under the weak demand.

China Textile Industry Association data show that in the first 5 months of this year, China's textile and clothing exports totaled 90 billion 642 million US dollars, an increase of 24.47 percentage points year-on-year, and the actual export volume of textile industry is still negative growth after deducting the price rising factors. Textile enterprises at above scale realized 1 trillion and 757 billion 158 million yuan of domestic sales value, and the growth rate dropped 18.51 percentage points year-on-year, indicating that the domestic sales growth rate of textile industry has obviously slowed down.

Entering the July, with the advent of the traditional off-season, the sales of gauze sales dropped more obviously, and the market price war became more severe.

All textile enterprises are competing for the price to return funds, and the competition of conventional varieties has entered the stage of white hot.

Orders such as J50S, J60S, J80S and other high-density and high-density varieties have been significantly reduced, inventory is rising, competition is fierce, prices have continued to decline, and 21*21 63, "20*16 63" and other conventional varieties have been seriously impacted by imported grey cloth, and sales difficulties have been forced into the ranks of "price wars". The performance of exceptional breadth of bedding market has already stopped rising, and later orders have been decreasing gradually.

Obviously, there are many uncertainties in the price of upstream cotton and polyester staple fiber.

If the upstream price rises, the gauze price can not rise with the pressure of inventory, but it will increase the production cost; if the upstream price falls, the price of gauze is bound to decline, or even the decline will be far greater than the decline in raw material prices.

In order to maintain smooth capital chain and reduce inventory, textile enterprises seem to have to choose the way to cut prices.

The latest report of the consumer goods division of the Ministry of industry and Commerce predicts that the loss of the textile industry in the second half of this year will continue to expand.

The report pointed out that from the industry development environment, labor costs and other problems such as continuous increase in production costs and financing difficulties are difficult to improve in the short term. The difference between domestic and foreign cotton prices is still widening, and the development environment of the textile industry is still grim.

Textile enterprises will continue to be in a difficult position in the second half of the year. Textile and garment exports will continue to grow at a low level. The overall efficiency of the industry will decline sharply compared with that of last year. The deficit and loss of enterprises will expand and more small and medium enterprises will face the risk of being eliminated.

The dilemma has increased the difficulty of cotton rebound.

According to the latest weekly report of China Cotton Storage Corporation, from the perspective of the cotton market, the supply of cotton is still surplus, the stock has increased sharply year by year, and the market is worried about the European debt crisis.

Domestic cotton market stalemate remains the same, most cotton spinning enterprises are in a state of loss or profit. Raw material purchasing tendency is outside cotton, textile enterprises' orders are reduced and finished product inventory pressure is bigger, consumption cotton demand is shrinking, export is showing weakness, cotton price is still easy to fall and difficult to rise.

"At present, enterprises have greater pressure to repay money, and textile enterprises continue to purchase on demand and prepare a small amount of stock strategy in lint purchase. The domestic cotton spot market is hard to deal with, and the downward pressure on cotton prices at home is very large."

"The 2012 year plan for temporary storage and purchase has been released, and the possibility of starting large-scale storage and storage is very great. The situation of cotton reserve safety management will be more severe."

China store cotton weekly said that the construction of new storage capacity projects will start in 2012.

Statistics show that at present, the number of cotton reserves reaches about 4000000 tons, and the number of storage banks is more than 140.