Cotton Yarn Industry -- Worries About Imported Textile Raw Material Market

The import of cotton yarn market is going on several years ago.

The collapse of the market crash.

A few years ago, the collapse of PTA raw material market was due to the fact that Zhejiang merchants used the opening limit of the bank to import PTA (raw materials for producing polyester), and sold them at a lower market price after clearing the ports in China.

We must guard against mistakes.

If the regulation is not in place, there may be a "collapse" storm brewing in the imported cotton yarn market.

The Chinese government has lifted the world's cotton prices, making the Chinese market a dumping ground for textile raw materials all over the world. It has taken care of the short-term interests of Chinese cotton farmers on the surface. But in the long run, the policy of quench poison and quench thirst is actually more harmful to farmers.

If we look at the problem from a large perspective, cotton planting is also a source link of the "big textile industry chain".

How will the upstream enterprises survive in the future? But at present, a lot of cheap yarns and foreign cloth have entered the Chinese market, and their power is enough to create a serious impact on China's textile industry. At present, a number of Chinese spinning and weaving factories have been closed down. In the future, cotton farmers in China are selling to cotton. The national spinning and weaving mills have all gone bankrupt. Who can sell the national cotton to the country?

It will be too late until we slow down.

It takes a few minutes to choke a person. What is the future of good prospects?

For example, for the driver who was drowned by the rainstorm and water in the tunnel of Beijing, we can say to him, "if we can stick to what we lose today, we will come back tomorrow, and even come back again."

Chinese

The death of the policy is hurting the fundamental energy.

This is not a natural disaster, but a man-made disaster.

In June 1, 2012 and July 6th, the two meeting of "China textile raw materials Summit Forum" and "import cotton yarn forum" were held in Hangzhou.

I participated in these two meetings, and I made a long report on the new pattern of "surging waves - imported gauze" at one of the meetings. The two meetings added up to nearly 1500 applicants.

To my great anxiety, I felt vaguely about the bloody smell of the market in the crowded arena. Just like the retail Hall of the securities company, you could see the bustling retail crowd would sniff out the market peak signal.

The participants in Pakistan and India were surprised and surprised. They thought they were actually buyers. Actually, they did not know that they came to the conference. Basically, they were two kinds of people: one type of participants was the new importing cotton yarn and cotton cloth, some of them were small owners who sold factories to the trade area, and the other participants were those who had a serious shortage after the early purchase of high priced goods and sought relief.

Over the past 3 years, imported cotton yarns and grey fabrics have attracted more and more attention due to price advantage. In 2010, the "big money market" made cotton merchants and cotton yarn merchants "earn ten years in a year". This kind of "money making effect" also attracted more and more off site funds.

Enterprises that originally had nothing to do with the textile industry, investment institutions and individuals also joined the overseas purchasing force of "yarn and cloth". At the same time, domestic banks also released large quantities of letters of credit to fuel the overseas purchase craze.

Our supplier, a famous textile enterprise in Karachi, Pakistan, received 5 batch of purchasing groups from mainland China in the month of May.

The Pakistan friend was not so happy. On the contrary, she worried and told me that due to the large demand from China in the short term, some small businesses in the region were very excited. By borrowing a lot of equipment and increasing manpower, the local textile mill workers had hardly been trained, so that the raw materials, energy and labor costs of Pakistan and India were virtually promoted, and the factory prices of local products were pushed up, which reduced the quality of products. In the short term, the enthusiasm of Chinese buyers seemed to be high, but once these "short-term demand bubbles" dispersed overnight, there would be disastrous consequences.

From the "tulip bubble" in Holland to the "Internet bubble" in the capital market of Wall Street in the late twentieth Century.

History is repeating itself.

Foam is like bacteria, so long as it has the soil, it will spread.

Because of the pnational paction mode, pricing mechanism, settlement way, quality dispute, which are involved in international procurement of bulk commodities, the foreign risks faced by imported raw materials almost destroy the confidence of new entrants.

The boat that can sail in the river to the sea may not be able to cope with it, but there are quite a few cases in which the rocks are on the rocks. If I tell you, a business in Changzhou, Jiangsu is still struggling to digest the high price in the second half of 2010 (when the cotton price is 33000 per ton, and the current cotton price is 19800). How do you feel about the imported cotton yarn?

Cotton and cotton yarn are becoming more and more like speculative commodities and are separated from the properties of raw materials.

Price fluctuation is also more and more affected by the capital side and away from the fundamentals of production and consumption demand.

At one time, the price of imported cotton yarns was even higher than that of domestic prices, as quoted by middlemen.

Because the terminal consumer market has not started, a large number of inventory of raw materials and finished products are kept in all aspects of the supply chain.

To give an example, farmers' agricultural products are stuck in the kitchen of wholesale markets and restaurants. They are not consumed by the end consumers, but the final outcome is rotten.

The prosperity on the surface can not hide the real crisis.

The slight avalanche will cause avalanche effect. Small scale local collapse is not very far away.

Any commodity such as cotton and cotton yarn, which is used as the target of hype, often exceeds its price as a general commodity in the first stage, and becomes the object of stockpiling in the field of production. The second stage is more than the price of capital as the object of investment funds. The third stage is a commodity as a financial derivative, such as the release of a large amount of credit lines, the trade companies do not do physical pactions and engage in agency business. This year's cotton and cotton yarn has become a financial derivative commodity.

In a highly free currency and capital market, if a commodity is gradually capitalized and monetized, it may replace the currency. (cotton and cotton yarns become financial derivatives) this behavior is bound to be punished by currency pairs, and the currency will completely lose its commercial and financial credit until bankruptcy.

{page_break}

The economic crisis caused by the crazy speculation of short-term funds is common in history.

From the distant tulip event in Holland in seventeenth Century to the garlic, ginger and cotton events in recent years in Shandong, China.

The tragic outcome of the "tulip incident" in Holland in seventeenth Century was almost overnight, and how many of them became infamous penniless, wealthy businessmen turned into beggars, and some big nobles were in an insolvable bankruptcy.

Among the victims of blindly following the trend, there are intellectuals with high educational level, and also have illiterate characters, because greed does not have any social boundaries.

We have learned a lot from the import trade of iron ore, steel, coal and soybean industry.

Now, it seems that the bubble has spread to China's textile raw materials.

A few years ago, the collapse of PTA raw material market was due to the fact that Zhejiang merchants used the opening limit of the bank to import PTA (raw materials for producing polyester), and sold them at a lower market price after clearing the ports in China.

We must guard against mistakes.

We did field investigations in the spring of 2012 in Beijing international.

At the meeting, 2/3 of the visitors were not the end buyers of the textile industry, but the trading companies and intermediaries.

At that time, people almost agreed on the cotton market in the future, blindly ordered a large number of foreign goods, resulting in a sharp increase in commercial inventories, but the serious shortage of industrial orders led to a small or lower commercial inventory time will be very long, the backlog of funds will be very large, the Bank redemption period will lead to a large number of selling, and even "chopping" and "stop loss" of the emergence of large numbers, so that the market price of a thousand li.

Historical experience tells us that when an economic bubble expands, the public's psychology of pursuit can make it a serious destructive wave of speculation.

People who lose their senses and fanaticism because of greed will take the initiative to find the "reasonable" basis for bubbles, constantly raise their expectations of prices, cause asset prices to rise continuously, and finally burst, and the market will be in a mess.

The current market situation is that buyers, who do not understand the operation and risk of imported cotton yarn, have all entered this unknown market.

For example, there is a merchant in the Hutang cotton market in Changzhou, Jiangsu. Originally, the domestic yarn trade has gone smoothly. Seeing other people making money from imported yarn, they started to rush into battle and rented an office. In May 1st, they began to work formally, invested about 20 million yuan, hurriedly applied for the right to import and export, and opened their foreign exchange account.

But the letter of credit, which was issued to suppliers in India in June 14th, has not been seen for 2 months until now. Even the example of a cotton yarn has not been seen, so the businessman is discouraged immediately.

A large number of real cases show that it is necessary to try to enter a new market, especially in a series of links such as international trade settlement, quality definition, price mechanism, currency exchange rate, legal environment and risk control, supplier evaluation and assessment, etc., without 2 years of training time, business can not be done.