Narrowing Of Intra And Foreign Cotton Prices And Polarization Of Domestic Textile Enterprises

The gap between domestic and foreign cotton prices has been shrinking this year. As of recently, the domestic cotton -CC price is 19318 yuan / ton, and the difference between the cotton price and the foreign cotton price has fallen below 4000 yuan / ton. Spin Leading enterprises in the industry have clearly shown signs of recovery, and have predicted that profits will increase substantially in the first half of this year, but this does not reflect the current situation of the whole industry.

Wang Qian, a textile expert, told reporters yesterday that comparing the difference between the domestic and international cotton prices last year exceeded 6800 yuan / ton, the difference may stabilize at 3000 yuan / ton this year, and the polarization in the industry will be more obvious.

Transfer production line to reduce cost

Baron East is one of the monopolized enterprises of colored spinning. With the gradual digestion of high priced cotton stocks, the first net profit of Baron East was 98 million 636 thousand and 300 yuan in the first quarter of this year, an increase of 42.55% over the same period last year. At present, the company is promoting gross margin through various ways.

One of them is the rapid development of the Vietnamese project. The Vietnam project mainly produces and sells yarn and its by-products, and its total investment is 98 million US dollars. Baron East Dong Mihua Jingdong told reporters that the Vietnamese project is expected to be put into operation by the end of this year and early next year. The company's annual orders should be stronger than last year, and its growth rate is expected to exceed 10%.

An official told reporters that the production capacity of the Bailong East Vietnam project is expected to be between 10 thousand and 15 thousand tons. The core significance of establishing a factory in Vietnam is not to increase production capacity, but to receive less quotas and get more cheap imported cotton.

The main reason for the sharp decline in the gross profit margin of Baron East last year was the sharp fluctuations in cotton prices and the digestion of high priced cotton stocks.

As a Maori killer of Baron East, cotton price has accounted for more than 70% of the main business cost of Bailong Oriental.

Guotai Junan report predicts that the gross profit margin of Baron East in 2013 can reach 20%. On the one hand, the average purchasing price of cotton is about 20 thousand yuan this year, down from 23 thousand yuan last year. On the other hand, the average price of shipments is higher than last year.

Another company owned by Lu Tai A, from cotton planting to spinning and weaving, and the complete industrial chain of garments, is mainly made of long staple cotton. In order to reduce the impact of long staple cotton supply and price fluctuations, Lu Tai A's measures are, for example, investing in cotton planting base in Xinjiang, accounting for about 30% of self produced cotton flowers. At the same time, as an important large textile enterprise, Lu Tai A can get cotton import quotas, and the proportion of outer cotton can reach 30%~50%. Therefore, its comprehensive cotton consumption is at a low level in China.

In addition, the company has established long-term and stable supply relationships by signing long-term orders and framework agreements with key suppliers, and actively acquiring cotton import quotas in China, so as to get the initiative to flexibly allocate domestic and foreign purchase percentage of long staple cotton.

CICC reported that Lu Tai A used outsourcing processing to cope with its own capacity shortage, but there was no outsourcing processing last year. Combined with the year-on-year increase in the price of orders, the semi annual report is expected to exceed expectations.

　 There is little room for contraction of cotton prices inside and outside.

Several other leading companies also showed signs of recovery. One of the largest suppliers of core cotton textiles in China, Tianhong textile announced its profit forecast. The profit in the first 5 months of this year exceeded the profit in the first 6 months of last year, more than doubled, so it is expected that the profit will increase substantially in the first 6 months of this year.

The company said that because the price of the international cotton market is still far below the price of China's cotton, the group continued to implement the cotton procurement policy announced earlier. At the end of May, the purchase orders already finalized for cotton inventories and prices were sufficient for use in the next 5 months. The group has about 1 million fully operational spindles and 300 thousand spindles at trial production stage.

Wei Qiao textile, the largest cotton textile manufacturer in China, also recently announced that it expects the net profit in the first 6 months of this year to increase substantially compared with the same period in 2012, mainly due to the slow recovery of the overall demand in the textile market and the increase in the sales of the gray fabric, and the stable value of the product's inventory book value compared with the end of 2012.

Data show that 1~5 months, the whole country clothing shoes The retail sales of cap and needle textiles reached 451 billion 500 million yuan, up 11.1% over the same period last year. Textile and apparel exports totaled 103 billion 119 million US dollars, an increase of 13.79% over the same period last year, and the growth rate slowed down 2.74 percentage points compared with 16.53% in 1~4 months.

Wang said to reporters that the industry's overall recovery rate is slower than that of the data, and is still in a weak position. It can only be said that it is better than the lowest in the two or three quarter of last year.

Hua Jingdong told reporters that at present, the situation of small businesses is not very good, the order is difficult and the loss is serious.

Judging from the difference between inside and outside cotton, Wang predicts that it will not be easy to maintain the level of 3000 yuan / ton this year. If it wants to shrink again, unless cotton continues to rise and cotton will be lowered again. "But neither of these two situations is possible." Wang Qianjin said that because of the overall overcapacity, it is unlikely that the industry structure will be adjusted in one or two years.