Excessive Supply Of Yarn In Indonesia'S Textile Industry

According to official reports in Indonesia, Indonesia's textile industry mainly produces yarn.

As the market demand continues to boom, Indonesian textile enterprises continue to expand, and the number of textile mills has increased from 251 in 2012 to 285 in 2015.

In 2013, Indonesia had 10 million 967 thousand spindles, 179385 spinning cups, and 2 million 600 thousand tons of fiber consumption, of which cotton accounted for 26%, chemical fiber 73%, and other fibers 1.1%.

30% of Indonesia's yarn output is used for export, while China, Japan and South Korea are the main export markets, accounting for 74%, 12% and 5% of the total export volume respectively.

Raw materials for yarn production rely heavily on imports.

In 2015, Indonesia imported mainly Brazil cotton, accounting for 44% of the total imports, followed by the United States cotton (21%), Australia cotton (13%), India cotton (8.2%).

Affected by the continued weak demand for textiles, Indonesia's cotton consumption dropped to 575 thousand tons in 2015/16 and cotton imports dropped to 544 thousand tons.

Indonesia's cotton imports will increase slightly to 599 thousand tons in the year 2016/17, with little increase. The main reasons are as follows:

1, the global economy continues to slump, crude oil prices continue to decline, chemical fiber prices are also continuing to decline.

The price of polyester and cotton fell 2% to 0.85 US dollars per kilogram, while the price of medium grade cotton was 1.7 US dollars / kg.

Indonesia

The output is very low, spinning relies heavily on imports. The textile factory has to guarantee 2 months' cotton stock usage. Relatively speaking, the cost of using cotton in Indonesia is higher than that of chemical fiber. Therefore, in 2015/16, the output of pure cotton combed yarn decreased by 10%, and the output of pure cotton combed yarn decreased by 23%.

2, Indonesia's currency continues to slack, domestic consumption is sluggish, and global economic recession is restricting Indonesia's textiles.

Indonesian textiles are facing an oversupply.

3, a large number of smuggled yarns, fabrics, garments and other textiles have sprung up in the domestic textile market in Indonesia, which has an impact on domestic consumption.

4, a large number of Indonesian textile and garment enterprises are closed.

In the past two years, with the continued depreciation of the rupiah against the US dollar and slowing global economic growth, Indonesia's textile and clothing exports decreased by 3.23% over the same period 2015/16.

In 2015 1-11, Indonesia's cotton exports dropped to 138 thousand tons from 188 thousand tons in the same period in 2014. Japan, Belgium, Italy, Indonesia and the United States are the main export destinations for Indonesia's cotton cloth.