Decline In Capacity Utilization, Revenue Expectations Are Pessimistic Cotton Business Confidence In The Test

Since March, the China Cotton Textile Industry Association (hereinafter referred to as the "Sino Cotton Association") has continued to track the production and operation of enterprises in the form of a questionnaire through the unified arrangement of the China Textile Industry Federation (hereinafter referred to as "China Textile union"). The following 5 months (fifth weeks) of -4 March 30th are as follows.

One

General situation

Fifth weeks, the cotton textile business confidence was once again frustrated by the global epidemic, and business indicators declined. The proportion of the start-up enterprises in the cotton textile industry and the number of workers who have resumed work accounted for the proportion of the number of workers in the normal production situation, and the utilization rate of the capacity decreased compared with the fourth week. The expectation for the first half of 2020 is still not optimistic, and the confidence of the enterprises is being tested. Since the beginning of mid 3, foreign orders have been cancelled, suspended and postponed. Enterprises expect export volume and export volume to decline, or they will choose to cut down the opening rate.

Two

Production recovery

Fifth weeks, cotton textile enterprises adhere to social responsibility as their responsibility, and drive the industry to resume work and resume production. Of the cotton textile enterprises surveyed, 98% of the enterprises had started work, and the number of workers who had resumed work accounted for 90.3% of the number of workers employed under normal production conditions. As shown in Figure 1, the start up situation of the enterprises was basically the same as that of the fourth week, and the situation of staff reemployment dropped by 3.7 percentage points.

Fig. 1 start up and personnel arrival of cotton textile enterprises

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Note: the large enterprises that fill in the data are the main ones, and the business starting rate of the statistics is expected to be higher than the actual situation. Because the weekly reporting enterprises will be different, the relevant results are for reference only.

From the perspective of capacity utilization, 52.38% of the enterprises have more than 80% capacity utilization, which is 7.14 percentage points lower than that of the fourth week, and the impact of export orders is becoming more and more obvious.

Table 1 capacity utilization ratio of cotton textile enterprises

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Three

Recovery of industrial clusters

According to the Cotton Textile Association's follow-up survey of the cotton textile industrial clusters, as of April 6th, from the situation of the surveyed clusters, the production of cluster enterprises continued to slow down due to the influence of the foreign trade situation, and the average operating rate and utilization rate of the enterprises decreased significantly, and the rate of employee arrival was slightly increased, as shown in Table 2.

Table 2 cotton textile industry cluster to resume production

　　 Source: cotton textile cluster China Cotton Textile Industry Association

The start of the fifth week cotton textile cluster enterprises mainly presented the following characteristics:

(1) the average operating rate of clustered enterprises is 64%, which is 5 percentage points lower than that of last week. Among them, 40% of cluster orders were reduced by more than 50%. As a whole, the utilization rate of weaving capacity is much lower than that of spinning capacity. The enterprise orders for direct export products have basically been cancelled or postpone, and the orders for enterprises exporting indirectly or downstream customers generally have dropped by more than 50%, and the domestic enterprises are relatively stable.

(2) from the perspective of the size of enterprises, the degree of impact of enterprises under regulation is greater than that of enterprises. The operating rate of enterprises under the regulation and regulation is 3 and 5 percentage points lower than that of last week. Most of the clusters showed that enterprises began to limit production and reduce production, and some enterprises appeared to stop production voluntarily. The operating rate of enterprises was below 50%. In order to reduce the impact of the cancellation of export orders, enterprises are stepping up their efforts to negotiate domestic orders, and strive to develop new markets such as domestic and non prominent epidemic areas.

(3) from the situation of personnel to posts, the average rate of entry to workers in cluster enterprises is about 72%, which has increased slightly compared with the previous week, mainly for off-site employees and early recruiters. At present, apart from a few important jobs, enterprises have basically suspended their recruitment. In order to effectively support enterprises' resumption of production, some clustered governments provide free masks for the staff on duty and help enterprises do epidemic prevention and control work.

Four

Management situation

The questionnaire also surveyed the business situation of enterprises. 80% of cotton textile enterprises indicated that the shortage of orders was the main problem faced by enterprises in the process of resumption of production and resumption of production, and 62.9% of enterprises said they were facing customers' cancellation or suspension of orders.

According to the latest research results, enterprises with orders below 50% of normal level show a continuous upward trend, as shown in Figure 2. Among them, 75% of enterprises export orders less than half of the normal level.

Fig. 2 order recovery of cotton textile enterprises

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Through the questionnaire, cotton textile enterprises forecast the sales revenue and export situation in the first half of 2020. With the spread of the epidemic in the global scope, the direct export orders are obviously reduced, and then upstream. The indirect export orders are also not optimistic. The phenomenon of customers refusing to accept the goods and refusing to pay the goods frequently occurs, which aggravates the pressure of capital turnover in the cotton textile enterprises. Enterprises believe that the negative impact of the epidemic on the sales and export of the cotton textile industry in the first half of the year will be more serious than that in the first quarter, and the market confidence will be significantly reduced. 50.5% of enterprises believe that sales revenue in the first half of this year will be reduced by more than 20% compared with the same period last year, accounting for 61.8% of the total export volume which will be reduced by more than 20% compared with the same period last year, as shown in Figure 3. It is expected that the global tensions will last for 3-4 months, which will affect foreign trade enterprises for at least 4-6 months.

Figure 32020 the first half of the year sales and export volume compared to the same period last year forecast.

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Five

Industrial chain situation

In the fifth week, 98.3% of the enterprises in the textile and garment industry participated in the survey, and the number of workers who had resumed work accounted for 90.9% of the total number of workers in normal production, down 0.3 and 3.8 percentage points respectively from last week.

1. Supply of upstream raw materials for cotton spinning

Cotton textile upstream raw materials, cotton supply is adequate, oil prices are still low, chemical fiber staple prices continue to decline, affected by the reduction of demand, chemical fiber enterprises high inventory, cut production intention to enhance. In the continuing downturn of the downstream market, the current cotton textile materials are in excess of supply.

2. Downstream operation of cotton textile

The negative emotions in the international market are gradually being transmitted from the upstream to the downstream, and the decline or cancellation of orders is one of the problems that the cotton textile industry chain is facing. Weaving, home textiles, printing and dyeing, and other links, gradually limit production or encourage workers to reduce production.

Home textile products are one of the important terminal products of cotton fabrics. According to the survey of China Household Textile Industry Association, shortage of orders, poor sales and tight capital chain are the prominent problems facing home textile enterprises. Since March 18th, many export enterprises have received the notice of postponed delivery of European and American customers, and even some overseas customers have cancelled nearly two months' orders. Foreign trade oriented home textile enterprises have problems such as increasing inventories and difficulties in capital turnover. Some export enterprises which are mainly markets in Europe and America will be in a dilemma of shutting down production or reducing production.

Six

Online feedback

Since February 14th, the China Cotton Association has launched the epidemic prevention and control platform and the online production service platform (short for "online information"). As of April 5th, it has received more than 170 Pieces of information from over 130 enterprises. At the same time, China Cotton Association has learned the topic of current market concern through various channels.

Affected by the outbreak of the global epidemic, the order problem was rapidly transmitted in the industrial chain. At first, foreign trade orders were affected. With the export sale of some enterprises, the domestic demand market was also rapidly saturated, and the production and marketing of the enterprises were hindered.

1, orders are seriously inadequate, and export orders are basically suspended or cancelled due to the outbreak and exchange rate effect. Domestic orders are mostly orders placed at the end of last year. Recently, due to the falling prices of raw cotton and chemical fiber, the market has a strong wait-and-see mood, and there is basically no substantial order. The upstream and downstream industry chain rework level is inconsistent, which makes the downstream enterprise operating rate affected, and it is difficult for enterprises to continue normal production.

2, stocks rose sharply. Due to the shortage of orders, many enterprises choose to produce regular varieties in order to ensure normal production and operation. However, the competition pressure of conventional varieties in the sales link is very large, resulting in the rapid increase of yarn and fabric stores in recent textile enterprises.

3, there is a shortage of liquidity. Due to the long duration of the epidemic, the slow recovery of orders after the resumption of work has resulted in backlog of inventory, and textile enterprises have no income and serious shortage of liquidity. Some enterprises are unable to guarantee the normal operation of production and operation.

4, the degree of implementation of supporting policies varies. According to the enterprises involved in the survey, the implementation of the preferential policies of the banks is not very satisfactory. Some have not even been implemented for the time being. The phenomenon of loans and loans has occurred frequently. The principal and interest rates are required to be returned on time. Textile enterprises neither have sales revenue nor have financing funds, or will aggravate some textile enterprises to resume work and stop work.

China Cotton Association will continue to pay attention to the trend of epidemic prevention and control and the current situation of enterprise production and operation, timely summarize and feedback to the relevant departments of China Textile Corporation, conscientiously fulfill the responsibilities of China Cotton Association, do well in the industry information early-warning and analysis work, and ensure the smooth operation of the industry in a special period.