China Cotton Textile Industry Association: China Cotton Textile Industry Prosperity Report In June 2020

In June, the cotton textile boom index was 48.94, with the decline rate narrowing for two consecutive months. This month, the off-season effect of the domestic textile market gradually appears, and the order pressure of textile enterprises has increased. In terms of raw materials, in order to reduce the pressure of capital and inventory, the main procurement method is to buy as you use it; in terms of production, the starting rate of this month has increased slightly compared with that of last month, and the production of gauze has increased compared with that of last month; in terms of product sales and inventory, conventional products are better than combed cotton products, and textile enterprises are selling at lower prices, hoping to recover funds as soon as possible, but the orders are relatively light, production is greater than sales, and product inventory is still increasing Plus.

On June 30, the Ministry of Finance and the Ministry of Finance issued a formal announcement on the implementation of grain policy and the Ministry of finance. The implementation of the "circuit breaker" mechanism: when the domestic market cotton spot price index is lower than 11500 yuan / ton, trading will be suspended from the next working day to strongly support the domestic cotton price. According to the survey conducted by China Cotton Textile Industry Association (hereinafter referred to as the China Cotton Association), more than 70% of the surveyed enterprises think that it is beneficial for textile enterprises to store cotton abroad. At the same time, some textile enterprises said that at present, traders auction more reserves, squeezing the storage space of textile enterprises auction. During the rotation period, the enthusiasm of the auction and storage enterprises was high. As of the publication date, all transactions were kept, and the price increase gradually returned to rationality.

In terms of foreign trade, according to the data of the General Administration of Customs on July 14, the overall performance of China's foreign trade import and export in the first half of the year was better than expected. In the first half of this year, China's textile and garment exports totaled US $125.19 billion, a year-on-year increase of 3.16% (in RMB terms, a year-on-year increase of 6.75%), and the overall export of the industry recovered to positive growth. Among them, textile exports from January to June totaled 74.103 billion U.S. dollars, a year-on-year increase of 27.81% (in terms of RMB, a year-on-year increase of 32.37%); clothing exports totaled $51.08 billion, a year-on-year decrease of 19.39% (in terms of RMB, a year-on-year decrease of 16.67%). The main reason for the growth of textile export is still driven by the export of epidemic prevention materials. Clothing, home textile and other textiles are under great pressure due to the weak demand of foreign consumer market, and China's export-oriented textile enterprises are struggling.

Due to the sluggish recovery of foreign consumer market and the slow recovery of orders, many foreign trade enterprises choose "export to domestic sales" to open up the domestic market. The State Council's office of the State Council issued the opinions on supporting the export enterprises to survive the difficult situation of domestic market development.

Raw material purchasing index

In June, the raw material purchasing index was 51.57, returning to the boom range. Cotton price fluctuated around 300 yuan in June. In the first ten days of June, domestic cotton prices fluctuated due to factors such as no obvious recovery in domestic and foreign demand side, Trump's statement that he would take suppression action against China, and market concerns caused by the rebound of local epidemic situation. In the late June, the news that the reserve cotton rotation was about to start attracted wide attention from the market, and the domestic cotton price rose slightly under the stimulation of Indian locust disaster speculation and other factors. On June 30, the plan for the rotation of reserved cotton was officially finalized. Some textile enterprises said that considering the current product structure, they would purchase and use reserved cotton, but affected by market and capital pressure, they would not purchase in large quantities. Non cotton fibers continue to maintain weak operation. The main reason is still the low demand of downstream. Although there is good news to stimulate the price rise, the raw material price has not been rigidly supported. At present, many chemical fiber enterprises have announced plans to stop and reduce production to stabilize prices.

According to the specific data, the average price of 3128 cotton was 12172 yuan / ton, up 280 yuan / ton on a month on month basis; the average cotook a index was 67.79 cents / pound, up 2.21 cents / pound; the average price of mainstream viscose fiber was 8888 yuan / ton, up 51 yuan / ton; the short average price of 1.4d direct spinning polyester was 5845 yuan / ton, up 97 yuan / ton on a month on month basis.

Stock index of raw materials

In June, the raw material inventory index was 49.08, up 0.43 from the previous month. In June, in order to minimize the inventory pressure, textile enterprises mainly purchased raw materials on rigid demand. According to the tracking data of China Cotton Association, the consumption of raw materials increased by 4.78% month on month, raw cotton inventory decreased by 2.9% month on month, and non cotton fiber inventory decreased by 1.01% month on month. This month, the market did not improve significantly, the product inventory continued to accumulate, the pressure of enterprise working capital did not decrease, and the purchase of raw materials was more cautious. According to the questionnaire of China Cotton Association, most textile enterprises expect that the market will remain weak in July, and the inventory of raw materials will remain at a low level.

Production index

In June, the production index was 50.75, and the output of products increased month on month. The results of the questionnaire showed that the cotton production of the association rose compared with that of the cotton ring. Affected by the epidemic situation in the first half of the year, domestic consumption demand decreased significantly, and downstream procurement was light. Except for a rebound in March, the production rhythm of other months decreased month on month. At present, it has reached a low level, and employees implement the rotation system. Therefore, in order to stabilize the production of yarn, the proportion of labor increased. According to the understanding of the China Cotton Association, some textile enterprises consider reducing salary to reduce expenses, but at the same time, they are worried about whether the employees will leave after the salary reduction.

Index sales

In June, the product sales index was 48.22. This month, the market has entered the off-season, the product price center of gravity has shifted downward, the sales are weak, the market is mainly domestic sales, and de stocking is still the main direction of work. According to the understanding of China Cotton Association, at present, textile enterprises' orders are mainly domestic small orders and supplementary orders, and the sales pressure has increased with the arrival of the off-season. The conventional products rely on price reduction, but the downstream procurement is still cold. Some textile enterprises said that the inquiry for foreign trade orders had increased, and the orders were mainly epidemic prevention materials or functional products with antibacterial properties. From the product point of view, conventional products are better than high count yarn products, combed pure cotton yarn demand is still low. At present, the impact of the epidemic on orders is gradually decreasing, mainly because the recovery speed of domestic and foreign consumer markets is not as expected.

Product inventory index

In June, the product inventory index was 48.17, and the inventory pressure increased. According to the survey of China Cotton Association, 40.57% of the enterprises interviewed said that their product inventory increased month on month, mainly due to the increase in the output of conventional products, but the sales speed was lower than the production speed, and the product inventory of textile enterprises continued to accumulate. It is understood that textile enterprises have been psychologically prepared for the sales and inventory of products this month, so they do not have much worry. However, the inventory of products occupies a large amount of working capital, resulting in tension in the cash chain. It is expected that textile enterprises will continue to reduce prices and sell goods in July to alleviate the pressure on inventory.

Business operation index

In June, the business index was 46.60. This month, most textile enterprises in order to reduce inventory, circulation funds to choose parity or even loss shipping. But the raw material price fluctuation rises, the product rises powerlessly, causes the textile enterprise management pressure to increase. In addition, the problem of difficult and expensive financing still plagues textile enterprises. The textile industry has the characteristics of heavy assets and labor-intensive, and has a large amount of capital investment. If the capital chain breaks, it will lead to chain reaction. We hope that the relevant departments can increase financing support and help textile enterprises survive the "epidemic winter".

At present, the recovery of domestic and foreign consumption demand is not as expected, and it will take a long time for substantial improvement. These situations are already within the expectation of textile enterprises, and further measures will be taken to increase revenue and reduce expenditure. In the second half of the year, the external situation is still grim, and it is still unknown when foreign economic activities will return to normal. From the current customs data, the demand for foreign clothing is still at a low level. However, it is believed that with the economic restart of most countries and the gradual liberalization of residents' consumption and production activities, the demand for textiles will pick up and the foreign trade situation will improve.

Cotton textile prosperity index from January to June 2020

　　 ? ? ? ?

Note: the prosperity index of China's cotton textile industry is collected from nearly 500 secondary cotton textile enterprises in China. Referring to the establishment methods of national manufacturing PMI and other indexes, it is concluded that when the index is higher than 50, it means that the prosperity degree of the cotton textile industry in the current month is better than that of the previous month, and if it is lower than 50, it means that the prosperity degree of the current month is lower than that of the previous month.