Cotton industry chain is in a circle

Following the large-scale relocation of textile companies, the data show that in the first three quarters of this year, many textile and garment companies in China are still in a state of operating losses. There are frequent occurrences of runaways, lost associations, and factory closures by textile companies.

Difficulty of textile enterprises

A person in charge of a large-scale textile company in Guangdong told reporters: “Our domestic and international price difference per ton of lint is about 3,000 yuan, and domestic stocks are still tight. Is this normal? Our material costs are higher than others, and labor costs are also higher than in Southeast Asia. Textile and apparel Where are the corporate roads and how do Chinese textile companies compete fairly with foreign companies?"

In Zhejiang, which is a centralized place for Chinese textile companies, the person in charge of a textile company with the same surname has the same feeling. He told reporters that after the financial crisis, most textile companies have been in a sluggish state, export orders have decreased, textile companies once suffered from shortages of labor, and cotton prices and labor costs have continued to climb, making it difficult for all textile companies. On the other hand, lack of innovation, long research and development cycle, and high R&D costs also restrict the competitiveness of Chinese textile companies in the international arena. “However, this is related to the overall living environment of the company. Its R&D expenses are directly proportional to the overall revenue of the company,” he explained.

International Cotton Association data show that the overall cotton harvest this year is quite good, Europe, the United States, Pakistan this year, a bumper harvest, India has risen all the way to become the main cotton producing country, China's Xinjiang, Shandong, Henan and other cotton production is also a major harvest.

According to data from the China Cotton Association, China currently has more than 12 million tons of cotton stocks, and the actual total annual usage is 6.8 million tons. It is estimated that the output this year will be more than 6.6 million tons and the quota will be 890,000 tons. The total supply will exceed 19.69 million tons, that is to say, in terms of the current inventory, even if we no longer store, our country will not lack raw materials within 3 years.

Contrary to huge cotton stocks and high yields, short-term supply and demand and market spot prices are still tight.

Large price difference between inside and outside

According to the national cotton market monitoring system monitoring and the data released by the Ministry of Agriculture website, as of October 2014, the national new cotton picking progress was 47%, a year-on-year decrease of 12.1 percentage points; and the seed cotton sales ratio (accounted for the proportion of picked crops) was 56. %, a year-on-year decrease of 6.5 percentage points; cotton processing company's new cotton processing rate (accounted for the proportion of already sold) is 29%, a year-on-year decrease of 21.2 percentage points; new cotton sales (accounted for the proportion of already sold) 2%, year-on-year decline 14.4 percentage points. Among them, Xinjiang's new cotton picking progress was 39.8%, 14.8 percent year-on-year, and seed cotton sales rate was 76.6%, an acceleration of 4.2 percentage points year-on-year, and a seed cotton processing rate of 29.9%, a year-on-year slowdown of 21.4 percentage points; the sales rate was 0.6%. The year-on-year decrease was 15.9 percentage points.

The downstream industry chain, such as yarn, cloth market transactions deserted, cotton yarn prices continue to fall, textile companies are still cautious purchase of lint, the domestic cotton spot prices fell.

In terms of **, the current average price of domestic standard cotton sales is 14,821 yuan/ton, and the settlement price of New York cotton* December is 63.00 cents/lb, representing the international cotton index (M) of the average price of imported cotton in China's main port. 1% tariff calculation, equivalent to *** import costs of 11,912 yuan / ton, compared with last week fell 126 yuan / ton, a decrease of 1.1%, lower than the domestic market 2,909 yuan / ton.

Internationally, India, a major cotton producing country, has not yet launched a large-scale acquisition of its state-owned cotton company. It is understood that the official delay in the acquisition is due to the high moisture content of seed cotton. It is expected that the acquisition will commence in early November, when the quality and quantity of seed cotton will be improved. Promote.

Analysts pointed out that with the arrival of new cotton in Xinjiang in China, it will help ease the current tight market conditions, foreign cotton will fall under pressure. However, it is undeniable that imported cotton has a lower price than cotton in the domestic market.

Can the reform break the dilemma?

With the deepening of the reform, the reform of the cotton market has entered the implementation stage. The contents include stopping the supply of reserve cotton, leaving room for new cotton purchases and sales; in addition to the distribution of tariffs within the distribution, in principle, no increase in the issuance of import quotas to encourage textile enterprises to use more domestic cotton; take necessary measures to guide the support of large cotton enterprises and other market players Actively enter the market to prevent "sale of cotton."

Observers pointed out that this is a gospel and will really be in line with the market. Cotton trade will be formed by market supply and demand, and the government will no longer interfere. At the same time, it also protects the basic income of growers. The country no longer temporarily collects and stores at a fixed price. When the market price is low, the planting income of growers is basically guaranteed through state subsidies and the cotton production is stabilized.

However, there are also market participants who have expressed their worries. In the process of implementing the policy, the various contradictions in the subsidy are intertwined. Under the favorable policy, how to achieve a smooth transition, promote the smooth progress of the reform and get rid of the current market cycle, this will fundamentally change the enthusiasm and confidence of late growers.

Whether China's textile enterprises can truly enjoy the benefits of reform and enjoy equal and fair competition in the international arena will have a profound impact on the future direction of Chinese textile enterprises.