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The high price of new cotton is coming, and the peak season of the cotton spinning industry is not prosperous

  • Categories:Company News
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  • Time of issue:2018-04-28 13:38
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(Summary description)The cotton fabric market does not support the rise in cotton prices, and the production cost is upside down", "this year's peak season is not prosperous, and the market is mostly waiting to see", in the face of the market environment where cotton prices continue to rise this year, many textile industry insiders told reporters this way.

The high price of new cotton is coming, and the peak season of the cotton spinning industry is not prosperous

(Summary description)The cotton fabric market does not support the rise in cotton prices, and the production cost is upside down", "this year's peak season is not prosperous, and the market is mostly waiting to see", in the face of the market environment where cotton prices continue to rise this year, many textile industry insiders told reporters this way.

  • Categories:Company News
  • Author:
  • Origin:
  • Time of issue:2018-04-28 13:38
  • Views:
Information

The cotton fabric market does not support the rise in cotton prices, and the production cost is upside down", "this year's peak season is not prosperous, and the market is mostly waiting to see", in the face of the market environment where cotton prices continue to rise this year, many textile industry insiders told reporters this way.
According to industry insiders, at present, companies rely on cotton hoarding for production, and those without inventory have to stop work and wait and see. Taking Henan, the second largest province in terms of yarn production in the country as an example, the production capacity in the golden autumn peak season may only be half. Analysts believe that the high price of new cotton is related to the substantial shrinkage of cotton planting area this year, which is expected to ease next year. 

The price of new cotton exceeds 16,000 yuan / ton
On September 30, the sale of cotton from the State Reserve ended, and new cotton became an important source for textile enterprises to continue production. In the context of the continuous high price of cotton futures and the repeated auction of cotton from the national reserve, the high price of new cotton in Xinjiang hit. 
"During the National Day holiday, cotton prices in Xinjiang soared, driving the entire cotton market to follow suit. Now the price of hand-picked lint cotton in Xinjiang has exceeded 16,000 yuan/ton, and the price of Xinjiang machine-picked cotton has also reached 15,500 yuan/ton." Henan Textile Industry Association Secretary-General Li Jifeng revealed that after the replacement of old and new cotton, the cost of cotton used by textile enterprises has increased by more than 2,000 yuan / ton compared with August. Although traders still have state cotton stocks in their hands, the price has also soared to 15,800 yuan / ton. At present, the upstream cotton price is rising, and the downstream demand is not strong. Cotton yarn enterprises are caught in it and face huge production pressure. 
As of October 9, the purchase price of seed cotton in southern Xinjiang was about 7.60 yuan/kg, and in Kuqa, Yuli and other places in Aksu, the higher purchase price reached 8.00 yuan/kg. Driven by the price of cotton in Xinjiang, during the National Day, the price of seed cotton in the Yellow River Basin also reached 7.30 yuan/kg, an increase of 0.15 yuan/kg over the pre-holiday period. 
"The cotton planting area has shrunk significantly this year. In addition, the end of the reserve cotton round and the recent rapid rise in Zheng cotton futures have all led to a recent surge in cotton prices." Zheng Bo, an analyst at Zhuochuang Cotton, said that when a large number of new cotton came into the market in early October last year , cotton prices are at a low level. After the beginning of this year, cotton prices began to rise sharply. Therefore, cotton farmers are reluctant to sell at a high price late and sell at a loss early, and have higher psychological expectations for cotton prices. In addition, despite the extension of the storage period this year, the turnover rate of cotton reserves at the end of September continued to be as high as 100%, which shows that textile enterprises and traders are also generally worried about the cotton supply in the future. 
It is understood that this year is rainy and windy in southern Xinjiang, and the Korla area of ​​Xinjiang has recently suffered hail disasters, which has an impact on cotton growth. After the end of the cotton reserve, there was a short "window period" of cotton supply in the market. The National Meteorological Center recently predicted that the total cotton output this year was 5.096 million tons, a drop of 9.1%. 
"This year's cotton production abroad is high, and prices have fallen. If this price difference between domestic and foreign prices continues, imported yarn will inevitably have an impact on my country's cotton yarn market." Li Jifeng believes that at present, most textile companies are afraid to buy cotton at a high level and are waiting for prices to fall. 

The peak season of cotton spinning industry is not prosperous
Gold is nine and silver is ten. The weather turns cold. It is the season when cotton spinning enterprises are booming and production and sales are booming. However, this autumn when cotton prices are high, Zhu Minfeng, head of Huapeng Cotton Industry Co., Ltd. in Xiayi County, Henan, is not optimistic about the market. 
"At present, the Xinye area in Nanyang, Henan is the hardest hit area, and the operating rate is only about 20%. In Xiayi County, Shangqiu, the operating rate of textile enterprises is generally only 50%." Zhu Minfeng said that his own textile factory is one of the few in the surrounding area. The horsepower started the enterprise, and what supported its production was the "grain reserve" that he kept in the warehouse when the cotton price was still at a low level. 
"At the current cotton price, textile enterprises are not profitable at all, and even the cost is upside down. Who dares to buy cotton for production?" A person in charge of a textile enterprise revealed that if the current price of Xinjiang cotton is 16,000 yuan/ton, plus Attrition rate, electricity and labor costs are converted into 5,800 yuan/ton, and the cost of producing one ton of carded 40S cotton yarn has reached 24,200 yuan/ton. At present, the market price of carded 40S is about 23,000 yuan/ton, and the cost is upside down at 1,200 yuan/ton. 
Zhu Minfeng reflected that although the cost of cotton prices has risen, due to the unsupported demand of downstream textile enterprises, the price of spinning enterprises can only increase by 50 yuan to 100 yuan per ton this year, which is completely unable to make up for the loss of profits caused by the skyrocketing cost. Nowadays, textile companies are in the state of spinning as much yarn as they have in their hands, and they dare not start work rashly. Although Zhu Minfengtun has enough cotton to produce until November, the cotton in the hands of some of his colleagues can only last for a few days. Despite this, the transaction volume of new cotton in Xinjiang is still at a low level. There are many inquiries and few auctions. Everyone is watching. 
Zheng Bo also said that according to the statistics of Zhuochuang, the cotton market is currently in a state of price and no market. Under the circumstance that the cotton price has risen significantly this year, the medium-sized and above-scale enterprises in Jiangsu and Zhejiang have already taken pictures of the national cotton storage, and the enterprise storage of cotton may be able to support until November. However, inland provinces such as Henan rely on Jiangsu and Zhejiang for sales, and the production and sales environment is not good, so it is difficult to survive in the Khmer price environment. 
Since the beginning of this year, the rising cost of raw materials and labor has severely impacted the textile industry, which already has meager profits. According to the National Bureau of Statistics, as of June 2016, there were 19,937 textile enterprises in China with an operating income of more than 20 million yuan, a decrease of 2,547 compared with 22,484 in 2011. In the first half of 2016, the net profit of listed textile companies also continued the downward trend in the previous three years, with the net profit falling by more than 10% year-on-year. 

The industry calls for a dual-track system for cotton supply
The trend of cotton prices closely affects textile enterprises. Previously, nearly 150 cotton textile enterprises in Hubei, Shandong, Hebei, Zhejiang, Guangdong and other places had reported to the China Cotton Textile Industry Association the problems of stockpiling cotton in the form of telephone calls and joint letters. Relevant state departments increased the daily amount of cotton reserves to 30,000 tons per day, and the dumping and storage originally scheduled to end on August 31 was also extended to September 30. Between August and September, cotton prices had a callback. 
"Storing cotton is like speculating in stocks. Buying a high price is a loss." Zhu Minfeng sighed that the cotton market is greatly affected by news and policies, and as a commodity, it is often hyped by traders. Deeply affected. At present, the textile industry is calling for the increase of the national reserve cotton to be put into the market at the same time as the new cotton to form a dual-track system to solve the situation of high cotton prices. 
However, for this statement, Zheng Bo believes that the feasibility is not high. She said that although there are still 7 million tons of cotton in the national reserve, if a large amount of cotton is put into the market, it will cause a sharp drop in cotton prices and damage the interests of cotton farmers. Only when cotton prices are stable can textile enterprises develop healthily. She analyzed that because the price of corn has plummeted this year, and the profit of cotton planting is higher, the domestic cotton planting area will expand next year, which will drive cotton prices lower. (Source: Securities Times)

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