Material weaving is “ice and fire”? It doesn’t matter if it goes up, it doesn’t matter if it doesn’t!
“Production costs have risen too sharply this year, and the production and operation of enterprises have been greatly affected.” A textile entrepreneur told China Yarn Network that the rise in raw materials and power restrictions With the increase in production, freight and other costs, companies have been severely hit.
Faced with the rising costs of raw materials, “price increases” have almost become the norm for textile companies since the second half of this year. More and more textile companies have released price increase information. There was even an incident where cotton yarn rose by 1,000 yuan one morning. In anticipation of rising raw material prices, some traders even used leverage to stock up, just to bet on the market. Different from the boom in the upstream, downstream weaving companies, especially some in areas with severe power restrictions and production restrictions such as Nantong, have poor transmission of price increases in the upstream. Adding the impact of power restrictions and production restrictions, life is really becoming more difficult.
After the National Day, due to the expected high purchase price of seed cotton and the entry of capital, Zheng cotton rose from 17,515 yuan/ton on September 24 to 22,855 yuan/ton on October 15. tons, an increase of more than 30%. At the same time, cotton futures increased more than cotton yarn futures. From September 24 to October 15, the closing price of the main cotton yarn contract increased by more than 22%. Domestic cotton yarn increased more than imported yarn.
Picture: Recent cotton futures market performance
Entering November, affected by The early power cuts and production restrictions affected the shrinkage of downstream weaving production capacity. After October 15, the cotton futures no longer rose. The purchase price of seed cotton also cooled down. The price dropped significantly. The weaving and yarn ends began to accumulate inventory. Recently, Henan, Jiangsu, Zhejiang and other places have relaxed power restrictions, reduced production shutdowns significantly, and enterprise production capacity has gradually recovered. At present, the operating rate of small and medium-sized yarn mills has increased to about 80%. Except for cotton 50S and above, high-count carded and combed yarn orders are still there. However, cotton and polyester-cotton yarns with counts of 40S and below are still accumulating slightly.
What is different from the previous “rising” sounds is that recently, there has been news of “price reduction” sales by textile companies in the industry. Before the price of raw materials increased, I needed cotton yarn, but now I am “deserted in front of the door and there are few cars and horses.” In just half a month, it seems like a completely different world. The salesmen in Xiaosha’s circle of friends who are selling yarn enthusiastically have also been feeling depressed recently. Although the price of seed cotton in Xinjiang has dropped now. The purchase price in northern Xinjiang has dropped to 9.5-9.7 yuan/kg, and the purchase price of machine-picked cotton in Aksu area in southern Xinjiang is 10.4-10.5 yuan/kg, it is still difficult for textile companies to accept this price and think that new cotton The price is a bit high.
Cotton picking machine operating in cotton fields
In this regard, some people in the industry Analysis, “In the long term, the overall price of raw materials is in a high and rising trend. The price of new cotton is so high that it is neither good nor bad to use, and it is very contradictory. Based on the experience of previous years, there will be fabric companies replenishing their stocks in December.” “Little Indian Spring”, it is difficult for downstream companies to make money, but the cost of raw materials is so high, should we increase prices or not?
At present, it seems that cotton futures have gained strong support at 21,000 yuan. Since October 20, Zheng cotton has been oscillating around the 21,500 yuan line for nearly two weeks. Under the tight supply and demand of US cotton and strong price expectations, Coupled with the fact that the initial acquisition cost of ginners this year is much higher than the current market sales price, cotton may still rise.”
Under the “calm sea”, undercurrents are surging, trade frictions and poor transmission Smooth, product inventory…
As the “power cuts” in many places are gradually relaxed, inquiries from weaving and spinning mills have also picked up. I believe that as more areas ” With the relaxation of “power rationing and production restriction”, production capacity will be gradually released, and the production that was pulled down in the early stage will be restarted. At present, weaving mills have successively started to restock raw materials, and spinning mills have entered a waiting period, and a new round of market may start. However, if the cost of raw materials cannot be smoothly transmitted to the downstream, and thus affects downstream demand, the product inventory accumulation phenomenon will intensify.
Affected by the rebound in international market demand and the return of some overseas orders, my country’s textile and apparel exports have maintained good growth. China Customs data shows that in the first three quarters of 2021, my country’s textile and apparel exports totaled 227.59 billion. US dollar, a year-on-year growth of 5.6%, the growth rate slowed down 6.5 percentage points from the first half of the year, and the two-year average growth was 6.2%. The situation of clothing exports has improved significantly. In the first three quarters, clothing exports reached US$122.41 billion, a year-on-year increase of 25.3%, which was the highest growth rate in the same period since 2010, with an average growth of 4.2% in the two years.
However, there are currently new variables in Sino-US trade, and there is uncertainty about the future direction of the relationship between the two countries. Once a “black swan” event occurs, risks will also arise, which will have a negative impact on foreign trade. The photovoltaic company LONGi, which has just encountered American gangsters, may be an example of this. Of course, this situation is also something we in the industry do not want to see. Abroad, from January to August, the cotton imported by the United States from IndiaBedsheets and towels increased to more than 50%, while imports of similar products from China declined significantly.
“Raw materials are separated from downstream demand and prices rise” is a major phenomenon that plagues the textile industry chain. It is also a challenge that the textile industry needs to face together, and it also appears under the “raw material price rise” Current status of many industries.
Current situation of the industry
“Rising raw material prices” are common in various industries. Since the beginning of this year, commodities have experienced a sharp rise. Chemicals such as phosphorus and coal have increased in price. Even food has increased in price. With the continuous over-issuance of global currencies, the price increase trend has gradually moved from commodities to terminals. At the consumer product level, prices of foods/condiments such as Haitian soy sauce, Hengshun balsamic vinegar, Qiaqia melon seeds, and Anjing fish balls have increased one after another. Rising raw material prices have become a common problem faced by all industries.
In the phenomenon of “raw material price increases”, there is no doubt that the upstream has more initiative, and the downstream Weaving companies and garment companies are in the “fishtail” part of the industrial chain. With high prices of raw materials, their profits are meager and they even suffer losses. Whether the “raw material price increase” can be smoothly transmitted downstream is a common problem faced by enterprises in the industry, and has become the key to whether the textile industry can develop better and healthier.
As an upstream enterprise, for the sake of longer-term development of the industry, we also hope to appropriately transfer profits to downstream companies. Only when everyone makes money can we go further.
Generally speaking, rising raw material prices will drive up the entire industry chain, but companies do not want raw materials to skyrocket. Under the “increased raw material prices”, when upstream business is good, some downstream companies cannot get the goods they want. When the market is good, they are faced with “no goods and business is difficult”. When the market is bad, there may even be low prices. The phenomenon of dumping and vicious competition, under the pressure of rising raw material prices, tests not only the management and operation capabilities of enterprises, but also their sincerity
In the short term, raw material prices continue to rise. The production cost of the enterprise increases, the pressure on production and operation increases, and more funds are needed to purchase raw materials. Under the frequent fluctuations in raw material prices, the method of buying as you use is adopted, and production capacity will be appropriately controlled, resulting in an increase in production costs; From the perspective of raw material structure, the price difference between cotton and short fiber is too large. Enterprises will reduce the proportion of cotton and increase the use of chemical fiber raw materials such as viscose and polyester in products. This will help increase the amount and proportion of chemical fiber raw materials and reduce the total cotton consumption. Demand; due to the high cost of raw materials, the profits of low-count yarns are relatively low. In this case, companies may increase the production of medium- and high-count yarns, and the market share of medium- and low-count yarns will continue to shift to Southeast Asian countries such as India and Vietnam.
In the long term, under the situation of high raw material prices, companies with low profits and low competitiveness will have difficulty operating. The competitiveness of high-value-added products of high-quality companies will continue to increase. Within the industry The process of survival of the fittest will accelerate, and there may be more giant companies in the industry in the future.
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