Cotton Price Break Collection and Storage Price Textile Enterprise Face De-Stocking Problem
Author: Aug 08, 2011 14:48
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168Tex News: Last year, cotton price stepped out of the surging wave, and for the last five months, cotton price keeps downward. On 4th Aug, China cotton price index (CCIndex 328 grade)shows cotton price as 19716CNY/t, which has broken the storage price 19800CNY/t.
Cotton price fluctuation has brought about the “butterfly effect”. Textile enterprise can no longer bear the heavy burden for the cotton price sharp surge and down. For the previous cotton price surge, textile enterprise gross net profit further shrank. Huafeng Spandex stock net profit even decreased by 45.80%. With new cotton come into the market and the traditional busy season of cotton, how will cotton price change aftermarket? Market analyst say, cotton price downward room is not big, while in the depressed cotton market condition, a company named Huafu yarn dyed company is still competitive, which obtained the recommendation of 8 brokers, and the market resource believe its performance will continue to surge in the third quarter. The drop amount has reached 40% from the peak Last year, cotton price has surged all the way, but since its hit the peak in March, it began to come down. According to the data, China cotton price index (CCIndex 328 grade)shows cotton price as 19716CNY/t, which dropped 84CNY, breaking the storage price that the government announced, and is 36.9% down than the price of 31241CNY in March. Although spot cotton price downward all the way, downstream need is still low. The China cotton information data indicates, currently, cotton enterprise are selling stock urgently all around, but weaving plants still don’t buy in actively, cotton dull sale is relatively severe. As is known, 2rd Aug, cotton quotation by China enterprises was marked down again by 300CNY/t. Recently cotton price changes frequently but its sales volume is not increased. For the weaving plants, although the current price is acceptable, they dare not to buy in too much for the slack season, only buy in according to need, and chemical fiber products portion continue to enlarged. Aftermarket prediction divergence. For what reason on earth that makes cotton price downward all the way since March? China cotton information net give out a survey report, which explains, under the pressure of inflation, tight monetary policy that influence the industry chain, textile industry is still depressed, which becomes the main reason. Among which, monetary policy further tightened, cotton industry chain financing pressure further increased. Lint cotton procurement is restricted, low sales volume and the overall situation is hard to improve. For the influence factors like RMB appreciation, feedstock price instability, and textile export tax refund lowering down rumors and etc, enterprises dare not to do big order or long term orders. Many enterprises are in difficult operation, and the aftermarket is not well regarded. A stock analyst told the economic news journalist, now cotton price has broken its storage price, in addition with allowance policy, the traditional busy season is on the way, all of which is favorable to cotton price, so it is not likely to downward greatly. But the information report from China cotton information net is not so optimistic. The report indicates, the enterprise confidence towards the market is gradually elapse, and most people believe August will be a tough month. The downstream weaving plants situation is also unoptimistic, the frequent yarn price fluctuate makes weaving plants buy in inactively. Now it is the traditional slack season, and for the hot weather, many weaving plants stop production, instead, they start to weave chemical fiber fabrics or bamboo fiber fabrics. Although business men are universally pin their hopes on the national storage, but there is still a month a head before the collection and storage time, so cotton business men had to suffer some time in waiting. Price pressure transmitted to the whole industry chain The big surge and down trend of cotton price is no doubt a enormous pressure. Market men believe such pressure has transmitted to the whole industry chain. Pan Shaochang tell the journalist, now many weaving plants are still in de-stocking stage, for the main reason is that cotton price jumped last year, which lead to a corner in cotton blindly, and enlarge production capacity blindly, while this year, cotton price slumped, which is far beyond most manufactures’ expectation. The high priced cotton that bought increased the production cost greatly, which leads to production price increase, and which directly influenced its marketing. Under the mutual pressure from both upstream and downstream, profit margin is further shrunk. Moreover, with labor cost increase, some enterprise had to stop production to lower down cost. After survey for many enterprise in the field, China cotton information net investigators believe, currently there is few orders downstream, and mostly are short term orders. In the weak market situation, weaving plants order taking is prudent, but garment plants are more prudent, the stock today might become the loss tomorrow. The aftermarket is in uncertain, which makes the whole textile industry chain embarrassed. A report from public work department about the first half of 2011 of the China textile enterprise operation condition shows, cotton price fluctuate largely makes a big influence to the whole textile industry chain, firstly, it makes business men wait and see, greatly lower down people confidence towards the market, secondly, stock mounted up, and operation rate lowered down. According the survey, cotton weaving plants’ stock amount is generally doubled, while its rate of capacity utilization is around 80% (last year, it was over 95%), consumption and marketing rate is just 87%, and thirdly, the profit margin is further shrank. Now 32s cotton yarn price is quoted at 29500CNY/t, according to such a price to buy in, the loss will reach a thousand Chinese Yuan. In addition, production cost increase leads some foreign trade orders transferred to other countries. Labor cost increase, RMB appreciation, feedstock price fluctuate, and also loan interest rate lift up, and etc increased the operation cost of enterprises, which also influenced textile enterprise competitiveness worldwide. From January to May, America cotton products importation worldwide decreased 6.1%, year on year, among which, its cotton products importation from China decreased 13.4%, while the importation from Vietnam, Bangladesh, Indonesia increased by 9.4%,9.1% and 10.1% respectively. According to the survey, year on year contrast, orders are reduced by 20% of the China enterprise this year. |
Editor: Candy From: 168Tex.com
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