Price increase for 25% in cotton prices for home textile companies

From 13,000 yuan/ton on September 1st to nearly 28,000 yuan/ton on November 3, domestic cotton prices seemed to ride a roller coaster in just two months, with a cumulative increase of up to 54%. Following the mung bean, sugar and other commodities, cotton has also been pushed into the whirlpool of non-ideal price increases.

At the first China National Textile Forum held recently, Yang Donghui, vice president of the China National Textile and Apparel Industry Association, bluntly stated that the recent increase in cotton prices was mainly a result of a short-term lack of effect and called for domestic textile companies not to follow suit. The person in charge of a leading textile company in China even suggested that if the company’s cotton reserves can support half a month, it should not go to buy cotton again to avoid further soaring cotton prices.

Industry experts predict that the global cotton market supply and demand gap has reached 890,000 tons from 2010 to 2011. If the recent supply of cotton can not be effectively increased, this shortage situation is likely to continue until next June.

The Khmer price “engulfed” profits Since September, a new round of raw material price surges in China have come under threat. From September 10 to October 25, 21S cotton yarn prices rose more than 25%, and home textile fabric prices also rose by 15%. In a sense, my country's textile companies are facing the most severe test after the financial crisis.

According to the latest statistical data from the China Home Textiles Industry Association on 14 domestic textile industrial clusters, from January to August this year, the textile industry accumulated a total industrial output value of 144.44 billion yuan, an increase of 17.96% year-on-year; and the main business income was 141.68 billion yuan, a year-on-year increase. The growth was 18.33%; the total profit was 6.6 billion yuan, a year-on-year increase of 24.25%, and the average profit rate of the home textile industry was 4.66%, which was only 0.23 percentage points higher than the same period of last year.

From the perspective of different home textile companies, the Home Textiles Association's comparison of the profits of 50 fabric companies, 50 bedding companies and 15 towel companies shows that in the first 8 months of this year, bedding companies had the highest profits, with a cumulative increase of 57.9. %, followed by cloth art companies, profit growth was 44.4%, the slowest profit growth was towel companies, only 24.7%.

The reason, according to Yang Zhaohua, president of the China National Textile and Apparel Association, is that the price of cotton yarn, the main raw material of towels, has risen higher than that of bedding main raw material fabrics and fabric main raw material polyester. In addition, the towel companies independently undertake a long production process, cotton yarn rose too quickly led to downstream companies difficult to digest and control.

“As far as the domestic market is concerned, since the price increase of cotton since September was carried out above the high price level in August, companies themselves are difficult to digest and must adjust product prices accordingly. The sales of products after price adjustment will surely be affected, which will in turn affect companies. The normal production and operation situation.” Yang Zhaohua frankly, in addition, due to raw materials prices too aggressive, the company's fall and winter orders and long-term orders are seriously damaged, resulting in the company's profit margins are further compressed.

At the same time, given the fact that the inhibitory factors for the recovery of global market demand have not yet been completely eliminated, and that the appreciation of the renminbi is expected to increase, the confidence and ability of home textile companies to actively raise prices are clearly insufficient.

Judging from the circumstances of the interview with reporters, in the face of the dual pressures of “no rice pots” and “inability to raise prices”, many home textile companies have now fallen into an embarrassing situation of low profits or even losses.

In the town of Maqiao, Haining, Zhejiang, China, the warp knitting industry park management committee Shen Shunnian told reporters that since the beginning of this year, the park has shown a good situation in both production and sales. It is the best year for the market situation in recent years. In the first three quarters, the industrial output value of the park totaled 11.59 billion yuan, an increase of 41.5% over the same period of the previous year; sales revenue was 11.7 billion yuan, an increase of 45.7% year-on-year; however, total profits and taxes were only 500 million yuan, a year-on-year growth rate of only 5.6%.

“In addition to the increase in labour and fuel power costs and the impact of energy conservation and emission reduction, the increase in the price of raw materials such as cotton is an important factor.” Shen Shunnian said that in the long run, rising raw material prices is an inevitable trend, but the rate of increase The rate should be moderate and cannot be ups and downs. Otherwise, downstream enterprises can hardly bear the pressure of increasing costs.

Export companies become "disaster-hit areas"

The reporter learned that due to the relatively low proportion of raw material costs and the comparative advantages of owning brands and channels, domestic sales companies have better ability to conduct price transmission and resist risks.

Executive director of Hunan Mengjie Home Textiles Co., Ltd. Qi Hongjie told reporters that the current operating rate of the company is sufficient, and the situation of hand-held orders next year is also relatively satisfactory. The company is a typical domestic sales enterprise with only 6% to 8% of exports.

In contrast, the export-oriented home textile companies, especially OEMs, face a rather severe market situation.

“For OEM companies, they can only earn processing fees. For example, each needle of an embroidery company worker has a clearly marked price.” Yang Zhaohua said that, overall, OEMs have implemented order-based export methods for three months. In the case of a previous order, there was no way to predict the sharp fluctuations in raw material prices.

This reporter learned that during the Canton Fair this year, foreign procurement companies basically accepted a high price of 28,000 yuan/ton of cotton, and began to implement a flexible one-week acceptance system, that is, domestic companies do not receive orders within 7 days, which means that they automatically give up. This will undoubtedly affect the production schedule of domestic enterprises next year.

Many home textile enterprises participating in the Canton Fair have expressed that they are confused about the price rise of raw materials and the future market situation. At present, orders are particularly cautious. The person in charge of a domestic textile company even half-jokingly said, "The enterprise prepares for the employee's holiday after the end of the Canton Fair and waits until the next Spring Festival."

Yuhang District of Hangzhou City is an important home textile industry cluster in China. It is also a famous cloth city in China and has more than 4,600 home textile enterprises. In 2009, 328 textile enterprises above designated size realized industrial output value of more than 10 billion yuan and employed 35,000 people. The surge in cotton prices this time has particularly affected the Yuhang textile enterprises.

Yang Linshan, president of the Yuhang Home Textiles Industry Association and chairman of Zhejiang Zhongwang Holding Group, told reporters that the impact of higher cotton prices on companies is more direct than the recent renminbi appreciation. It is reported that the group's export share is as high as 85%.

“In the face of the price of cotton for a day, companies can only negotiate a specific price based on changes in the price of raw materials, and they are afraid to take orders for the next year.” Yang Linshan said that the top priority for companies is to put this into action within this year as soon as possible. The order is processed.

Different from Zhongwang Group, Anhui Star Textile Group is a complete export-oriented home textile company that faces the US market. The manager of the group, Guan Lei, told reporters that at present, the company is in a state of low profit, and export orders will only be guaranteed. According to reports, the cost of cotton accounts for about 73% of the total cost of the company's products, up to 80%.

"In order to reduce costs, the company has shut down all outreach factories that account for one-third of its total capacity. Currently, the operating rate of the company is only two-thirds." Guan Lei reluctantly said.

In the situation of soaring cotton prices, cotton yarn prices have also risen, and the fluctuations have become more frequent, which makes the downstream home textile companies extremely uncomfortable.

“If the upstream cotton yarn companies do not quote prices, companies cannot determine the cost of raw materials. Sometimes they can only estimate their orders based on the cotton price of the day.” Guan Lei said frankly.

The reporter learned that according to past laws, if the price of cotton rises by 10%, the increase in cotton yarn prices is usually only 5%; but according to the market situation this year, the price of cotton yarn has risen as high as 15% in the case of a 10% increase in cotton prices. The country is called on to suppress cotton prices.

The reporter learned from an expanded meeting of the Standing Committee of the China National Textile Association held in early November that the domestic textile association has reached a consensus regarding the situation of rising cotton prices. The Home Textile Association has recently reached a consensus on related departments and called on the country to issue policies and measures to curb cotton prices as soon as possible. At the same time take into account the interests of the vast number of domestic cotton farmers, and scientifically justify the current value of cotton.

The Home Textiles Association appeals that nowadays home textile enterprises must take a two-pronged approach by continuously developing new products, enhancing brand culture and added value of products, enhancing the right to speak and pricing in the international market, and taking the initiative to win the market with high-quality products; on the other hand, effectively reducing The proportion of raw material costs in product costs, emphasis on the construction of terminals and channels, and accelerate the innovation of marketing models.

Yang Zhaohua suggested that in the face of stubbornly high raw material costs, domestic textile enterprises must in particular vigorously implement R&D innovations, increase the technological content and added value of products, and at the same time constantly improve the internal management level and achieve the optimization and upgrading of industrial structure and product structure.

In the situation of soaring cotton prices, cotton yarn prices have also risen, and the fluctuations have become more frequent, which makes the downstream home textile companies extremely uncomfortable.

Related reports The price of cotton-related products soared In the recent surge in cotton prices, the prices of polyester filaments and polyester filaments in related products also showed an irrational upward trend. An interview with the reporter found that if the increase in the price of polyester filaments is a compensatory increase after the financial crisis, the price rise of polyester filaments can be described as a step-like increase.

According to market monitoring data from the China Home Textiles Industry Association, the price of staple polyester staple fiber rose more than 30% from September 10 to October 25, and the price increase of polyester filaments associated therewith also exceeded 15%.

Ma Jianping, head of the production department of Zhejiang Hailidian Co., Ltd. in Haining Warp Knitting Industry Park in Zhejiang Province, told reporters that since August of this year, the price of the main raw material polyester chips required by the company has risen by 20%, resulting in the price of its product industrial filaments. Also rose by more than a dozen percentage points.

"Usually speaking, the average price adjustment of enterprises once in two or three months, since October, the company will adjust prices every two weeks, but overall, the current price increase of raw materials is close to the ability of downstream companies to withstand "The limit." Ma Jianping told reporters, at the same time, the company's production inventory also showed a downward trend.

As for the reason for the rise in the price of raw materials, "Rocket riders", Ma Jianping said it was not clear.

He told reporters that in the first half of this year, companies were still cautious about the prospects of the industrial filament market, and they did not expect raw material prices to rise so sharply. Relevant statistics show that the current price of ordinary varieties of industrial filaments in China has hit a high of 15,000 to 16,000 yuan per ton.