Compared with the prosperous market situation of last year, this year's market has made many cotton textile companies lament the "ice and flames". Why does the market situation suddenly turn? Cotton prices are the first mentioned factors.
Taking the cotton textile enterprises in Heze City of Shandong Province as an example, almost all cotton textile enterprises in Heze City started construction last year. The supply of orders was in short supply. By the end of the year, Heze had 374 large-scale textile enterprises, 6.607 million cotton spindles, and 73,000 employees. . However, since March this year, the market situation has suddenly been cold, cotton prices continue to decline, most of the cotton textile companies in Heze will lose their credibility and compensation for liquidated damages, and continue to produce a profit without any profit or even a serious loss.
From the boiling point to the freezing point, many companies lack ideological preparations for the sharp turnaround in this market situation, and the current predicament becomes even more difficult. As domestic and foreign market demand continues to be sluggish, corporate inventory pressure is huge, and the country's macro monetary policy adjustments, cotton textile enterprises are generally facing difficulties and liquidity. Many companies believe that the cotton textile industry is facing a reshuffle.
Crazy cotton why the market situation will suddenly turn? Cotton prices are the first mentioned factors. Some people say that the lower cotton prices have pushed cotton textile companies to “dead endsâ€.
From September last year to now, the price of cotton has experienced a period of skyrocketing plunge. The general trend of the "roller coaster" and the magnitude of the rise and fall are unprecedented. Many "old textiles" with years of experience lamented that they have not experienced this kind of market.
I remember that when the price of cotton rose to 19,000 yuan/ton in mid-September last year, many textile companies said they could not eat too much. Since then, the soaring price of cotton can be said to almost everyone's expectations. When cotton prices rapidly crossed the threshold of 20,000 yuan/ton and 25,000 yuan/ton, and went straight to 30,000 yuan/ton, many people in the industry were worried about the plunge in cotton prices. Although the increase in cotton prices led to the rise in cotton yarn prices, allowing cotton textile companies to receive tangible benefits and greatly increase profitability, sensible people understand that cotton prices cannot go up indefinitely once cotton prices emerge. Plunging, the blow to cotton textile companies will be great.
From September to early November last year, the price of domestic and foreign cotton rose by more than 67% in less than two and a half months. After the return of cotton prices to the fundamentals, the contradiction between “necessity for production†still persisted. Although there was a period of decline in November last year, the price of cotton rose sharply again in February this year and entered the “3 million eraâ€. On March 11, the national cotton price index, which represents the average sales price of standard lint in the Mainland, reached 31,198 yuan/ton. It is generally believed that when the cotton price will remain high this year, the market once again shows its unpredictability. The price of cotton has been falling all the way, one price per day, and sometimes it can be reduced by four or five thousand dollars in three days, until the current fall below the reserve price, which is more than 40%, and there is a tendency of falling.
Not only did the spot price of cotton plummet all the way down, but in the ** market, the price of cotton was also depressed. On the Zhengzhou Commodity Exchange, the cotton 1109 contract fell from 34,000 yuan/ton in February to 21,000 yuan/ton, a decrease of nearly 40%. In the international market, the settlement price of cotton in New York in October reached a maximum of 164.64 cents/lb in April, and fell to 100 cents/lb by the end of July, a similar decline of nearly 40%.
The price of cotton yarn fell even worse. Thirty-two pure cotton yarns have fallen from 40,000 yuan per ton at the beginning of March this year to around 25,000 yuan per ton, and fell by nearly 40% per ton in more than five months. Cotton textile companies generally suffer losses, and cotton yarn stocks are always high in recent months.
At the same time, as of the end of July, there were still 1.37 million tons of total cotton business inventories, which was higher than the 120 tons in the same period of last year, and even more significantly than the 95,000 tons and 900,000 tons in 2008 and 2009.
From a thousand dollars a day to a thousand dollars a day, this year's cotton is really crazy.
The ups and downs of the cotton industry, which can not afford to hurt the industry chain, have caused a serious blow to the entire cotton industry chain.
The instability of cotton prices first hit the enthusiasm of cotton farmers. As the price of cotton has recently fallen below 19,800 yuan/tonne, many cotton farmers are deeply worried. On the one hand, due to reluctance to sell, some cotton farmers are still taking advantage of last year's cotton. At current prices, they must lose money. On the other hand, although this year's cotton is generally growing well, due to the rising cost of cotton, if the price of new cotton is not higher than the closing price, many farmers will have no benefit. Many textile companies are worried that "no one will grow cotton next year."
The ups and downs of cotton prices have also been disastrous for cotton textile companies. The first is that the normal market order has been disrupted. When the price of cotton soared, the market was filled with hype, and some companies were busy hoarding cotton and cotton yarn, causing orders to fall short of supply. Demand has been magnified. Crazy speculation has masked the real relationship between supply and demand. When the price of cotton fell, the market fell into a wait-and-see mode under the psychological effect of buying up or not buying, real market demand was suppressed, and orders suddenly decreased or even disappeared.
The normal production order of enterprises has also been disrupted. The price of cotton yarn oscillated with the fluctuation of cotton prices. To prevent the occurrence of business risks, companies did not dare to accept large orders or long orders. The production of cotton textile companies is cyclical and generally requires cotton for about 3 months. Some large enterprises have tens of thousands of tons of cotton. When the price of cotton drops by as much as 10,000 yuan/ton, the company’s losses will be hundreds of millions. In the situation where the prices of cotton and cotton yarns are declining, the production characteristics of “high entry and low output†make it difficult for most companies to avoid losses. It is estimated that the current production of a ton of cotton yarn will cost around 2,000 yuan.
Faced with this situation, many SMEs can only stop production. According to the survey, nearly 70% of the textile enterprises in Lucheng and Caoxian of Shandong Province have stopped production, and only a few large and medium-sized enterprises have normal production or limited production. Some companies are "reluctant to maintain," but "starting means losing money. This year, the profits earned in the previous two or three years have all been lost."
Who can do it alone?
But not all companies are so miserable.
Many companies that produce differentiated fiber yarns are doing well. In the exceptionally difficult situation of the cotton textile industry in recent months, the benefits of the new fiber yarn production enterprises have steadily increased, maintaining a steady development momentum.
In Ling County, Shandong, a group of textile companies such as Hengfeng, Shengze, Baoding, Fuhua, etc., have vigorously developed new fiber yarns in recent years and explored a new path. Relying on multi-variety, differentiated, and new-type product structure, Lingxian new fiber textile enterprises are far away from the impact of cotton price fluctuations. According to statistics, currently there are more than 30 new-type fiber textile enterprises above designated size in Ling County, with a production capacity of 1.2 million spindles, and the production capacity accounts for 30% of the same industry in the country. The new fiber textiles have reached over 30 series and over 500 varieties, covering More than 90% of the varieties on the market.
Other companies that rely on technological or managerial advantages to obtain higher value-added products are also less affected by cotton price fluctuations. Lu Tai A 2011 mid-year report shows that: in the first half of the year, the company realized total operating revenue of 2,980,811,100 yuan, operating profit of 623,509,800 yuan, and net profit attributable to the parent company of 491.6671 million yuan, an increase of 32.67%, 40.46%, and 34.01% over the same period of last year. . As a leading domestic yarn-dyed fabrics company, Lutai has the technological advantages and scale advantages that enable it to better withstand external risks.
As one person in charge of the China Cotton Textile Association said, the current predicament of cotton textiles shows the urgency of transformation. It forces companies to improve product quality, eliminate backward production capacity, and establish truly differentiated development models. Only by improving the core competitiveness of enterprises and adapting to the needs of the market can we minimize the impact of cotton price fluctuations.
Taking the cotton textile enterprises in Heze City of Shandong Province as an example, almost all cotton textile enterprises in Heze City started construction last year. The supply of orders was in short supply. By the end of the year, Heze had 374 large-scale textile enterprises, 6.607 million cotton spindles, and 73,000 employees. . However, since March this year, the market situation has suddenly been cold, cotton prices continue to decline, most of the cotton textile companies in Heze will lose their credibility and compensation for liquidated damages, and continue to produce a profit without any profit or even a serious loss.
From the boiling point to the freezing point, many companies lack ideological preparations for the sharp turnaround in this market situation, and the current predicament becomes even more difficult. As domestic and foreign market demand continues to be sluggish, corporate inventory pressure is huge, and the country's macro monetary policy adjustments, cotton textile enterprises are generally facing difficulties and liquidity. Many companies believe that the cotton textile industry is facing a reshuffle.
Crazy cotton why the market situation will suddenly turn? Cotton prices are the first mentioned factors. Some people say that the lower cotton prices have pushed cotton textile companies to “dead endsâ€.
From September last year to now, the price of cotton has experienced a period of skyrocketing plunge. The general trend of the "roller coaster" and the magnitude of the rise and fall are unprecedented. Many "old textiles" with years of experience lamented that they have not experienced this kind of market.
I remember that when the price of cotton rose to 19,000 yuan/ton in mid-September last year, many textile companies said they could not eat too much. Since then, the soaring price of cotton can be said to almost everyone's expectations. When cotton prices rapidly crossed the threshold of 20,000 yuan/ton and 25,000 yuan/ton, and went straight to 30,000 yuan/ton, many people in the industry were worried about the plunge in cotton prices. Although the increase in cotton prices led to the rise in cotton yarn prices, allowing cotton textile companies to receive tangible benefits and greatly increase profitability, sensible people understand that cotton prices cannot go up indefinitely once cotton prices emerge. Plunging, the blow to cotton textile companies will be great.
From September to early November last year, the price of domestic and foreign cotton rose by more than 67% in less than two and a half months. After the return of cotton prices to the fundamentals, the contradiction between “necessity for production†still persisted. Although there was a period of decline in November last year, the price of cotton rose sharply again in February this year and entered the “3 million eraâ€. On March 11, the national cotton price index, which represents the average sales price of standard lint in the Mainland, reached 31,198 yuan/ton. It is generally believed that when the cotton price will remain high this year, the market once again shows its unpredictability. The price of cotton has been falling all the way, one price per day, and sometimes it can be reduced by four or five thousand dollars in three days, until the current fall below the reserve price, which is more than 40%, and there is a tendency of falling.
Not only did the spot price of cotton plummet all the way down, but in the ** market, the price of cotton was also depressed. On the Zhengzhou Commodity Exchange, the cotton 1109 contract fell from 34,000 yuan/ton in February to 21,000 yuan/ton, a decrease of nearly 40%. In the international market, the settlement price of cotton in New York in October reached a maximum of 164.64 cents/lb in April, and fell to 100 cents/lb by the end of July, a similar decline of nearly 40%.
The price of cotton yarn fell even worse. Thirty-two pure cotton yarns have fallen from 40,000 yuan per ton at the beginning of March this year to around 25,000 yuan per ton, and fell by nearly 40% per ton in more than five months. Cotton textile companies generally suffer losses, and cotton yarn stocks are always high in recent months.
At the same time, as of the end of July, there were still 1.37 million tons of total cotton business inventories, which was higher than the 120 tons in the same period of last year, and even more significantly than the 95,000 tons and 900,000 tons in 2008 and 2009.
From a thousand dollars a day to a thousand dollars a day, this year's cotton is really crazy.
The ups and downs of the cotton industry, which can not afford to hurt the industry chain, have caused a serious blow to the entire cotton industry chain.
The instability of cotton prices first hit the enthusiasm of cotton farmers. As the price of cotton has recently fallen below 19,800 yuan/tonne, many cotton farmers are deeply worried. On the one hand, due to reluctance to sell, some cotton farmers are still taking advantage of last year's cotton. At current prices, they must lose money. On the other hand, although this year's cotton is generally growing well, due to the rising cost of cotton, if the price of new cotton is not higher than the closing price, many farmers will have no benefit. Many textile companies are worried that "no one will grow cotton next year."
The ups and downs of cotton prices have also been disastrous for cotton textile companies. The first is that the normal market order has been disrupted. When the price of cotton soared, the market was filled with hype, and some companies were busy hoarding cotton and cotton yarn, causing orders to fall short of supply. Demand has been magnified. Crazy speculation has masked the real relationship between supply and demand. When the price of cotton fell, the market fell into a wait-and-see mode under the psychological effect of buying up or not buying, real market demand was suppressed, and orders suddenly decreased or even disappeared.
The normal production order of enterprises has also been disrupted. The price of cotton yarn oscillated with the fluctuation of cotton prices. To prevent the occurrence of business risks, companies did not dare to accept large orders or long orders. The production of cotton textile companies is cyclical and generally requires cotton for about 3 months. Some large enterprises have tens of thousands of tons of cotton. When the price of cotton drops by as much as 10,000 yuan/ton, the company’s losses will be hundreds of millions. In the situation where the prices of cotton and cotton yarns are declining, the production characteristics of “high entry and low output†make it difficult for most companies to avoid losses. It is estimated that the current production of a ton of cotton yarn will cost around 2,000 yuan.
Faced with this situation, many SMEs can only stop production. According to the survey, nearly 70% of the textile enterprises in Lucheng and Caoxian of Shandong Province have stopped production, and only a few large and medium-sized enterprises have normal production or limited production. Some companies are "reluctant to maintain," but "starting means losing money. This year, the profits earned in the previous two or three years have all been lost."
Who can do it alone?
But not all companies are so miserable.
Many companies that produce differentiated fiber yarns are doing well. In the exceptionally difficult situation of the cotton textile industry in recent months, the benefits of the new fiber yarn production enterprises have steadily increased, maintaining a steady development momentum.
In Ling County, Shandong, a group of textile companies such as Hengfeng, Shengze, Baoding, Fuhua, etc., have vigorously developed new fiber yarns in recent years and explored a new path. Relying on multi-variety, differentiated, and new-type product structure, Lingxian new fiber textile enterprises are far away from the impact of cotton price fluctuations. According to statistics, currently there are more than 30 new-type fiber textile enterprises above designated size in Ling County, with a production capacity of 1.2 million spindles, and the production capacity accounts for 30% of the same industry in the country. The new fiber textiles have reached over 30 series and over 500 varieties, covering More than 90% of the varieties on the market.
Other companies that rely on technological or managerial advantages to obtain higher value-added products are also less affected by cotton price fluctuations. Lu Tai A 2011 mid-year report shows that: in the first half of the year, the company realized total operating revenue of 2,980,811,100 yuan, operating profit of 623,509,800 yuan, and net profit attributable to the parent company of 491.6671 million yuan, an increase of 32.67%, 40.46%, and 34.01% over the same period of last year. . As a leading domestic yarn-dyed fabrics company, Lutai has the technological advantages and scale advantages that enable it to better withstand external risks.
As one person in charge of the China Cotton Textile Association said, the current predicament of cotton textiles shows the urgency of transformation. It forces companies to improve product quality, eliminate backward production capacity, and establish truly differentiated development models. Only by improving the core competitiveness of enterprises and adapting to the needs of the market can we minimize the impact of cotton price fluctuations.
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