Cotton spinning gross profit down to 1%

In the past few days, the author investigated the Wuhan cotton spinning industry chain and found that this year's cotton price plummeted caused a series of unexpected “butterfly effects”.

"The cotton clothes are not good to do. We basically didn't do anything in autumn and winter." Manager Shao Xian of Wuhan Yazi Dini clothing told the author. Yesterday, the author came to Dazheng Street Garment Wholesale City in Hanzheng Street and discovered that a cotton-made garment was very hard to find. Manager Shao explained: “Cotton prices are fluctuating, cotton spinning companies are reluctant to produce, and garment companies have basically changed to chemical fiber clothing.”

The business of making cotton clothes is also very light. Lu Jia, the designer of the Jiali costume, told the author: “Although the cotton is cheap, but we haven’t felt any cheap clothes. In fact, the price we purchase is still about 10% more expensive. This year, due to inflation, the weather has been slow. Due to cold and other reasons, the sales volume was less than half of the same period of last year. In this case, the purchase volume and purchasing price of our fabric will only be compressed."

In Taiyuan Textile City, the author saw that the retail price of cloth has decreased. The left-hand cloth industry manager told the author: “The price of cotton fabrics dropped from 38 yuan per kilogram last year to 32 yuan, but the sales volume is far less than last year, and even less than the previous quarter.”

For most cotton companies, this winter is not easy. Relevant person in charge of Wuhan Jiangnan Textile Co., Ltd. told the author: “Now our purchase price is basically below 19,000 yuan per ton, but downstream companies still feel that they are not low enough. The downstream market is not good, they continue to give us lower prices. But in addition to raw materials, None of the costs are rising, labor costs have risen by 2-3%, overall costs have risen by more than 10%, and downstream quotes have fallen by 15%, which is enough to make it costly."

“This has hardly eaten our profits. The worst breed has only 1% gross margin. Orders are at a loss.” The official said frankly: “Approximately 2 to 30% of the orders have been cut down, especially In the case of pure cotton products, we had to refuse. And last year, the most unproductive product gross margin reached more than 15%."

Industry insiders told the author that the proportion of cotton textile products was generally 70%, and other chemical fiber fabrics accounted for 30%. However, this ratio has reversed in recent years.

The above-mentioned person in charge told the author: “In this year's procurement of raw materials, chemical fiber fabrics such as polyester and natural rubber accounted for more than 70%, and the purchase volume of cotton was reduced to 30%. Some small textile enterprises in the foreign countries have already suffered from declining gross margins and tight cash flow. The comprehensive reasons such as recruitment difficulties have stopped production. Wuhan's cotton spinning companies have not yet stopped production due to their large scale, but they have begun to adjust the product structure and reduce the production of cotton products."

What worries cotton spinning companies is that the apparel market has not shown signs of improvement and some garment factories have even entered a semi-discontinued state.

Manager Yara Dini costume manager Shao introduced: “There are many stocks in the factory. In order to keep the workers, we can only open a half-day work and stop half-day work. If business is not yet on New Year’s Day, we may have annual leave ahead of schedule.”