Reduce the spread of cotton at home and abroad to ease pressure on textile companies

In recent years, the spread of cotton prices at home and abroad has continued to widen. The cost of raw materials for Chinese textile companies has remained high, and textile companies have been very difficult to manage. From this year onwards, the state will cancel the temporary cotton purchasing and storage policy and implement target price reforms, which will reduce the domestic and foreign cotton price gap and ease the operating pressure of textile companies.

Khmer spreads pressure on companies

The reporter learned that due to China's cotton purchasing and storage policy, the price of cotton has not been in line with the international market. In recent years, the international cotton price has continued to decline, showing a trend of increasing inside and outside the country. The ever-widening spread of cotton prices at home and abroad has put pressure on Chinese textile companies.

“In recent years, the cost of raw materials for Chinese textile companies is very high, which is mainly due to the high price of domestic cotton. However, the cost of raw materials for foreign textile companies is much lower than in China, which directly affects the export of textile enterprises in China. Earnings, high cotton prices at home and abroad have caused textile companies to feel business pressure,” said Mr. Wang, head of a textile export company in Hunan. “Because domestic and foreign cotton price spreads are too large, our orders have become less and less in recent years.” The person in charge of Hangzhou Light Industry Arts & Crafts Textiles Import & Export Co., Ltd. stated that last year the production lines of some of the company’s factories were idle in August and September. It is down, and in the past, from July to September, it was the peak period of processing and production, and there would be no idleness. The reasons for the occurrence of idleness were on the one hand the bad international market last year, on the other hand, the customers transferred some of their orders to Southeast Asian countries such as Vietnam.

Hunan Yintai Textile Group has already begun to purchase cotton in other countries. This reporter learned that Hunan Yintai Textile Group has its own spinning mills, but in recent years they have had to buy cotton yarns from Pakistan and India. In those countries, the price of cotton yarn is 12,000 yuan/ton, domestic cotton is 19,000 yuan/ton, and the price of imported cotton yarn is much lower than that of domestic cotton. The import of cotton yarn is not restricted, and the industrial chain is seriously upside down. These conditions directly impact the cotton spinning enterprises in China. .

Zhu Sujun, head of Shanshan Group's International Trade Department, said in an interview with the media that in recent years, the group’s exports have been bleak, the pressure is relatively high, prices have been depressed, and orders have become smaller and smaller. The minimum order quantity for orders is at least 500, compared to 200-300 last year.

Closing storage to target price cotton price gap is expected to shrink

Sun Liwu, an analyst at Zhuo Chuang Information Market, believes that the cotton market, which has formed a custom of autumn reserves, will have a relatively obvious turbulence after the lack of a direct purchasing and storage policy. In the future, domestic cotton prices will gradually move closer to international cotton prices.

According to industry sources, after implementing the target price subsidy policy in 2014, the market mechanism will dominate the domestic cotton price, and the domestic and foreign price difference will return to the normal level. It is understood that under the premise that China's cotton import policy has not undergone major adjustments, the difference between domestic and foreign cotton prices is in the range of 1,000 to 1,500 yuan per ton, and textiles are affordable for enterprises. The average price of imported cotton to Hong Kong is about 82 cents (according to the exchange rate of 6.2), a discount of 1% of the tariff quota includes tax and fees, and the port delivery price is about 14,100 yuan/ton, and the slippage tax includes tax and fee delivery is 14,700 yuan/ton. With tariffs and fees at the port of 17,900 yuan per ton and the above-mentioned pre-judgment, industry insiders estimate that the average domestic cotton price in 2014 will be 15,000 to 16,000 yuan/ton.

Temporary purchase and storage policy to eliminate profit from textile enterprises

The China Textile Import & Export Chamber of Commerce’s Chang Jianghui stated that the cancellation of the country’s temporary cotton purchasing and storage policy and the implementation of targeted price reforms will bring good benefits to the industry. The narrowing domestic and foreign cotton price gaps will be conducive to the improvement of China’s textile industry’s international competitiveness and export market. increase. "The elimination of the temporary cotton purchasing and storage policy by the state and the implementation of targeted price reforms are good news for our textile companies. This national policy will reduce the price of domestic cotton and help reduce the domestic and foreign cotton price gap. Our domestic Textile companies will be able to buy low-cost cotton,” said a person in charge of a textile export company in Shandong. "Since this year, China's textile companies will no longer worry about high raw material prices." A person in charge of a textile company in Henan said that the country's target price reform on cotton will reduce domestic cotton prices, domestic cotton prices and international The cotton price gap will become smaller and smaller, and the profits of domestic textile companies will gradually increase.

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