As of March 3, 2021, the price of cotton futures is 16,385 yuan per ton. From the low point in the first half of last year, it has risen by about 60%. Not only the price of cotton, but also the news that the price of cotton yarn has skyrocketed recently has also shocked the circle of friends of textile people. So, what are the impacts of the current rise and fall in cotton prices? How do spinning and fabric companies view the fluctuations in raw material prices and market trends? Does this mean that the textile market is off to a good start?
The rise in cotton prices has stimulated enthusiasm for cotton planting
Since April 1, 2020, In less than a year, the main May contract price of US cotton rose from 48.35 cents/pound to a maximum of 95.6 cents/pound. During the same period of time, the main May contract price of domestic cotton futures rose from 10,090 yuan/ton to a maximum of 17,080 yuan/ton.
As cotton prices rise and remain at a high level for a long time, cotton farmers are motivated to diversify cotton in the new year. It is understood that Xinjiang, Hebei, Hubei and other places are currently at the peak stage of spring preparations. Cotton farmers have increased their investment in agricultural inputs. Cotton farmers in some producing areas have also expanded cotton planting areas. Experts said that the cotton planting area in Xinjiang is expected to be stable in the new year. There are three reasons for the rise:
First, since the launch of new cotton in 2020, the purchase price of Xinjiang seed cotton has been rising. The enthusiasm for planting has dispelled the idea of some cotton farmers to switch to other crops, which is conducive to the stability of the total cotton planting area.
Second, the Xinjiang Production and Construction Corps and some local institutions have issued a number of measures to improve the quality of cotton planting, improve the level of improved varieties, and expand the cotton planting industry in the new year. Measures and policies such as planting area have effectively guided cotton farmers’ planting intentions and are conducive to increasing cotton planting area.
Thirdly, judging from the planting habits of cotton farmers, Xinjiang Corps and cotton farmers in northern Xinjiang prefer to grow cotton. Although there are some uncertainties in the cotton planting area in Kashgar and other places in southern Xinjiang, , but the impact on the total area is limited.
The continued improvement in downstream demand has provided strong support for the continuous rise in cotton prices in the past year. At present, the domestic textile market has sufficient orders and smooth sales. Enterprises are actively purchasing raw materials and are enthusiastic about restocking, which continues to boost cotton prices.
It is understood that most textile companies are actively completing pre-holiday lint cotton ordering contracts and organizing lint cotton storage to prevent upstream ginners and traders from breaking the contract due to the skyrocketing cotton prices. ;At the same time, appropriately purchase the urgently needed lint for cotton distribution.
Due to the ups and downs of cotton prices, many cotton spinning companies have a wait-and-see attitude towards purchasing new cotton. The local lint price in Hubei has been raised by about 1,000 yuan/ton, but sales are slow. Industry insiders said that 80% of local textile companies have not purchased new cotton yet, and more than 80% to 85% of companies are still mainly producing last year’s orders. This year’s new orders are few and mainly concentrated in Jiangsu and Zhejiang. There are two main reasons why companies dare not accept large orders. First, they are worried that the price of cotton and cotton yarn will be inverted, resulting in no profit for the company; second, they are worried that the cotton market will be volatile, with sharp rises and falls, and they plan to wait until the market stabilizes to stabilize. purchase.
Cotton yarn is in short supply and prices rise
As of February 25, 2021, CY C32S pure cotton yarn It closed at 25,450 yuan/ton, an increase of 1,455 yuan/ton in just one week, an increase of more than 6%.
Industry insiders said that the ex-factory price of cotton yarn is “adjusted once a day or even twice a day”, and spinning profits have increased compared with the fourth quarter of 2020, mainly due to low cotton yarn inventories in cotton spinning mills. , sufficient liquidity and the intensifying inflation caused by the surge in prices of crude oil, chemical products and other products.
Judging from the quotations of cotton yarn, the prices of various varieties of cotton yarn are now significantly increased by 1,500 yuan/ton to 2,000 yuan/ton compared with before the Spring Festival. Cotton spinning mills are full of confidence in their production and operations this year, and post-holiday purchases and sales are quickly on track. Yarn inventory is significantly lower than in previous years. As of February 25, China’s yarn inventory index closed at 9.2 days. If the peak season from March to April arrives as expected, textile companies will continue to be in short supply.
In terms of cotton yarn sales and shipments, some spinning companies have promptly adjusted their thinking of rushing out pre-holiday orders after the holiday to ship pre-holiday orders in time to complete the contract, and have changed to installments for pre-holiday orders. Completed, priority will be given to supplying high-priced cotton yarn orders after the holiday and actively shipping. Many textile company owners believe that they should run at full capacity, seize the opportunity to produce and sell, and strive to complete 70% or even higher of the 2021 annual profit target and production tasks in the first half of the year.
At present, most cotton spinning mills in Anhui Province have resumed post-holiday production. Although cotton and cotton yarn futures prices have soared after the holiday, and the prices of various types of cotton yarn in cotton spinning mills have increased significantly by more than 1,500 yuan/ton compared with before the holiday, downstream customers are still on the sidelines, resulting in fewer actual transactions of cotton yarn. Cotton spinning mills are currently mainly rushing to produce Most orders are placed before the Spring Festival.
According to the person in charge of a cotton spinning factory, the factory has a high rate of resumption of work and production after the Spring Festival. It has successively shipped multiple trains of cotton yarn to customers. It is expected that pre-holiday orders will not be received until early March. Finish. At the same time, the company plans to selectively accept orders taking into account rising cotton prices.
Downstream customers expressed “indigestion”
Currently, downstream weaving factories are fully operational, but Compared with the upstream cotton yarn price surge of more than 10% in February, the current price increase of gray fabrics, fabrics, clothing, etc. has significantly lagged behind. Export-oriented companies and processing companies have become more cautious in accepting orders. Many fabric companies have expressed that they cannot bear and absorb the cost increase. ��.
“All cotton yarn prices are rising. Compared with September last year, the price of cotton yarn has increased by almost 10,000 yuan per ton. It is difficult for us to do now, and customers simply cannot accept it. .” The person in charge of a knitted fabric company said: “The prices are still changing, with one price in the morning and another in the afternoon. Some cotton yarn manufacturers are also pressing down the goods and releasing them when they want the price to be higher. Our company’s The production chain is very long, from purchasing cotton yarn, to weaving gray cloth, to dyeing and finishing, and then to sales. Now that the yarn price is so high, the production chain cannot stop. Who knows when the price will drop? Once the price drops, all price differences will be lost. We have to bear it.”
Compared with the price increase of raw materials, the response of fabric prices is lagging behind. “Although raw materials have increased, most of our products are still not available. If you dare to adjust prices, on the one hand, the company still has some preparations and inventory, but on the other hand, it is worried that customers will not accept it. For textile companies, the biggest fear is not the rise or fall of prices, but the instability of prices. If you buy materials at a high price, you will have to wait for production , the price of finished cloth has dropped, it’s like a punch in the stomach.” The person in charge of the company said helplessly.
The rise in raw material prices has also made many weaving companies regret it. Industry insiders said that due to the poor market situation last year due to the global epidemic, raw material prices continued to fall, causing many companies that prepared raw materials before the 2020 Spring Festival to suffer heavy losses. Therefore, many companies are extremely cautious this year, buying and using raw materials as they come, and have no intention of stockpiling large quantities of raw materials.
“Downstream customers generally find it difficult to accept large increases in a short period of time, mainly because most of their orders are taken before the Spring Festival, and the quotations are based on the pre-Spring Festival market. But the current increase has basically eaten up all profits. In order to retain orders and retain customers, some trading companies can only accept it with tears,” said an industry insider.
Experts believe that without demand support, even if raw materials support the rise, a sustainable market cannot be formed. However, as long as upstream cotton yarn remains in short supply and coupled with expectations of an improvement in the epidemic, the gray fabric market is unlikely to fall unilaterally in the first half of this year. The fluctuation of cotton prices is a normal market phenomenon. As long as the amplitude is relatively controllable, there is no need to deliberately reduce production. Therefore, the factory capital chain situation may affect the factory start-up load in the first half of 2021: the inventory of factories with sufficient funds may increase slightly, while factories with tight funds will pay more attention to the production and sales ratio. </p
