In August, more than half of 2020 has passed. Affected by the new coronavirus epidemic and the traditional cotton spinning off-season, the current cotton textile market appears to be even more sluggish. The production and sales of most enterprises are sluggish, and capital turnover is difficult. Coupled with the Sino-US trade friction and the disordered rhythm of the off-peak and peak seasons, the operating conditions of spinning enterprises are generally poor in the first half of the year. News of spinning enterprises suspending production, reducing production, and taking holidays are common among textile friends.
Currently, some companies have entered a shutdown At this stage, the market expects that there will be more companies suspending operations and production. In the future, there are still many uncertainties in the cotton spinning market. Can the spring of yarn come earlier?
As economic growth picks up, the quantity of imported yarn rebounds
According to national statistics Data released by the Bureau on July 27 showed that in the second quarter, the profits of industrial enterprises increased by 4.8% year-on-year, compared with a decrease of 36.7% in the first quarter. Especially in May and June, profits increased by 6.0% and 11.5% respectively, and the growth rate accelerated month by month. Data shows that China’s economy is slowly recovering.
According to customs statistics, my country’s cotton imports in June 2020 were 90,000 tons, an increase of 29% month-on-month and year-on-year. A decrease of 44%; in June, my country’s cotton yarn imports were 150,000 tons, a year-on-year decrease of only 6.5%, and a month-on-month increase of 50%. It can be seen that domestic enterprises’ demand for imported cotton and cotton yarn has recovered.
Market participants believe that the rebound in the quantity of imported yarn is one of the manifestations of the recovery of market demand. In May and June, domestic sales orders postponed due to the epidemic were fully released, and consumer demand for cotton yarns with counts of 40S and below (including OE yarns) rebounded in a short-term “retaliatory” manner; while some domestic small and medium-sized yarn mills were slow to resume work and production and lacked raw materials. Due to reasons such as high costs, low and medium count yarn output, and insufficient inventory, purchasing on-site, bonded or customs-cleared Vietnamese yarn and India-Pakistan yarn has become an inevitable choice for textile and garment enterprises and middlemen.
Foreign trade orders pick up and demand for high-grade cotton picks up
In the past six months, affected by domestic and foreign epidemic factors and other factors, spinning companies in various places have generally reported poor sales of mid-to-high-end yarns. In order to maintain production and operations, companies have sought transformation through product downgrades.
A spinning enterprise with 200,000 spindles in Hubei mainly produces some mid-to-high-end products such as combed 60S, 80S, and 100S. As for yarn, affected by domestic and foreign epidemic factors and other factors, the company’s mid-to-high-end yarn exports have been blocked and orders have decreased. In addition, domestic and foreign textile and clothing consumption has declined, and the product inventory of the cotton spinning industry has increased. Due to the severe foreign trade situation, companies mainly produce mid- to low-end yarn products to meet domestic market demand.
The current cotton yarn market is cold. The person in charge of some yarn companies said that due to the impact of the previous epidemic, many companies had difficulty operating. To reduce expenses, some companies have entered a semi-holiday state. Since the resumption of work and production, the company has transformed its products from yarn production to mask manufacturing.
Industry experts said that the proportion of overseas trade in my country’s textile and apparel accounts for about 50% of the total, which means that textile companies rely solely on the domestic market It is impossible to digest such a huge production capacity. Most textile companies have switched exports to domestic sales, increasing competitive pressure in the domestic cotton spinning market. As the international epidemic situation is at a relatively severe stage and there are still uncertainties in the future development of the global epidemic, domestic textile companies are still facing greater operating pressure.
However, since August, some trading companies have reported that the order receiving situation has improved, and the frequency of purchasers placing orders has increased. The orders placed are mainly for autumn and winter fabrics. Due to the seasonal demand for autumn and winter fabrics, export orders have increased in some regions.
The person in charge of a yarn company that mainly sells domestically said: “Although the overall market is not ideal this year, it is good for us. Small companies have little impact, and they are still making orders one after another. Recently, the production of autumn and winter fabrics for the domestic market has begun, and our company mainly focuses on autumn and winter fabrics, so we have received several orders in recent days.”
A foreign trade company said that the company mainly exports to the United States. Since the beginning of this year, all orders from the United States have stopped. U.S. orders have gradually resumed since May, and some orders have been received intermittently. However, orders have been placed frequently in recent times and have been queued up to the end of October.
In addition, some intermediate trading companies have reported that the demand for mid- to high-end Xinjiang cotton from spinning mills has been relatively good recently, especially The Xinjiang Production and Construction Corps machine-picked cotton on Double 28, the frequency and quantity of purchases have increased, and many companies have also raised their sales basis by 100 yuan to 200 yuan/ton.
Industry insiders believe that with the rebound of foreign trade orders, some companies have increased their orders, and the yarn orders are biased towards In the mid-to-high end, the digestion of high-quality Xinjiang cotton has increased significantly, so the replenishment of high-grade lint cotton has increased to varying degrees. Due to concerns about the impact of the epidemic on the transfer of cotton from Xinjiang to warehouses, the shipment volume of high-quality resources from some warehouses in the mainland has also increased accordingly.
Industry reshuffle accelerates and overcapacity is expected to improve
At present, the survival of the fittest among domestic textile enterprises is accelerating. Since July, many small and medium-sized enterprises have completely withdrawn from the textile industry, suspended production, and taken holidays. The number of enterprises increased to more than 30%. However, there are still some companies with strong strength and high technological level that are still accelerating their development. These companies have seized the market gaps left by the exit of small and medium-sized enterprises.
In this regard, some people in the industry said that the phenomenon of enterprise suspensions and holidays should be viewed dialectically. The withdrawal of backward production capacity will have a positive impact on improving the long-term structural overcapacity situation in the cotton spinning industry. The impact of the epidemic has accelerated the withdrawal of this part of the production capacity from the market with low profitability and low product competitiveness. In the long run, it has positive significance for improving the direction of the industry’s production capacity layout and optimizing the product structure.
Industry insiders believe that China’s textile market is currently recovering slowly. With the rapid recovery in demand for imported yarn and the increase in foreign trade orders In the process of recovery, the spring of domestic yarn will be getting closer and closer. Looking back on previous years, most orders for autumn and winter fabrics began to increase in late August and were placed explosively in September, which is commonly known as the “Golden Nine and Silver Ten”. The end of July this year ushered in the autumn and winter fabric market, which may indicate the early arrival of this year’s “Golden Nine and Silver Ten”.
“The sustainability of this autumn and winter fabric market can be maintained until the end of August, although there is no breakthrough in the entire domestic market. However, many suppliers began to sample frequently and substantial orders increased. The foreign trade market also began to improve after gradually adapting to the changes in the international situation, especially the arrival of orders for autumn and winter fabrics, which gradually opened up the situation and sales began to improve. This wave of market conditions It has stimulated manufacturers’ production enthusiasm. If the market outlook continues to improve, market inventories will slowly decline; if this wave of market conditions is only short-lived, it is likely to aggravate overcapacity in August.” Industry insiders said.
Taken together, today’s textile market is standing at a crossroads, and it remains to be seen whether the market will get better or weaker. It is predicted that the yarn market will reach an inflection point and is waiting for an opportunity. Maybe it will be in September to October during the “Golden September and Silver Ten” years, maybe after the overseas epidemic is under control, maybe it will be when the Sino-US trade dispute makes some new progress. At present, textile companies still need to reasonably arrange the status of funds and inventory based on their own order situations. </p
