Cotton Prices Are High &Nbsp, And Textile Enterprises' Profits Are "Walking Tightrope".

In September 26th, domestic cotton 328 spot spot price reached 20644 yuan / ton. Cotton price Historical highs rose by 58% and 38% respectively over the same period in 2009 and early 2010. For cotton spinning enterprises that account for more than 60% of the cost of cotton, the high price of cotton will force. Corporate profits Stepping into a difficult "walking wire" era. An industry researcher analyzed: "according to the industry's average calculation of gross margin of 12% or so, the cotton price increases by 1%, and the gross profit margin of the enterprise decreases by 0.53%."

The industry generally believes that the tight supply and demand of cotton is the fundamental factor in the rise of cotton prices. Li Xin, a researcher at CITIC Securities [10.94 0.18%], believes that at present, the global supply of cotton is not optimistic, but the demand for textile and clothing is obviously higher than expected. Taking China as an example, the export volume of textile and clothing increased by 24% in the 1-8 months of 2010, and the recovery of global clothing consumption is evident.

It is reported that several famous international companies in recent years. cotton Forecasters have revised the 2010/2011 global cotton supply and demand forecast data: cotton supply year-on-year decline further widened, cotton demand year-on-year growth rate further increased, prompting 2010/2011 global cotton "inventory and consumption" is expected to decline to a few decades low. Take the ICAC forecast as an example, its cotton supply in the 2010/2011 year decreased by 6.6%, the demand for year-on-year growth increased to 4.68%, and the inventory consumption ratio dropped to 36%, reaching a 21 year low.

"At present, the cotton price at such a high level has greatly weakened the enterprise dynamics to overcome the cotton price fluctuation ability, and the cotton spinning enterprises in the late stage are losing their profits." Li Xin said. In this regard, cotton textile enterprises generally overcome the fluctuation of cotton prices in three ways: first, change the cost through the adjustment of product prices; second, judge the inventory based on the later cotton price; if it is judged that the price of raw materials will rise later, then stock up; third, increase the proportion of substitute varieties, such as increasing the use of viscose and polyester fiber.

The survey found that in the recovery process of textile and garment exports in 2010, the price of products in the industry generally increased by 5%-15%, and the data showed that cotton prices rose nearly 40% compared with the beginning of the year. Cotton generally accounts for 60%-70% of the cost of cotton spinning enterprises. If we want to transfer the cost, we will consider the demand, exchange rate and other factors comprehensively.

It is understood that many cotton spinning enterprises at the end of 2009, a large number of low-priced cotton and cotton yarn stocks were hoarded, and this part of the enterprises will benefit from this increase in cotton prices. But up to now, most of the low priced cotton stocks have basically run out, and the inventory level at the end of the 20 thousand yuan / ton historical high level has become a difficult problem for the management of cotton spinning enterprises.

From the perspective of substitute varieties, the ratio of cotton, polyester and viscose fiber used in the three main categories of cotton spinning in China is about 60:30:10. After the rise of cotton prices, increasing the proportion of polyester and viscose fiber will become one of the measures to avoid risks. On the other hand, this is bound to drive up the price of polyester and viscose fibers. Under the current situation of high cotton prices, cotton spinning enterprises with cotton production capacity and cotton prices will be more competitive.