The cotton spinning industry in the midstream is experiencing a "chain reaction"

Since the State Reserve Cotton Acquisition Policy in 2011, China's domestic cotton prices have now been higher than the international market by 4,500 yuan/ton. At present, the domestic storage and storage price is 20,400 yuan/ton. As of May 13, the international Cotlook A index has been reduced by 1% 1% tariff price to 14,889 yuan/ton, and the non-tax price difference between domestic and foreign cotton is about 4,500 yuan/ton.

According to the survey, after the third and fourth quarters of last year's cotton collection and storage enterprises were difficult to deliver, it was difficult for cotton farmers to obtain benefits from them (see our report on November 28, 2012, “Privacy Reserve Cotton: The Secret of Trustee Market Acquisition”). Nowadays, a series of "chain reaction" is also taking place in the cotton textile industry in the middle reaches of China.

According to a survey conducted by this reporter, under the State Reserve Cotton Acquisition Policy, at the same time as the State Reserve Cotton’s own losses and hard-to-reach farmers’ hardships, it is the Chinese textile and garment industry that was originally affected by small profits. Not only the entire industry is under collective pressure, but also China’s The textile industry's industrial chain ecology has also changed, so that some companies have to move overseas to find profits.

In order to maintain the high prices of the State Reserve Cotton, its inventory level of up to 9 million tons has been higher than the annual cotton consumption in China. The State Bank of Cotton now facing inventory depreciation and direct losses, the financial pressure has become a burden.

In addition, price distortions have also led to a series of consequences, such as import quotas, and the loss of the cotton market's pricing function.

The reporter’s survey shows that the policy of cotton collection and storage is causing distortions in the entire chain, and the high-priced collection and storage model has been a dead end. There is no need to rethink the protection and subsidies of cotton farmers and the protection of cotton.

Up to 4,500 yuan / ton price difference National Reserve cotton storage policy from 2010. Due to the previous downturn in the cotton market, international cotton prices soared in 2010, reaching as high as 32,000 yuan/ton, which led to large reserves of state reserve cotton at the time. Earlier 10,000 yuan / ton storage cotton, rose up to 2 times.

"The problem is that the State Reserve Bank of China thinks this price increase will become the norm, thinking that the more you earn, the more you earn, so you open up the acquisition, but did not expect the price of cotton to drop significantly after 2011." A senior cotton market source told In fact, as reported by this reporter, the case that the price of cotton exceeded 1 US dollar/lb in 2010 only occurred twice in history and cannot be the norm.

The other reason for the acquisition of domestic cotton at a price higher than the international market is to protect the interests of cotton farmers, stabilize domestic cotton acreage and cotton production, and ensure domestic cotton supply.

According to the aforementioned senior sources, at the 2011 Cotton Work Conference, officials from the State Reserve Cotton Group preached: “China is a big country in the textile and clothing industry and has a certain degree of cotton self-sufficiency. It is only safe to develop the textile and clothing industry. Cotton needs to be self-sufficient. The amount will be checked by overseas."

However, the current situation is that domestic high cotton prices are rising outside the causes of the rise in the value of labor and labor costs. This has substantially increased the cost of raw materials for the Chinese textile and garment industry, and as a whole has depressed the international competitiveness of the Chinese textile and garment industry.

Even according to the current purchase price, according to our reporter’s survey of cotton farmers in the middle of November last year in the cotton producing province of Shandong, there is no comparative advantage in the profits of cotton farmers, and the enthusiasm of cotton farmers to grow cotton is not enough. Quota control over cotton imports has instead fostered growth, leading to cotton import quotas being bought and sold, and exacerbating cotton smuggling.

Due to the huge price difference between China's reserve cotton and imported cotton, the imported cotton quota has naturally become a tool for some people to profit. The qualification for one ton of imported cotton is sold for three to four thousand yuan.

Li Wen (a pseudonym) is the head of a privately-owned cotton spinning company in Zhejiang Province. He has his own spinning mill and weaving mill. 80% of the company's products are exported. He complained to the reporter that spinning now is not a profitable trade. Since the implementation of the State Reserve Cotton Acquisition Policy, it has basically not made money.

“We have a ton of cotton that is more than 4,000 more expensive than our foreign counterparts. The price of cotton yarn we import is even lower than the price of cotton I use. How do we compete?” said Li Wen. The hard work. The company can now maintain and maintain certain exports, mainly because our workers are skilled and relatively diligent."

Li Wen stated that assuming that his company needs 100 tons of imported cotton, he applied for 100 tons of imported cotton from the Municipal Development and Reform Commission, but he will not be granted him in the first year of application. Generally, he will be granted him in the second year, but generally Only half of the amount, that is, only 50 tons, but after the approval in the province, it is often only 30 tons. As for the other 20 tons, it is often for people who have relationships.

Difficulties in textile and garment industry difficulties for cotton spinning companies are unprecedented.

According to the reporter’s understanding, the cost of cotton accounts for about 70% of the cost of the cotton mill. Since the domestic cotton price is about 4,500 yuan more than the imported cotton price, the cotton textile industry is struggling to maintain, but this maintenance is based on “our workers are diligent”. Based on.

What is even worse is that under pressure of high costs, Chinese textile and garment companies are being forced to abandon some orders, and the international market share continues to decrease. More cotton textile industry production chains are shifting to Vietnam, Bangladesh, India and other countries.

What is endangered by high prices is actually the entire industrial chain of the cotton textile industry. A person in charge of printing and dyeing of the company told this reporter that he received fewer and fewer lists. The company can only practice "tortoises," and try to reduce business and strive for survival. He even hopes that one day, *** Great devaluation, the company can get the second spring.

Although Li Wen’s own company can also produce cotton yarn, because the country does not currently prohibit the import of cotton yarn, Levin chose to import part of the cotton yarn in order to reduce costs. He said: “I cannot import all the cotton yarn, because the workers of the mill cannot be allowed to leave. Now we can only continue to survive and produce a small amount of cotton yarn."

The person in charge of a cotton textile foreign trade company in Hangzhou told the reporter that 2012 was the most difficult day. It exported 30% more this year, but it was the same as last year's income, and this year's *** sharp appreciation has made the company's business worse. However, he believes that he has found a way to make a fortune, that is, despite the country's restrictions on cotton imports, he has not restricted the import of cotton yarn. He intends to import cotton yarn for profit.

Although Wang Yi, general manager of Shandong Ruyi Cotton Textile Group, did not expect to cancel the State Reserve Cotton Policy, he told the reporter that he hopes that the imported cotton quota will be larger and the national reserve cotton price will be lower.

Wang Qiang said that in countries newly entering the textile industry, India and Pakistan’s machinery and equipment for producing cotton yarn are mostly the latest equipment, and they are even better than domestic cotton yarn mill equipment. The pressure of international competition in the industry is very large. The current domestic advantages are only higher than the quality of workers. high.

The contradiction in China's cotton import control policy is that it controls the import of cotton, but it does not restrict the import of cotton yarn. This has led many Chinese apparel companies to directly import cotton yarn from overseas. China has riddled the sector of added value from cotton to cotton yarn. It has greatly boosted the related industries in India and other countries.

Increase in cotton consumption in the South Asian subcontinent Since 2000, China has gradually established itself as a world cotton consumption center. World cotton consumption increased by 22 million bales (4.83 million tons) from 2000 to 2010, and Chinese cotton mills’ cotton consumption increased by 2250. Wanbao (4.89 million tons)

However, after 2010, China’s cotton consumption dropped by 14 million bales (3.04 million tons). At the same time, Indian cotton demand rose by 3 million bales (650,000 tons). From 2009/2010 to 2012/2013, world cotton consumption fell by 9% while consumption in China fell by 28%.

Countries in the South Asian subcontinent use competitive raw cotton, and their textile production capacity continues to expand. The demand for cotton is very promising. Cotton industry professionals believe that India, Pakistan and Bangladesh are replacing China and becoming the world’s new cotton consumption center.

From a single country, in 2012, China consumed 7.84 million tons of cotton, which was 5.27% lower than the 8.27 million tons in 2011. At the same time, India's growth from 4.3 million tons to 4.95 million tons, an increase of 15.2%; Pakistan from 1.18 million tons to 2.5 million tons, an increase of 15%; Bangladesh from 720,000 tons to 810,000 tons, an increase of 12%. The total consumption of the three countries of the South Asian subcontinent rose from 7.2 million tons to 8.26 million tons, completing the catch-up with China. In addition, the growth rate of cotton consumption in Vietnam and Thailand in 2012 was as high as 27% and 25%.

On the other side of the coin, India took the initiative to formulate cotton export quotas and restrict cotton exports in order to strengthen competition with China's industry chain. The cotton textile industry involves 17 million cotton textile workers in China. According to the National Bureau of Statistics' analysis of inputs and outputs many years ago, the textile industry has increased investment by 1.00 units per year, affecting the national economy with a coefficient of 1.25, which is 25% higher than the industry average.

Closing mill accounts for about 30%

Although the quality of workers in cotton spinning companies is high, many small and medium-sized enterprises still cannot withstand the impact, especially the companies that produce 40 or less cotton yarns. The impact is very great.

He Yinguan, deputy general manager of Suzhou Runxinhua Import & Export Co., Ltd., which specializes in the import and export trade of cotton, chemical fiber and cotton yarn, told this reporter that cotton yarn has not been subject to quota management, and huge price differences have stimulated a huge amount of imports. From January to October, 1.3 million tons of cotton yarn was imported, which accounted for 20% of domestic yarn. He estimated that the import of cotton yarn last year caused the shutdown of about 15 million spindles in China, and more than 200,000 textile workers were unemployed.