How Can They Survive In The Jedi?

Affected by the epidemic situation, export orders of cotton yarn and clothing decreased, especially due to the "double attack" of cotton price rising and yarn price falling since August, the domestic textile industry is in a dilemma. What is the development trend of domestic textile industry when the new season cotton is about to go on the market and the economic cycle starts? Can the active cotton and cotton yarn futures and options market, especially the continuous growth of cotton yarn futures trading volume and delivery volume, help textile enterprises out of the predicament? In order to understand the above problems, from September 21 to 25, the reporter of futures daily followed the investigation on cotton textile industry of institutional investors of stable enterprise and agricultural escort entity organized by Zhengshang Institute and China storage Cotton Information Center Co., Ltd., and visited textile and garment production enterprises, cotton storage and trade enterprises in Henan and Shandong.

Low cotton is difficult to survive

According to the on-the-spot investigation of futures Daily reporter in Henan and Shandong, combined with the current situation of textile enterprises in Jiangsu, Zhejiang, Guangdong and other places, it is found that the current domestic cotton and cotton yarn prices are relatively serious inverted phenomenon. Except for some enterprises that produce high count yarn and low count yarn for specific use, most textile enterprises are in a state of loss in cotton yarn processing In the range of 500-1000 yuan / ton, this leads to a general shortage of the whole textile industry, and about 50% of the textile enterprises have reduced production or even stopped production.

From the analysis of the change process of textile enterprises, before April, the operation of textile enterprises was still very good, most enterprises had good profit level, but after that, the profit rate gradually declined, and at present, almost the whole industry suffered losses. The main reason is that the domestic cotton price began to rise continuously in April, with a cumulative increase of about 1000 yuan / ton, while the domestic cotton yarn price generally decreased by about 500 yuan / ton in the same period. This rise and fall, textile enterprises operating profits significantly reduced.

"The textile industry is becoming more and more difficult to do. Many enterprises are going step by step. I haven't encountered a worse market situation than this for more than ten years." The person in charge of a textile enterprise with 100000 spindles in Shangqiu, Henan Province, said that many textile enterprises started their operations in order to keep their market share and factory employees, but I don't know how long they can hold on to it. If the market has not improved, it is estimated that more enterprises will reduce production in the next step.

Small and medium-sized enterprises in Guangdong and some large textile enterprises stop production. Although the operating rate of large enterprises is high, they are also trapped in the loss mire. In addition to relying on the original accumulated funds to maintain market share and retain employees, the hard production of enterprises has not returned too much profit, and most enterprises are in the state of "blood loss".

From the analysis of the sales of textile products, the market presents a polarized pattern. Among them, the sales of high count yarn and low count yarn are smooth. Some of the enterprises producing these cotton yarns have realized a slight loss, and some even achieved profits. However, the sales of 32 yarns and other major commodities are generally so that the enterprises producing these cotton yarns are in deep loss. At the same time, foreign trade textile enterprises are facing difficulties in operation, and the sales of combed 40 yarns are not smooth. Some enterprises have to stop production. However, the living space of textile enterprises producing blended yarn is relatively larger. On the one hand, the demand for domestic blended yarn is strong, on the other hand, the production cost of blended yarn is lower than that of pure cotton yarn.

"At present, whether it is for large-scale and long-term industrial chain textile enterprises, or for small and medium-sized textile enterprises, the days are very difficult." Henan TongZhou cotton industry chairman Wei gangmin told reporters. However, he also said that in the medium and long term, the market is gradually improving. For example, under the severe impact of the new crown pneumonia epidemic, the start-up rate of domestic textile enterprises dropped to one-third of the normal level. At present, although the epidemic situation in Europe often rebounds, the epidemic situation in India is still spreading rapidly, and there is no driving factor for consumption in cotton yarn, clothing and other markets in the short term, the demand has gradually recovered since June, and the start-up rate of textile enterprises in some regions has increased from 20% To 50% or even 70%.

With the use of mining, enterprises "show their own skills" to overcome difficulties

The more difficult it is, the more we can see the development potential of an enterprise. Some textile enterprises adopt flexible raw material procurement and product sales methods, develop new products urgently needed by the market, and make full use of cotton, cotton yarn futures and option tools, which not only reduces the purchase cost of the main production raw material cotton, but also ensures the smooth sales of products, breaking the situation and winning when the textile industry as a whole is in trouble.

"New cotton is about to be listed. Although the price of cotton is fluctuating, the focus of operation is constantly moving up and down, while the price of cotton yarn is stable. The operation of textile enterprises in the downstream of the industrial chain has always been the focus of the market." Li Youyin, chairman of Henan Weishi Textile Co., Ltd., said that the profit of cotton yarn production was meager, even in the state of breaking even. In order to maintain normal production, enterprises mainly control production costs by adjusting the production structure. For example, the local electricity consumption has the difference between peak and valley prices. During the peak price period, the power supply will be shut down for rest, and the production will be started again during the low price period.

Some textile enterprises in Shangqiu, Henan Province, told the futures daily that in the face of the current situation of low cotton yarn prices and the shrinking demand for cotton and clothing in the downstream, many textile enterprises have adopted the mode of "on-demand purchasing" in the aspect of raw material procurement, which not only actively reduces the inventory of raw materials, but also reduces the inventory of raw materials To control the downward risk of product price, continuously reduce the inventory of cotton yarn, so as to reduce the capital occupation rate and save capital interest.

"With less orders from Europe and the United States, we actively develop products for export to Japan and South Korea, and produce a variety of products online. In addition, the company also improves the quality of cotton yarn by upgrading equipment and improving technology, and the comprehensive operating efficiency is better than that of peers. " Shandong Yuncheng a textile enterprise in charge said.

During the investigation in Luohe and Shangqiu of Henan Province, Heze and Yuncheng of Shandong Province, the reporter learned that the current situation of cotton downstream production is grim, and the inversion of cotton yarn cost and sales price makes textile enterprises struggling. Some enterprises have to cut down employee wages and start-up rate to save production costs.

"Our factory uses more than 10000 tons of cotton a year, mainly producing 21 and 26 cotton yarns. The current production efficiency is good. The key is that when the cotton price was low in March, we took a lot of supplies from the futures market through the basis point price." The cotton purchasing director of a textile enterprise in Yuncheng, Shandong Province explained that before and after March 23 this year, Zheng cotton price fell to 10000 yuan / ton. Through long-term tracking and analysis of cotton price trend, it was found that cotton price had reached the bottom, so they boldly purchased nearly 10000 tons, including 24 batches of double 29 grade cotton produced by BINGTUAN in one day, which laid a solid foundation for overcoming the difficulties.

Li Youyin introduced that since the listing of cotton yarn futures, Weishi textile has participated in several delivery, from the initial dozens of tons and 100 tons to 500 tons of cy2001 contract and to 960 tons of cy2009 contract. More importantly, the company's revenue from participating in cotton yarn futures delivery has increased from tens of thousands of yuan at the beginning to one million yuan now.

It is understood that more and more textile enterprises in Henan, Shandong, Hebei, Xinjiang and southern regions are actively participating in cotton yarn futures trading and delivery business. In the cy2009 contract, which has just finished delivery, the number of cotton yarn delivery has increased significantly. Some large textile enterprises with strong influence in the market have also participated, and small and medium-sized textile enterprises are actively involved.

At present, in the cotton market, from seed cotton purchase to ginning plant lint production, from lint storage to final sales, there are cotton futures and options in every link. Basis point price and right containing trade have become the mainstream, which not only effectively reduces the operational risks of various market entities in the cotton industry chain, but also is conducive to the stable operation of the market and effective resolution The impact of the new crown pneumonia epidemic situation was relieved, the loss of cotton yarn, clothing and other export orders decreased, and the good development momentum of cotton industry was ensured.

Li Youyin said that cotton yarn futures, as the most closely related futures varieties with textile enterprises, are more suitable for direct hedging operations. When the market price and the relationship between supply and demand of raw materials fluctuate greatly, especially when the market emergencies emerge, it is necessary for textile enterprises and downstream cotton enterprises, even clothing enterprises, to maintain the value of stock raw materials and products in time in order to cope with the risk of price fluctuations.

"Cotton yarn futures delivery has reasonable product quality standards in line with the participation of enterprises, and all indicators are in line with the market demand and reality. Enterprises have equipment and raw materials. The Zhengshang exchange has also implemented a number of preferential policies such as fee reduction and exemption. It is not a good way to put the ready-made financial instruments on the table and wait for the market to improve." Li Youyin believes that the domestic cotton, cotton yarn market has undergone qualitative changes, textile enterprises remain unchanged, sooner or later will be eliminated.

It is understood that at present, the current price of cotton and cotton yarn has a high correlation. If textile enterprises can make full use of cotton yarn futures and option tools, they can basically take into account the upstream and downstream risk management of raw materials and products, so that the futures market can better play its functions and serve industrial enterprises. Some responsible persons of textile enterprises believe that with the increasingly mature market, the delivery standards and prices of cotton and cotton yarn futures are more and more recognized, and their "wind vane" role in quality determination and industry pricing is becoming more and more prominent.

Lack of power, raw materials, product inventory are low

Futures Daily reporter field research found that, compared with the past textile enterprises piled up raw materials and full warehouses, the current textile industry de stocking is more thorough. Not only the inventory level of raw cotton is very low, but the purchase of raw materials depends on the product orders and sales, and the inventory of cotton yarn and more terminal products cotton cloth is particularly low. Some market professionals believe that low inventory in the whole industry is a problem worthy of attention, which means that when major events occur in the market, the probability that low inventory will become the key factor of market outbreak is very high. At the same time, the whole industry's low inventory is a big variable for the purchase and circulation of new cotton and the rise and fall of cotton yarn price.

"The low product inventory of textile enterprises and downstream enterprises, and some enterprises even have zero inventory, does not fully indicate that the market demand is strong. It may also indicate that enterprises are unwilling to hoard raw materials and products under the condition of poor price transmission and low market situation in the whole industry. This is a phenomenon of active de stocking." Some responsible persons of textile enterprises believe that due to low profits, enterprises are not motivated to actively increase the inventory of raw materials and products due to low profits. In addition, new cotton will soon be put on the rise, old cotton inventory is sufficient, and the trend of high cotton price is obvious, and Sino US trade relations are not clear, so the inventory of raw materials and products in the textile industry is still at a low level It will continue.

A person in charge of a textile enterprise in Shangqiu, Henan Province, said that the difficulties faced by textile enterprises this year were far greater than those during the financial crisis in 2008. With the sharp reduction of spinning profits and even losses, many enterprises had to try their best to control the risks. It was impossible to significantly reduce the inventory of cotton and cotton yarn, just to reduce the capital occupation rate.

According to the situation of fabrics, clothing and other industries mastered by the reporter, the downstream demand of cotton yarn still needs to be restored, and it is difficult to support textile enterprises to increase the inventory of raw materials and products in the short term. At present, the foreign trade orders of fabric enterprises have been reduced on a large scale, and some enterprises whose products are mainly exported have appeared the phenomenon of capital turnover difficulty. At the same time, enterprises have also encountered many problems in turning to domestic trade orders, mainly because domestic demand is not strong. In addition, due to the fierce competition of fabric manufacturers in the domestic and export markets, enterprises are more competitive. In this case, in order to survive, some enterprises have to take orders in the loss state. In terms of clothing enterprises, affected by the impact of the epidemic and the instability of the relevant political and economic environment, the overall order volume decreased significantly year-on-year, and the large orders became smaller and the long orders became shorter.

From the perspective of market psychology, combined with the actual situation observed by reporters in textile enterprises, there is a certain rigid demand in the cotton yarn market, and the demand for some varieties is fair. The low inventory is closely related to the expectation and psychology of textile enterprises. At present, there are two major variables in the cotton yarn market, one is the control of the new crown pneumonia epidemic situation, the other is the impact of the US ban on Xinjiang cotton. Textile enterprises are worried that these two variables will exist for a long time, so they dare not easily increase the inventory of raw materials and products.

"In the medium and long term, the change of epidemic situation is still the core of future market development." Wei gangmin said that from the analysis of domestic situation, the marginal effect of the epidemic situation is good, but the epidemic situation in the international market is repeated and uncertain.

Some textile enterprise officials told reporters that the impact of the restrictions on the use of Xinjiang cotton in the United States is slowly emerging, and more far-reaching. For example, in the future, many export orders will explicitly require the use of imported cotton. Although the products of most enterprises are mainly sold at home, the use of Xinjiang cotton will be a big problem with the appearance of foreign demand orders. It is expected that in the future, relevant organizations will issue more cotton import quotas to meet the needs of textile enterprises, and increase the collection and storage of Xinjiang cotton, so as to alleviate the lack of consumption of Xinjiang cotton.

The pattern changes, the renewal management idea becomes the trend

"Considering the overall operation situation and development trend of the textile industry, the temporary shortage of terminal demand, the epidemic situation, and the fluctuation of Sino US trade relations are not the most important problems. The problems that need to be solved are excess capacity, backward business model and technical means. The domestic textile industry is likely to take advantage of the current opportunity of the whole industry into trouble, ruthlessly eliminate backward production capacity, and industry reshuffle or centralized Some textile enterprise leaders in Luohe, Henan Province, said at the forum that the majority of large-scale enterprises can produce at full capacity and the small and medium-sized enterprises with strong characteristics do not feel difficult to survive, and the production of enterprises that use cotton and cotton yarn futures to reduce costs and risks are relatively normal, because the pattern of domestic textile industry has changed greatly.

According to the reporter of futures daily, since the second half of 2018, the production situation of domestic textile enterprises has gradually deteriorated, and the overall production capacity has shown a trend of "big advance and small retreat". The backward production capacity has been occupied by advanced production lines of large enterprises. It is estimated that this development trend will speed up in the future, which will lead to a long-term low profit level of yarn processing, and even fall into the predicament of continuous loss.

During the investigation in Yuncheng, Shandong Province, the reporter learned that the transformation of terminal sales mode and the diversification of product variety demand, as well as the changes of order frequency and yarn material demand, on the one hand, the production of textile enterprises is required to follow the market demand, on the other hand, the operation ideas and products of textile enterprises are required to have their own uniqueness, such as the production of fast fashion clothing products Material - cotton yarn has characteristics.

Some industry insiders said that although the survival of domestic textile enterprises is still difficult, the most difficult days have passed. With the gradual recovery of market demand and the function of cotton yarn futures, the ability of textile enterprises to bear risks has been improved.