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The Decline In Cotton Prices Has Made The Textile Industry Very Optimistic.

2012/6/6 16:21:00 32

Sun HuaibinCotton Textile IndustryCotton Price

"Production, domestic sales, exports, investment and economic benefits all showed deceleration or downward trend, and the current textile economic situation is more severe." In May 31st, the China Textile Industry Federation held a conference on the economic operation of the industry, the reporter noted that with the aggravation of the complexity of the macro environment and the fact that the overall operation of the textile industry slowed down in the first half of April, the industry was less optimistic about the situation of the textile economic operation in the whole year than that before the beginning of the year. Director of China Textile economics research center and spokesman of China Textile Industry Federation Sun Hua Bin Through data interpretation, this year stressed the serious situation facing the textile industry.


The economic situation of textile industry is grim.


The meeting pointed out that in the first 4 months of this year, China's textile industry showed a trend of slowing down. The specific performance was: the growth rate of production and investment slowed down, the price of textile and clothing exports narrowed, the number of exports increased negatively, and the growth rate of industrial profits dropped significantly. In the first half of 2012, the industry continued to face higher external risks. Further improvement of risk control and response capability is still the top priority. According to Sun Huaibin analysis, in 1~4 months, China exported 71 billion 3 million US dollars of textile and clothing, an increase of 1.07% over the same period last year, which is a sharp drop compared with the year-on-year increase of 19.8% in 2011. "1~4 months, China's textile and clothing exports decreased by 2.23% over the same period last year. This is a very dangerous figure, indicating that our foreign markets are losing." Sun Huaibin said. At the same time, the downward trend of domestic economic growth also slowed down the demand for textile and clothing. In 1~4 months, the clothing retail sales in China increased by 11.6% after deducting the price factor.


Another serious signal comes from the decline in the economic efficiency of the industry. In 1~3 months, the total profits of textile enterprises above Designated Size amounted to 53 billion 704 million yuan, down 1.77% from the same period last year, and the growth rate was 55.34 percentage points lower than that of the same period last year. The profit margin of sales was 4.5%, down 0.66 percentage points from the same period last year, and the deficit of Enterprises above designated size was 19.67%, and the amount of losses increased by 120% over the same period last year.


Cotton price gap seriously weakens competitiveness of enterprises


The industry situation is unfavorable, and the export situation is grim. 1~3, the three largest textile and apparel market in Europe, America and Japan dropped 6.55% from the global textile and apparel market year-on-year. The growth of international demand has been weak for a long time. The demand of developed countries has decreased, and the textile industry of China's emerging economies such as Southeast Asia has also declined. For example, 1~4 months, China's exports of ASEAN's textile products increased by 59.66 percentage points year-on-year.


Sun Huaibin believes that behind the severe appearances, besides the lack of market demand and the increasing pressure from international competition, the spread of cotton prices at home and abroad has become an important factor in the export situation.


"The spread of cotton prices at home and abroad has weakened the international competitiveness of China's textile industry." He pointed out that since September 2011, the price of cotton prices in the international market has dropped by about 1000 yuan, compared with domestic cotton prices. At the beginning of 2012, the difference between cotton prices at home and abroad was about 3000 yuan; and as of May 25th, the price of grade 328 cotton in China was 18853 yuan / ton, and the cotton price in the international market was 83.3 cents / pounds. After 1% duty and value-added tax, the price was 13393 yuan / ton, and the cotton price in the international market was lower than the domestic market price 5460 yuan / ton, and the price difference continued to widen. Compared with India, another big cotton producing country, China's cotton price is higher than India cotton price of 7000 yuan / ton ~8000 yuan / ton, while Pakistan's cotton yarn price is even lower than that of China's cotton price. The serious inverted cotton price directly causes domestic cotton spinning enterprises to bear too high raw material costs. The serious loss of market orders resulted in an overall negative growth in the export of cotton textiles and clothing in China.


Statistics show that 1~3 months, China Cotton spinning industry Profits fell by 3.6% over the same period last year, which is just as bad for cotton textile companies whose profits are not high. At the same time, the 1~3 profit of chemical fiber industry, which is closely affected by cotton prices, has dropped by 46.6% compared with the same period last year. Thus it can be seen, Cotton price The problem has also become the main reason affecting the overall profit of the textile industry.


Industry calls for effective national policies to overcome difficulties


In the face of the grim reality, sun Huaibin said that the textile industry hoped to distribute the quotas of imported cotton, and to tilt the production enterprises on the issue of the quotas, implement price fixing and storage, stabilize domestic cotton prices, and narrow the price difference between domestic and foreign cotton, so as to ensure the smooth operation of the textile industry. "According to historical data and enterprise's reflection, domestic and foreign cotton price difference is controlled at less than 1500 yuan per ton, and the textile industry's economic indicators are expected to reverse the downward trend. If the cotton price problem can be solved as soon as possible, although the external demand is sluggish and domestic demand is slowing down, the textile industry will still be able to rely on its own structural adjustment and transformation and upgrading to ease the problem of insufficient market demand.


"In the long term, we should deepen the reform of the cotton circulation system, improve the macro control mechanism of cotton, increase the quantity of cotton imports every year until the abolition of the dual management restrictions of cotton import quotas and sliding tax, so as to achieve the market docking of internal and external cotton prices and play a regulatory role in the market mechanism." Sun Huaibin said.


Sun Huaibin also suggested that the departments concerned should effectively solve the "high and low deductions" (value-added tax levy 17% deduction 13%) which has long troubled the development of cotton spinning, cocoon silk and linen textiles. The textile industry will be included in the pilot area of the State Administration of Taxation on the management of approved tax deduction for agricultural products value-added tax in some industries, and the export tax rebate rate of textile industry should be raised in a timely manner to curb the serious situation of the decline of China's textile and clothing exports. At the same time, industry and enterprises should continue to accelerate transformation and upgrading, and strive to turn risks into opportunities.

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