Cotton price plummets 20% loss for cotton traders

After the cotton price re-raised to a high of 30,000 yuan per ton in March this year, the heel has not yet stabilized, and it has fallen all the way. Mr. Cao, a cotton trader in Pengze County of Jiangxi Province, was very anxious because the price of lint in his area fell to about 22,000 yuan/ton, and he had already lost 6,000 yuan per ton, but he still could not find a buyer.

“All the lint processing plants around have lost. Everyone is worried about continuing to fall and is eager to sell lint from their hands. But basically there are no cotton yarn factories to place orders. Our county cotton trading market has a backlog of more than 10,000 tons of lint. In addition, each processing factory in the county has a lot of goods on hand, and in previous years, this season coincided with the stage of ignorance of cotton, and the basic supply of lint was in short supply, and the price was at the highest level in a year. This year was too abnormal and the situation was far worse than at the end of last year. Many lint mills will not be able to sustain and close down,” said Mr. Cao in an interview with the reporter of the “First Financial Daily” yesterday. Last November and December, the lowest price of lint per tonne was 26,400 yuan, far from the current loss. It is simply a disaster.

Since 2010, the trend of cotton prices has caused textile and garment companies to be “scared,” and domestic 328 cotton stocks have risen from 15,000 yuan/ton at the beginning of last year. They accelerated in September and hit record highs almost every day. On November 11 last year, they rushed to 31235. After the peak price of RMB/ton, it fell sharply to RMB 26,000/tonne. It gradually recovered in December. After going back to the RMB 30,000/ton mark in March this year, it again lowered its prices to RMB 27,000. About tons.

The cotton price is diving again, which has a lot to do with the shrinking of downstream demand. At present, the apparel orders have slowed down and the cotton price has cooled sharply. Mao Xiahua, director of the trade management department of Shanghai Feima Import and Export Co., Ltd., just returned from the 109th Canton Fair, and she was disappointed that there were few European and American buyers who came to the Canton Fair to negotiate. “We have brought a lot of new products to participate in the show, but the price is too high for customers to accept,” Mao Xiahua said. “Although the price of cotton dropped, it is still higher than the 17,000-18,000 yuan/ton in the same period last year. The trend of garment export market in the second half of this year is very uncertain. We are not in a hurry to purchase cotton yarn. We are still watching and expecting a further drop in cotton prices. Costs of clothing companies are now under great cost pressure and we are afraid to take a wrong step.”

Contrary to the upstream cotton enterprises, the downstream textile and apparel companies hope that the cost of raw material purchases will continue to decline in the event that the market is not prosperous. Wang Qiang accepted an interview with this reporter, said that the current cotton yarn stocks are generally larger, have reduced cotton procurement, downstream apparel demand is not prosperous, which is affecting the decline in domestic cotton prices this year, one of the main reasons. This year, the clothing consumption in the domestic market has not changed much, but the demand in the international market has slowed down significantly. The number of garments exported last year increased by about 10% to 15%, while the number of garments exported in the first quarter of this year grew by less than 5%. Six months may also continue to slow down.

At present, the price of cotton has been pulled back, but the pressure on corporate costs has not been alleviated at all. Many factors such as the increase in labor costs and the appreciation of the renminbi have prompted domestic garment companies to increase export quotation, which may lead to the transfer of some international orders.

However, Wang Qianjin believes that the 328-grade cotton dropped to 25,000 yuan / ton will encounter a lot of resistance. “Overall, China’s textile and apparel competitiveness is still strong in the international arena, and Southeast Asia and other regions are unable to undertake a large number of order transfers. Therefore, a small amount of order transfer will not lead to a negative growth in China’s textile and apparel exports this year. In addition, although the current international Commodity prices have fluctuated dramatically, but international cotton prices are still firm, and the decline is small. Current domestic and foreign cotton prices are upside down. Currently, domestic cotton prices are generally lower than international cotton prices by 2000 to 3,000 yuan per ton, which means domestic cotton prices There is limited room for price decline," Wang Qian said.

In response to cotton price volatility, eight ministries and commissions, including the National Development and Reform Commission and the Ministry of Agriculture, jointly issued the “2011 Preliminary Interim Cotton Storage and Storage Plan” on March 30 this year, and decided to be in the period from September 1, 2011 to March 31, 2012. Once the standard lint price was lower than 19,800 yuan/ton for 5 consecutive working days, policy purchase and storage started. The introduction of the cotton minimum price policy has been widely recognized by the industry as helping to stabilize the planting area, production, and prices. Cotton prices plummeted 20% of cotton makers lost their shipments and still had no buyers.