Textile Observation: Fermented Factor Fermentation, Inventory Over 30 Days, Yarn Price Weakness

In late July, cotton futures and ICE futures all rose sharply. Some cotton traders slightly raised the spot price quotations of Xinjiang cotton, but the cotton textile market was still deserted. Through contact with textile enterprises in Shandong, Henan and Hebei, it is known that cotton yarn is difficult to raise and the pressure of orders is still large.

In recent years, the sound of real economy has been fermented every once in a while, and this year is more intense. According to a US data, as of July, 7062 retail outlets in the United States were closed this year, and the number of stores closed for the whole year is expected to reach a record 1.2.

People in charge of clothing enterprises in Zhengzhou, Hebei and Shijiazhuang, Henan, said that due to the serious homogenization of commodities, the life expectancy of clothing products is becoming more and more short under the prevailing competitive environment of imitation. In July of this year, large wholesalers, garment factories and shops were closing down.

According to port traders, the impact of external yarn is also growing. Since June of this year, China's main port logistics area and bonded area are full of yarn, and stocks are mostly over 100 thousand tons. By the end of July, it had reached a historical high of 120 thousand tons. In addition, the price difference between imported yarn and domestic yarn has narrowed down. At present, the price of yarn in C32S of China's medium-sized textile enterprises is 21700 yuan / ton to 21900 yuan / ton (more than 50% of the national cotton and cotton assorting cotton), while the price of the C32S high package bleaching India, Vietnam and Pakistan yarn is more than 21800 yuan / ton to 22000 yuan / ton. In contrast, imported yarn has good quality index and high consistency of dyeing. Imported fabrics are preferred for grey fabric and fabric enterprises.

Under the heavy pressure of imported yarn impact and clothing shop closing, the situation of textile enterprises with fewer orders and high inventory is clouded. On the 24 day, the head of a textile factory in Shandong said that the spinning capacity of the factory exceeded 170 thousand spindles, but the order was not enough to produce half of the capacity. While the Company Limited production, it was looking for orders, but its inventory was still rising. It is understood that, in the general year, textile enterprises do not stock more than 15 days, this year inventory of more than 30 days of enterprises everywhere. Under high inventory, the capital flow of enterprises is not good enough, and raw materials are more laborious. Doing everything possible to inventory has become the main target of textile enterprises in the near future.

In the face of a weak market environment, the contradiction between supply and demand is prominent, and cost side support is weak. Textile enterprises mainly focus on the implementation of pre orders, but the price is difficult to raise and the price of medium and low yarn is not guaranteed. Although the recent Sino US trade talks have released good news, they have limited impact on the textile market. For the yarn products in the off-season, the negative factors dominate, and the market is very clear that the prospects for its negotiation remain quite variable, and the price of yarn will remain weak in the short term.

According to the tracking data of China Cotton Textile Industry Association in June 2019, the production and marketing situation of cotton textile enterprises continues to decline, and the finished product inventory pressure is still larger. Faced with the more difficult situation, textile enterprises should actively respond to pre production guarantees and profits.

In June, the reserve cotton traded 151 thousand and 200 tons, a decrease of 52 thousand tons compared with May, a decrease of more than 25%, and the purchase volume of imported cotton in the raw cotton decreased by 20.35%. In June, the A price index of the international cotton price in June was 77.65 cents / pound, 3.4% lower than that in the past five years, the lowest in nearly three years, and the difference between domestic and international cotton prices narrowed to 1000 yuan per ton, and the price advantage of imported cotton weakened. According to the General Administration of customs data, 158 thousand tons of cotton were imported in China in June, a decrease of 53 thousand tons compared with May and a decrease of 25.24% in the ring ratio.

Tracking data in June 2019 showed that the raw material inventory of cotton textile enterprises decreased by 5.19% compared with last month. Raw material cotton inventory decreased by 4.49%, and non cotton fiber inventory decreased by 7.36%. The sharp decline in raw material prices in the early period has led to a great economic loss to the enterprises, resulting in panic. Inventory of raw materials has dropped for three consecutive months.

Tracking enterprise data shows that 1-6 months, sales of yarn decreased by 8.96% compared with the same period last year, and sales volume decreased by 5.47% year-on-year. In June, the sales of yarn increased by 2.33%, and the price of textile products was reduced. Taking 32 pure cotton combed yarn as an example, the price of tonnes of yarn dropped by around 1200 yuan in that month, and the price difference between domestic and foreign yarns was narrowed. In the same month, China imported 158 thousand tons of cotton yarn and 22 thousand tons less than the same month. The sales volume decreased by 2.68% compared with the previous month, and the monthly average price of 32 cotton pure grey fabrics fell by about 3%. As of the end of June, the yarn and cloth inventory increased by 2.72% and 1.38% respectively, the increase narrowed from last month. According to investigation and understanding, most enterprises finished product inventory in 20~40 days.

In 1-6 months, the production of cluster enterprises slowed down, and the average operating rate of tracking enterprises was around 80%. The total number of enterprises in the cluster decreased slightly, and the average number of employees declined. Tracking cluster yarn production capacity, output and cloth production decreased year by year, cloth production capacity grew year on year. In 1~6 months, the tracking capacity of cluster spinning decreased by 1.2% compared with the same period last year, and the output of all kinds of yarns dropped by 6.7% compared with the same period last year. The number of looms increased by 1.8% compared with the same period last year, and the total output of fabrics decreased by 14.6% compared with the same period last year.

From the main economic indicators, the main business revenue and profit of cluster enterprises decreased year by year. In the 1~6 month, the main business revenue and profit of cluster enterprises decreased by 3.5% and 11.6%, respectively, of which the number of enterprises decreased by 2.7% and 4.3% respectively.