The price of cotton fell sharply and the cotton farmers changed their production. The new round of reshuffle in the cotton spinning industry was inevitable.

Affected by such factors as the sharp drop in cotton prices and sluggish demand, the current cotton textile industry is in a sluggish state, and the entire industry, including cotton farmers, cotton processing companies and textile companies, is complaining collectively. Cotton processing companies stopped production or semi-discontinued production, and cotton textile enterprises were slow to sell. Farmers have “abandoned cotton from food”.

The industry believes that the transformation of cotton farmers into new cycles will be planted, and the current plight of the whole industry chain of cotton processing and cotton textile companies will trigger a new round of industry reshuffle, and some SMEs will be forced to withdraw from the market.

Cotton prices plunge cotton farmers to turn to production Dezhou City, Shandong Province is located in the northwestern plains of Shandong Province. It is a traditional cotton production area and an important textile base in the country. There are 247 cotton textile enterprises in the city and the annual cotton demand is about 450,000 tons. At present, the price of seed cotton has dropped to around 7.8 yuan per kg, down 44% year-on-year.

Ma Yuzhen, Zuzai Village, the old town of Wucheng County, Dezhou, has planted 13 acres of cotton. This year, a total of 3,300 kg of seed cotton was harvested. The reporter recently saw in her home that the rooms and corridors were full of cotton. She told reporters: “The price is not high, and even the feelings of picking up are gone. Now the better seed cotton can sell 8 pieces per kilogram, and the poorer one can only sell 7 pieces per kilogram or 2 per kilogram. This year is considered busy!”

According to the monitoring of the Dezhou Cotton Association, the current purchase price of Texas IV seed cotton is around 7.8 yuan/kg, a drop of more than 40% year-on-year. In the same period last year, the purchase price of the fourth grade seed cotton reached the highest 14.4 yuan/kg.

Wang Xijun, a member of the China Cotton Association and a member of the Xijun Crop Cultivation Cooperative in Lijin County, Shandong Province, told reporters that this year's cotton prices are low and the profit margins of cotton farmers are too thin, and many farmers have already “abandon cotton from food”.

Ma Yuzhen said: “It takes time and effort to grow cotton. Compared with growing grain, planting cotton will reduce the working hours of at least three to four months. If you count the income of working for one day by seventy to eighty yuan, the difference between planting cotton and growing grain will be seven or eight thousand yuan.”

It is understood that Texas is a cotton market, with an annual cotton planting area of ​​2 million to 3 million mu. The area has fallen sharply in recent years, and farmers have “discarded cotton from food”. In 2008, the cotton planting area in Dezhou City was 2.9 million mu, which was 2.31 million mu in 2009, and it dropped to 1.55 million mu in 2010. In 2011, when the cotton price was relatively high in the previous year, the area rose to 1.6 million mu, which was an increase of only 3% year-on-year. This year, many cotton farmers have already pulled out the cotton plant in advance and planted wheat. According to the Dezhou Cotton Association, the cotton planting area in the city will drop by 20%-30% next year.

Cotton enterprises collectively "stick to scalp persistence"

Wuqiao County Kangqiao Cotton Industry Co., Ltd. is a large local cotton processing company. The reporter recently saw that the factory area is quiet and four or five people kneel in the cotton pile lazily and “three wires” (in the Chemical fiber, silk, hemp, hair, plastic (9540, 15.00, 0.16%) ropes, fabrics, and other fibers mixed in cotton.

Sun Ronggui, general manager of the company, told reporters that starting from last month is not normal, but only when the old customers need to produce a little. He said that enterprises are now "two difficult", one end is a bad seed cotton, cotton farmers reluctant to sell a very strong psychological, and the other is the low price of lint hard to sell. Last month, the company was basically enough, and this month it was estimated that it would lose 340,000 yuan.

The situation of Longxiang Cotton Co., Ltd., which is separated from Kangqiao Company by a wall, is also worse. The reporter came to the production workshop of this company and saw a worker slamming in front of the machine. The company's principal Lu Baofeng told reporters that the company is now half-commenced, mainly to retain workers and to maintain some of its old customers.

Sun Ronggui and Lu Baofeng recalled that the cotton market last year to this year can be described as ups and downs. In September last year, the new cotton was listed. Sun Ronggui sold the first lint at a price of 12,300 yuan/ton, after which the price rose rapidly. By mid-November, it had risen to 32,800 yuan/ton. "Since then, good days have come to an end. The price has been declining. It has now fallen to the level of 19,000 yuan/ton."

Lint processing companies are in trouble, and the spinning industry in the next ring is also crying out. Wan Yongming, head of Huili Cotton Industry in Handan, Hebei Province, told reporters that there are 18,000 spindles in the company, but only 6,000 spindles are currently under construction. The product is sold at 28,000 yuan/ton and the cost price is above 2.9 yuan/ton. "Even if you lose money, you can't stop it completely. Otherwise, you can't maintain workers and old customers," he said.

Wucheng County Huayi Group is a company mainly engaged in the production of worsted cotton yarn. Meng Qingshun, Chairman of the Group, told reporters that according to the current market price, the company has a loss of 1,500 yuan per ton of cotton yarn. "At present, due to the relative sluggish downstream demand, the inventory of spinning mills has continued to build up. Now we can only insist on sticking to the scalp," he said.

Ma Junkai, deputy secretary-general of the Dezhou Cotton Association, said that since the beginning of March this year, with the sharp decline in the price of cotton, the price of cotton yarn has also dropped significantly, making it difficult for textile companies to operate. From May to July, about 80% of local small-and-medium-sized cotton textile enterprises stopped production and restricted production, which was no less difficult than the impact caused by the 2008 financial crisis. Since the end of August, as cotton prices have stabilized and recovered, sales of cotton yarn have improved, and companies that have stopped production have resumed work. Since mid-September, the spot price of cotton has continued to decline, which has caused a certain impact on the downstream market. Weaving and apparel customers are not willing to purchase. As a result, sales of cotton yarn have been hindered. The average operating rate of cotton yarn companies is only about 70%.

Structural adjustment of the industry chain is the key to plight. Junjun Ma said that due to the weak foundation of cotton production and the substantial increase in production costs, price fluctuations have caused the whole industry chain to suffer a dilemma, which has caused the greatest impact on cotton farmers. This has seriously affected the enthusiasm of cotton farmers, some cotton. The planting area in the producing areas continues to decline, and a wave of cotton prices may rise again next year.

For processing companies, the actual downstream demand is low and the export environment is not optimistic. Sun Ronggui said: “The biggest problem at the moment is that you cannot see the spring. I receive a lot of industry information every day on my mobile phone, but everyone is a desperate voice.”

Meng Qingshun said that domestic textile enterprises have dominated the market and developed rapidly with lower raw material costs and labor costs over the years. In recent years, domestic labor costs have risen rapidly, the cost of domestic cotton textiles has risen, international competitiveness has declined, and foreign trade orders have been severely lost. This can be seen from the closing of the 110th Canton Fair.

It is understood that the 110th session of the Canton Fair transaction data is not optimistic, Europe and the United States lack of orders, reduced by 20% to 30%, and the short-term orders within 6 months accounted for more than 80% of the total number of orders, lack of long list.

According to industry analysts, although the country’s temporary purchase and storage policies have stabilized cotton prices, a new round of reshuffling in the cotton spinning industry is still inevitable. China’s labor costs continue to increase. While domestic cotton prices have been higher than international cotton prices for a long time, the situation of tight funds will continue. These factors that are unfavorable to the cotton spinning industry cannot be fundamentally changed. Therefore, a new cotton textile industry will emerge. After a big round of shuffling, a group of companies with poor capital and technical strength will be forced to withdraw from the market.

Ma Junkai believes that for the processing enterprises, the structural adjustment is the most critical, only to increase the added value of products, eliminate low-quality products, eliminate backward production capacity, is the way out for cotton textile enterprises. The textile industry must carry out technological transformation to transform the products from low-grade, extensive to high-grade and refined, and actively develop high value-added non-cotton fibers, reduce the use of cotton, and reduce dependence on cotton.

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