Control risk or become the main tone of the current textile industry development

Release time:

2022-04-04

The so-called feng shui turns, opportunities will change between industries with the wind of the times. This year, the cotton spinning industry has shown a particularly obvious performance. From cotton farmers, ginning mills to textile enterprises, all experienced the laughter and pain brought about by this change.

Three years ago, the author went to Shandong for research. On the way, I met a cotton farmer who was picking medicine in the cotton field. After explaining his intention, the cotton farmer casually asked, "Can cotton sell at a good price this year?". It is not easy for cotton farmers in the mainland to plant cotton. Not only is the standard of cotton subsidy low, but also the cotton growers are mainly the elderly, and there are no young people at all. Facing the old cotton farmer, I responded with a sentence: "There will be no good price in the past two years.", It seems that cotton farmers have become accustomed to such market conditions, and they are not concerned about the amount of profit or less. The purpose of hard work is to keep their plots idle. Until last year, the wind direction has changed greatly, which most people did not expect. Cotton farmers finally turned over, the profit of cotton planting was significantly higher than that of the same period, and their efforts were finally rewarded.

In comparison, ginning enterprises are not so lucky. Of course, this is relative. Cotton processing enterprises will make a lot of money in 2020. When encountering such profit opportunities, it is not how excellent the enterprises are, but the market gives good opportunities. In 2021, when I wanted to continue the good times of 2020, ginning enterprises bought at a high level. The cost of lint was higher than the futures price. There was no suitable hedging opportunity. Sales encountered difficulties and the risks in the future were increasing. Many ginning enterprises were also looking forward to retreating from the whole body this year, even if they lost a little.
In fact, I think the most difficult is probably the textile enterprises, regardless of the scale of capital or factory operating costs, textile enterprises are far larger than ginning enterprises. Starting from 2020, the production profits of textile enterprises have continued to rise. It seems that heaven helps them. The profits once reached more than 4000 yuan/ton. Looking at the history, there are few such high profits. Textile enterprises are attracted by the current prosperity, expanding their scale and increasing their output. It seems that they have returned to the old road, just like the continuous floating profits and increasing positions in futures. As a result, it will be very uncomfortable to withdraw.
At this stage, textile enterprises are currently facing three main problems. First, daily wages, electricity and other costs are not a small expense. Even if they lose money, they must ensure basic production, otherwise it will be difficult to stop production and start up again. Second, buying cotton spinning yarn is already at a loss. From the original high profit to the current loss, the psychological gap is very large. Facing the continuous loss, the pressure on enterprises can be imagined; third, cotton prices are already at a high level. In the long run, the probability of continuing to fall is greater than the probability of rising. All those who know about textile enterprises know that enterprises most hope that cotton prices will rise steadily, and the sharp rise and fall will be disadvantageous to enterprises, especially the sharp fall, which will have the greatest impact on enterprises. It is unrealistic for cotton prices to remain high for a long time, because there will definitely be a downward trend in the future, and textile companies must prepare and plan for a protracted war.
At present, the economic situation at home and abroad is still grim and complex. Under such circumstances, living is the first thing. Don't think about how much money you can make. It is more important to plan how to live better in the decline. After talking so much, good times and bad days always go hand in hand, often inadvertently change, perhaps the enterprise can enjoy how much glory, how much pain it has to bear.

There is a risk of weakness in the spandex market with flat demand.

Return to List

Highlights: A number of textile and clothing towns affected by the outbreak issued a notice of closure! Around the boot rate fell sharply!

More information