First Quarter Of 2010 Analysis And Forecast Of The Textile Industry

By Himfr Paul

The gradual warming of the global economic environment, stable domestic macroeconomic trends and other comprehensive factors, China’s textile industry to undertake recovery in Q4 2009, the trend during the first 2 months 2010 production start for a smooth running operation, continued to show a favorable situation for the better stabilization, produce a steady recovery, export growth accelerated, balance production and sales results have increased. However, because of drastic changes in the cotton market and exchange rate expectations, and many uncertain factors, operating environment will not optimistic.

1, January February 2010, the Basic Operation of the Textile Industry

1, production rebounded significantly. Gradually restored by the market demand and other factors, since 2010 the pace of China’s textile and garment production to speed up the growth rate was faster than in 2009. According to statistics, from January to February 2010, China’s textile enterprises above designated size 52800 accumulative industrial output value of 567.328 billion yuan, up 27.05 percent growth rate over the same period increased 24.4 percent. From the main product output situation, in addition to individual category product output decreased slightly over the previous year, most product growth accelerated noticeably. According to statistics, from January to February 2010, cumulative production of above scale textile enterprises of chemical fiber 4.2527 million tons, up 17.11% growth rate over the same period increased 13.27 percent; production of yarn 3.5822 million tons, up 26.52%, increasing speed increase over the same period 20.61 percent; production cloth 10.082 billion meters, up 50.98 percent growth rate over the same period increased by 56 percentage points; produce clothing 3.559 billion, an increase of 17.15%, the growth rate increase over the same period 23.76 percentage points.Sub regional perspective, the larger increase in yarn output up areas: Zhejiang, 42.68 percent, 40.49 percent in Henan, Fujian, 31.29 percent, 28.43 percent in Jiangsu, Hubei, 23.71%, 16.04% in Shandong. Cloth production increased a larger holding area are: Zhejiang, 131.51%, 33.48% in Hubei, Jiangsu, 24.09%, 18.87% in Henan, Shandong, 11.64%.

2, raise the proportion of domestic sales, sales balance. Statistics from January to February 2010, China’s textile enterprises above scale sales value of 555,436,000,000 yuan, up 27.08 percent growth rate over the same period increased 23.95 percent, of which domestic output value of 451,239,000,000 yuan, up 30.35% growth over the corresponding period of 23.72 percentage points. Domestic sales accounting for 81.24 percent reached a year earlier, up 2.04 percentage points. January February sales rate of 97.9% of textile products, balance production and sales. According to National Bureau of Statistics, 1 February, the national retail sales of consumer goods totaled 2.5052 trillion yuan, an increase of 17.9% increase over the same period the growth rate 2.7 percentage points. Among them, the clothing and shoes retail sales of textile products to 110.5 billion yuan, up 23.3% increase over the same period the growth rate 7.4 percentage points.

3, to speed up export growth, export growth on the Europe and the United States about three percent. Gradual improvement in the international market demand or replenishment, exports increased significantly. According to Customs statistics, from January to February 2010, China’s textile and apparel exports totaled 28.202 billion U.S. dollars, up 28.77% growth rate over the same period increased 43.45 percent. Of textile yarn, fabrics and products 10.148 billion U.S. dollars, up 39.28%, the growth rate higher than the same period last year 60.1 percent; apparel and clothing accessories exported 18.057 billion U.S. dollars, up 23.53%, the growth rate higher than the same period last year 34.8 percentage points.

Imports from the country perspective, the European Union, the United States exports by 3 percent or more. January February, the EU exports 6.651 billion U.S. dollars, up 30.3%; U.S. exports 4.346 billion U.S. dollars, up 33.8%. Exports to the EU and the United States amounted to 2.646 billion U.S. dollars, accounting for China’s textile and garment export growth of 42% of the total.

From the main exports by area, Zhejiang Province, export growth accounted for five total net increase of nearly eight percent nationwide. January February, Zhejiang exported 7.209 billion U.S. dollars, up 40%, an increase accounted for 32.7% of the total national net; Guangdong exported 5.013 billion U.S. dollars, up 29.26%; Jiangsu exported 4.4 billion U.S. dollars, up 24.85 percent; Fujian exported 1.747 billion U.S. dollars, up 51.06%; Shandong exported 2.198 billion U.S. dollars, up 14.09 percent. An increase of five provinces and exports 4.934 billion U.S. dollars, accounting for a net increase of the total textile and clothing 78.3%. View from the main export products, yarn, fabrics, made ups, knitwear export growth are more than three percent. January February yarn exports grew 44.05 percent, up 40.36% fabric, manufactured goods, up 37%, up 34.18 percent knitwear. The four categories of exports 18.152 billion U.S. dollars, up 37%, an increase of the national textile and garment exports accounted for 77.8% of the total net increase.

Substantial growth in the first two months of exports, in addition to last year’s low base factors, should say that it is to restore growth, as compared with the same period in 2008, increased by only 10%, if after deducting price factors, an increase of even lower.

4, significantly raise economic efficiency. January February 2010, China’s textile enterprises above designated size achieved sales revenues of 543.3 billion yuan, up 27.9% over the previous year increased 26.6 percent over the same period. Total profit of 22.817 billion yuan, an increase of 9.748 billion yuan, an increase of 74.59% over the previous year increased 85.59 percent over the same period (down 11.01% over the same period last year). Main Product gross margin was 14.01%, up 0.85 percentage points. Sales profit rate of 4.2%, up 1.12 percentage points to upgrade. Cotton processing enterprises in which two consecutive price increases above the cotton price increase, sales revenue of 889.058 billion yuan, up 10.57%, the growth rate increased 6.7 percentage points over the same period last year. Total profit of 6.495 billion yuan, the same period last 2.06 times. Sales profit rate 4.34%, 1.61 percentage points year on year increase.

Second, Increased Negative Factors, Operating Environment will Become more Complex

Situation from the ground two months, China’s textile industry, production, domestic sales and export performance in the data showed a relatively rapid recovery in growth momentum, it is noteworthy that the low base last year, to some extent will cause the main earlier this year indicators overestimate, but the industry faces this year, the operating environment more complex and more external and reducing its inventory.

First, pressure on exchange rate movements is expected to increase. Greece and other countries affected by the debt crisis, the euro began last December continued depreciation of the dollar against the euro has appreciated nearly 10%. As the dollar yuan is linked, this year, although the yuan against the U.S. dollar remained stable at around 6.82, but the 5% appreciation of the yuan against the euro, sterling rise 7%. Recently around the appreciation of the renminbi, in a dispute between the U.S. heats up. Even if the short term exchange rate changes to have much time being, but medium and long term exchange rate appreciation pressures still exist, re entered if the yuan revaluation cycle, it will seriously affect the export of China textile and apparel products, and industry stability.

Second, recruitment is difficult, labor costs. Subject to rapid economic rebound, the market demand and other factors, many textile enterprises in China coastal areas are facing a more serious shortage of laborers, “labor shortage” as an important influence factor in the current development of the industry. In order to maintain production, enterprises have raised wages, lower educational level, age and other restrictions, to ease the “labor impasse.” It is understood that the recent textile workers in some coastal areas have been as high as 30% wage increase. Substantial increase in labor costs will become effective in 2010 affected the textile industry, an important factor in reducing profits.Third, the supply shortage of cotton, cotton prices rose rapidly. Biao international cotton prices in February rose, driven by the rapid follow up of domestic cotton prices and surging domestic cotton price futures briefly broke through 17,000 yuan mark, spot cotton prices will continue to rise in the price, spot cotton prices in March rose up to a thousand dollars total This is a substantial increase in price this year to the second wave (10,11 last month were up 870 yuan and 730 yuan), the cotton for the past five years to gain the highest level.Currently 328 cotton prices across the board break 16,000 yuan ton, the price and the annual rate of increase is second only to the level of 03 04. If the October November last year, the cotton price is reasonable up, and has risen to a rational price, then round up the foam with a non rational or cotton, there is a certain risk.

Transitional cotton prices rose, the negative effects are starting to show.

On the one hand, the order of business operation rate decreased. Replenishment by domestic and international market demand, cotton prices rose higher than the cotton textile industry still capable of digesting the short term, while the gray cloth, cotton clothing rose less than the cost pressures on the order of business to run hard. According to investigation, a number of smaller funds are insufficient, inadequate post order company, has begun to stop taking orders, not to buy cotton yarn, part of the looms are also being parking, equipment Founding rates are falling.On the other hand, cotton prices push up prices of cotton yarn, cotton yarn imports continue to surge. Because large increases in domestic cotton prices, for the slow low cost pressure, many companies take the direct import of cotton yarn, cotton yarn import growth accelerated. According to customs statistics, from January to February this year, China’s total imported cotton yarn up to 170,400 tons, up 54.4%. From the perspective of country 1 February China imported cotton yarn from Pakistan, India, Vietnam and China Taiwan. Which imported 69,900 tons from Pakistan, up 63.05 percent, China’s cotton yarn imports accounted for 41% of the total. From Vietnam, India, import growth accelerated significantly, year on year growth of 121.72% and 44.13%.

Analysis of the main reasons for rising cotton prices:

First, demand exceeds the output. From cotton production side, this year’s cotton crop failure, cotton production 6.4 million tons, about 1.1 million tons over the cut. On the other hand, due to the textile market to pick up, demand driven, increased production and demand contradiction, cotton prices continued to rise.Second, control measures lag. In recent years, the main means of state regulation of the cotton market is collected, a cast storage, transporting and distribution of cotton in Xinjiang cotton import quotas. Storage during the last throw in the resource control capabilities have been significantly less than after the payment of import quotas, on the one hand the import of cotton to miss a good opportunity to focus on the other hand, stimulate the international cotton prices of imports rose in order to stimulate the domestic cotton price Biao up.

Third, store cotton reluctant sellers, increasing the supply and demand tension. Rise in international cotton prices Biao postganglionic case, the domestic cotton price rose rapidly with the holding of cotton business optimistic and store cotton reluctant sellers, increasing the supply shortage of the cotton market atmosphere. A report from the Agricultural Development Bank of the Agricultural Development Bank loans acquired cotton, has sold 1.157 million tons of cotton, accounting for 48% of purchase amount, which has sold 1 million tons in Xinjiang, accounting for acquisition of 60%, while the Mainland for sale proportion of only about 20%, that most of the mainland hoarding unsold cotton.

Fourth, scattered resources, the cotton market disorder. Agricultural Development Bank from a group of recent data shows that the Agricultural Development Bank this year put the number of loans and the acquisition there was a reduction, the new cotton industry into other funds acquired increased significantly. Ended March 20, 2009 cotton year running Agricultural Development Bank loans to total 33.2 billion yuan, down 17 billion yuan, down 33.8%, support enterprises to purchase cotton, 2.4 million tons, down 1.8 million tons, down 42.9%; average price 12280 yuan ton, up 1,400 yuan over the previous year. Spring Festival has been completed after the acquisition, the Agricultural Development Bank to support the acquisition of cotton cotton enterprises accounted for only 37.5% of the total, while most of the other funding sources for the acquisition of resources, transition resources, scattered cotton market was rather chaotic.

In summary, from the current situation, cotton, cotton effective absorbed rising costs of raw materials and active store cotton stocking, cotton, cotton yarn each other support, the linkage pattern of rising short term is difficult to change. But when the garment, fabric companies can not digest high price of cotton yarn, cotton yarn market crash, time will come, it is excellent in the current market context, we need to maintain a sober grasp the pulse of the sound development of market, I would like to visit Queer .

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