Saying goodbye to the “copper, nine and iron ten” market conditions, the weakness of the chemical fiber market is becoming more and more obvious.
Recently, monitoring of various chemical fiber raw materials has shown that product sales have dropped and market transactions have declined month-on-month. A small drop one day and a big drop a few days has become the norm. Facing the current severe market situation, not only polyester manufacturers are having a hard time, but cotton spinning companies are also having an extremely difficult time.
Profit decline widens
Losses narrowed
According to data from key enterprises tracked by the China Cotton Industry Association, market purchases and sales were stagnant in October 2022. The cumulative operating income from January to October turned from positive to negative year-on-year. The growth rate of export delivery value continued to decline, the profit decline expanded, and the loss area narrowed. . Tracking data shows that from January to October, the industrial added value of cotton textile enterprises fell by 9.0% year-on-year, a decrease of 0.9 percentage points narrower than that from January to September; the industrial added value rate was 13.6%, an increase of 0.2 percentage points from January to September.
From January to October, the total profits of cotton textile enterprises fell by 30.1% year-on-year, a decrease of 15.4 percentage points from January to September; the profit margin was 3.2%, a year-on-year decrease of 1.4 percentage points, and a decrease of 0.7 percentage points from January to September.
From January to October, the number of loss-making enterprises in the cotton textile industry increased by 127.6% year-on-year, and the growth rate was 9.1 percentage points lower than that from January to September; the loss-making area was 32.5%, narrowed by 2.3 percentage points from January to September, and expanded by 18.2 percentage points year-on-year.
From January to October, the industrial added value of cluster enterprises was basically the same year-on-year; total profits fell by 35.4% year-on-year, and the decline was 4.3 percentage points larger than that from January to September.
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-1400 yuan!
Vortex spinning’s losses hit a new high!
Since November, the trading atmosphere in the rayon yarn market has been unusually light. Every day that passes, yarn mills will become more panicked, because it has basically become a consensus that the downstream industry will have an early holiday. If the yarn is unsaleable now, the backlog of inventory and funds in the future will be unimaginable. So far this month, after the losses of compact spinning and siro spinning hit a new high in June, the recent losses of vortex spinning hit a new high on record, at around -1,400 yuan/ton (including depreciation and finance).
Chart 1 Profits of siro spinning, compact spinning and vortex spinning
Even with such huge losses, most downstream fabric factories and traders remain indifferent and still mainly purchase goods for urgent needs without any intention of speculation. Industry inventories have now increased to about 35 days, and are expected to exceed the 2020 high before the Spring Festival.
Survey on cotton spinning enterprises along the Yangtze River in Anhui:
Three major factors are accelerating the deterioration of the market
In addition, according to a survey of a number of textile companies of different sizes in the areas along the Yangtze River in Anhui Province, this year’s “Golden Nine and Silver Ten” are no longer in the spotlight, which has disappointed the textile companies. However, starting from mid-November, the downstream market has changed from the sluggish consolidation in the first half of the year, and instead The deterioration is accelerating and the downward momentum is difficult to contain. Mainly manifested in the following two aspects:
First, the decline in yarn prices has increased, and the profit margins originally generated by the decline in cotton prices have been compressed. It is understood that the current price of 40-count carded cotton yarn in some cotton spinning mills has dropped to around 23,000 yuan/ton, which is 600-800 yuan/ton lower than half a month ago. Compared with the previous two months, the decline has increased. In the first ten days of this month, the decline in yarn prices slowed down and was slower than the decline in cotton prices. Based on the real-time synchronization of cotton and yarn prices, cotton spinning companies have already made a certain profit. However, the rapid decline in yarn prices since the middle of the month has greatly compressed the profit margins of spinning companies.
Second, shipments are weak and cotton yarn inventories are increasing. Sluggish downstream demand and weak shipments have caused textile companies to increase their cotton yarn inventories and highlight operating pressures. According to the person in charge of a medium-sized cotton spinning enterprise, for most of this year, the cotton yarn inventory in the factory was only about 25% of the production volume. In the past half month, yarn sales have slowed down significantly, and yarn inventory has reached nearly half of production. Several polyester-cotton yarn and open-end spinning manufacturers have also felt that they have recently fallen into the dilemma of difficult sales of cotton yarn and falling yarn prices. A few companies have already planned to have a long Spring Festival holiday starting from New Year’s Day.
In addition to the deterioration of market conditions, the recent epidemic has also had a more or less negative impact on the procurement and sales of textile companies. According to a textile company, the lint cotton purchased and processed by the factory in Xinjiang this year has been transported back to the factory due to road transportation restrictions. Drivers are reluctant to leave Xinjiang, which has made it difficult to find cars and increased freight costs (an increase of 150 yuan from the first half of the month). / ton) situation will also have a certain impact on the cotton use and cotton distribution of textile enterprises.
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