China Textile Market Research Report

Recently, the China Cotton Textile Industry Association has sent a total of 25 people and formed 12 research teams to visit 8 provinces and regions including Jiangsu, Zhejiang, Shandong, Henan, Fujian, Jiangxi, Hubei, and Xinjiang, and visited 74 cotton textile companies. enterprises and 9 cotton textile industry clusters. Research was conducted on six topics: the overall situation of cotton textile industry clusters and enterprises, raw material security, market situation, comprehensive costs and benefits, transformation and upgrading, and brand building.

Good start, orders increased after the Spring Festival

The companies surveyed this time involve a spinning scale of approximately 18.67 million spindles and 22,000 looms. According to reports from companies, the first quarter of 2017 got off to a good start. A survey of companies showed that 93% of companies had an operating rate close to 100% on the eighth day of the Lunar New Year holiday. The production situation has been stable after the Spring Festival holiday. Most companies are relatively optimistic about this year’s situation, and companies with relatively single products are cautiously optimistic. Many companies have adapted to the market demand for short-term and small orders and shortened delivery cycles. Their product inventory levels are low and the risk of bad debts is reduced. After the Spring Festival, orders increased by 5% to 10% year-on-year, and can basically be scheduled for 2-3 months. Some production orders for yarn-dyed fabrics have continued until August. Orders for home textiles and clothing are concentrated in advantageous enterprises with relatively complete industrial chains. Although the industry generally reflects a lack of orders, the number of orders from these enterprises has not decreased but increased.

Investment is more prudent and production expansion is more rational

In an environment where market demand is still sluggish, companies have made more prudent investments in production capacity and expanded production more rationally. 28% of companies have investment intentions, and 20% of companies have already or plan to transfer industries. The Xinjiang region is still very enthusiastic about attracting investment from spinning enterprises. Some companies with greater financial pressure said that while stabilizing production scale, they will put more energy and funds into product research and development, constantly change product varieties, continue to innovate, and work steadily to meet customer needs and improve the market competitiveness of corporate products.

Raw material inventory is low, non-cotton fibers are popular

The current use of raw materials by enterprises basically follows the principle of buying as they are used. Whether it is cotton (15990, -40.00, -0.25%) or non-cotton fiber, there is no large inventory. The main reason is to avoid risks caused by price fluctuations and reduce The amount of funds occupied ensures the liquidity of funds. For the procurement and inventory of raw materials, there are mainly the following factors:

1. Enterprises using non-cotton fibers are showing a growing trend. In 2016, the usage of non-cotton fibers in the cotton textile industry was basically the same as the previous year, at 12.63 million tons. More and more companies are experimenting with non-cotton fibers. According to the survey, companies using various non-cotton fibers with a proportion of more than 50% are showing a growth trend. Most companies stated that they will continue to increase the use of non-cotton fibers. Companies that have always insisted on producing pure cotton products have also stated that they will follow the market trend of increasing the proportion of non-cotton products and try to use differentiated fibers to diversify yarn fibers.

2. The reserve cotton has been released to stabilize the market, and there are high calls for additional issuance of quotas. In 2016, the national cotton output was 4.94 million tons, of which Xinjiang’s cotton output was 3.95 million tons, accounting for about 80%. Currently, textile companies mainly use Xinjiang cotton and reserved cotton, and a small amount of imported cotton is used. The release of cotton reserves has played a positive role in maintaining the stability of the cotton market. It is understood that the yarn output in Xinjiang, which has attracted much attention, was about 1.1 million tons in 2016, of which cotton blended yarn and chemical fiber yarn accounted for about 20%. The cotton conversion rate increased from 15% in the previous year to 20% in 2016. Since the Xinjiang cotton target price pilot was implemented three years ago, the price gap between domestic and foreign cotton has narrowed. Due to the prominent structural contradictions of cotton, companies are eager to increase the issuance of cotton import quotas.

3. Imported cotton yarn decreased year-on-year, and domestic yarn had quality advantages. Since the Xinjiang cotton target price pilot was implemented for three years, the price difference between domestic and foreign cotton has narrowed. In 2016, the price difference between domestic and foreign cotton averaged 1,500 yuan per ton. The price difference between domestic and foreign unified cotton yarn was about 300 yuan per ton. It has been in an upside-down state for a period of time. Imported cotton yarn Showing a decreasing trend. In 2016, a total of 1.97 million tons of cotton yarn were imported. Although it decreased by 16% year-on-year, the quantity was still large, equivalent to a production capacity of more than 10 million spindles, and it still attracted high attention. Domestic weaving companies said that when the price difference between domestic and foreign yarns is less than about 500 yuan per ton, they will choose to purchase domestic yarns considering order cycle and quality stability factors.

The market is stable and improving, but price transmission is poor

1. The market is stable and improving is the consensus of the research companies. According to the situation of enterprises tracked by the China Cotton Industry Association, the summary data of enterprises whose total production capacity accounted for 50% of the entire industry in 2016 shows that the main business income of cotton textile enterprises increased by 4.4% year-on-year, and the total profit increased by 7.1% year-on-year. After experiencing the washout in recent years, The companies that have survived after the brand have gradually improved their operating conditions by virtue of their transformation to keep pace with the times, the improvement of their R&D and innovation capabilities, and the improvement of their overall competitiveness. The small and medium-sized enterprises visited reported that although corporate profits increased year-on-year in 2016, the increase was limited and was slightly lower than the sales revenue growth rate. After the Spring Festival in 2017, although sales were relatively smooth, corporate profits were relatively thin, the market situation was still fragile, and some companies still suffered losses. The companies surveyed reported that despite the periodic rise in raw material prices,It is not driven by demand, which is reflected in the fact that the growth rate of cotton yarn is not as high as the growth rate of raw materials, the price of cloth products basically does not follow the increase, and the price transmission of products in the industrial chain is poor. Recently, when the price of viscose staple fiber fell, the decline of viscose yarn exceeded the decline of raw materials.

2. There are regional differences in costs and the problem of expensive financing is prominent. Under normal circumstances, the raw material costs of spinning and weaving production account for 72% to 65% of the total cost respectively, and labor and electricity costs each account for about 10%. Taking a company’s pure cotton carded 40-count yarn as an example during the research period, the processing cost of producing one ton of yarn was more than 7,000 yuan, and the profit per ton of yarn was only more than 200 yuan.

3. In terms of labor costs, the difference in labor costs between coastal and central regions is more than 500 yuan per ton. In terms of electricity costs, electricity costs in the surveyed areas range from 0.28 yuan to 0.72 yuan per kilowatt hour. The cost of electricity per ton of yarn in Xinjiang is about 1,000 yuan per ton lower than that of mainland companies. In terms of other costs, due to the large investment in fixed assets and high liquidity requirements of cotton textile enterprises, the current financial environment makes the cotton textile industry difficult to obtain loans, high loan interest rates, difficult and expensive financing problems, and financial and tax costs. The proportion increased. For companies with large loans, loan interest rates have risen by 10% to 20%, making it more difficult for them to make profits. In recent years, cotton textile companies have actively taken measures to “reduce costs” despite the continued increase in production and operating costs. In the production cost, comprehensive competitiveness is improved by improving equipment operation rate, increasing product added value, improving labor productivity, saving energy and reducing consumption, and reducing financial costs.

Transformation and upgrading present a new look

The survey revealed that equipment updating, technological transformation, product innovation, and quality improvement are the main ways for cotton textile enterprises to transform and upgrade. In terms of equipment, most companies mainly eliminate outdated equipment (equipment before 2007), and are more willing to add intelligent equipment that is more efficient, improves quality, and requires less labor. Companies such as Weiqiao Textile and Jiangsu Dasheng have taken the lead in building advanced spinning production lines based on domestic equipment. Technological transformation and energy conservation and emission reduction measures continue to be deepened. Old-fashioned projectile looms, rapier looms, and dyeing and finishing equipment with high energy and water consumption are gradually phased out; energy-consuming motors and fans are replaced, and frequency conversion devices are added to save electricity, steam, and water. Some cotton textile clusters give full play to their resource advantages in raw materials, labor force, etc. to accelerate industrial agglomeration, expand the brand influence of the cluster, increase investment in product research and development and improve refined management levels, and further develop high-end customers. In terms of internal management, many high-quality companies have accelerated their work on ERP information management systems and the integration of informatization and informatization. The application of production barcodes and supporting management software has strengthened the internal management of the enterprise and significantly improved management efficiency. E-commerce platforms have emerged as the times require. In response to market demand, the business model of online and offline transactions through the Internet has gradually come into play, and new logistics methods are gradually taking shape.

1. Actively adjust product structure and gradually enhance brand awareness. The product varieties of enterprises in various regions under investigation are different, showing the characteristics of an increase in the proportion of non-cotton products, differentiation of varieties, and the development of product grades towards mid-to-high-end. In terms of development ideas, there has been a shift from the pursuit of quantity to the pursuit of quality and high added value. They all agreed that although gauze products are intermediate products, their brand effect can still increase the added value of the company.

2. From the perspective of yarn fiber raw materials, the proportion of non-cotton yarn has increased, among which conventional polyester-cotton and other cotton blended yarns have not increased much; from the perspective of yarn count, the majority of ring-spun yarns above 40S among the surveyed enterprises. In order to avoid the competition between imported yarn and Xinjiang yarn, misplaced competition is adopted, such as open-end spinning to increase the product market of 32-count yarn; some companies also use the principle of increasing product added value and market demand as the starting point to improve product quality and focus on Research and develop new products; from the perspective of spinning methods, the proportion of siro spinning and compact spinning yarns is showing an increasing trend; from the perspective of yarn uses, high-end knitting yarns and yarn-dyed yarns have increased.

3. Among the weaving enterprises surveyed, pure cotton fabrics still occupy an absolute advantage, and new materials and new processes are increasingly used. Some companies that have little advantage in pure cotton products are more inclined to follow market development trends and add differentiated products, with more than a hundred varieties.

4. Enterprises in some areas have changed yarn structures and fabric styles. Investment in technical transformation accounts for more than 10% of sales revenue. Product structure and quality have been rapidly adjusted, making yarn categories richer and fabric styles more diversified. Work with downstream customers to develop and promote, and work hard on design, branding, awards and added value.

Source|China Textile Network Editor|Decon Nano