1. Basic situation of the industry
1) Since 2012, the operation of China's textile industry has continued to exhibit the following characteristics: All indicators have been decelerated in full; some of them have even been the lowest level of growth over the years; the domestic market has not seen any significant improvement; the weak recovery of export markets has not changed; The contradiction between overcapacity caused by the slowdown has become increasingly prominent.
2) The rapid expansion of the industry in the textile industry is difficult to sustain. The “golden age†of the industry has passed and turning point has emerged. Low growth or even zero growth may become the textile industry's “new normalâ€, and the possibility of even negative growth cannot be ruled out. The development of China's textile industry has entered a new stage of deep transformation and upgrading.
3) 2016-2025 will be a new round of industry upgrading. With the implementation of a new round of reform measures in China, the new dividends for the next step in the development of China's textile industry will be fully established and the industrial competitiveness will enter a new round of upgrading. The new growth pattern supported by technological innovation has basically taken shape, and China has transformed from a large textile country to a textile power. Urbanization, Belt and Road, Internet+, smart manufacturing, and supply-side reforms are expected new dividends.
2. Changes in the pattern of cotton consumption
1) Cotton consumption shrinkage:
a) From the institutional data: ICAC data show that during 2010-2015, consumption contracted 2.86 million tons, USDA 3.7 million tons, China Cotton Association 3.8 million tons, and China Cotton Association 4.4 million tons. We believe that since 2010, the overall contraction has been around 3.7 million tons.
b) From the aspect of capacity change, the capacity of China's cotton spinning industry in 2010 was about 121 million spindles. In 2014, the number of spindles dropped to about 70-80 million spindles, and the shrinkage was over 30%.
2) Changes in cotton yarn consumption patterns:
a) In the future, China's cotton yarn consumption will change significantly. From a scale point of view, low or even negative growth will become the norm, and the number will show a gradual shrinking trend. From the structural point of view, the low-end market will gradually be replaced by imported yarns. With the upgrading of consumption, the focus of domestic cotton yarn consumption will gradually shift to the middle and high-end sectors, and the product structure of domestic spinning companies will certainly be adjusted accordingly. To be clear about the phased and structural overcapacity.
b) Changes in the structure of consumption of cotton yarns will drive textile companies to accelerate change. Firstly, product upgrades will increase the production and development of high-staple yarns, chemical fiber blended yarns and new fiber yarns; secondly, upgrading of technical equipment and increasing the application of new spinning methods such as compact spinning and siro spinning. At the end of 2014, China had more than 18 million ingots in compact spinning.) Third, the transfer of production capacity has shifted production to the central and western cotton-producing regions (focus on Xinjiang) or Southeast Asia (focus on Vietnam) and other regions.
c) Foreign companies are eyeing the Chinese market. The overseas exhibitors of the 2015 China International Textiles & Yarn (Spring & Summer) Exhibition, which opened on March 16 this year, mainly came from India, Indonesia, Pakistan, Indonesia, Vietnam, Uzbekistan and other countries. In recent years, the external yarn import volume has continued to increase substantially. We believe that the trend is irreversible. Chinese companies can only choose to hold industrial upgrading, develop new varieties, and adjust to the “high, large, and high†directions. ".
3) Future cotton consumption trends:
a) The basic pattern of China's cotton consumption is basically one cycle every five years;
b) After a period of rapid decline from 2010 to 2015, China's cotton consumption will increase with the industrial upgrading from 2016 to 2020 and is expected to enter the new round of platform area as a whole. It is expected that the consumption will fluctuate around 6 million tons;
c) China's cotton consumption is affected by multiple factors such as imported yarns, chemical fiber substitution, product structure adjustments, product upgrades, and slowdown in terminal consumption.
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