The price of cotton: China's small and medium-sized textile companies will slide into the life and death line

In the short period of one year, the cotton price in mainland China has experienced a doubling of volatility. To avoid risks, nearly 70% of textile downstream customers have announced their suspension of production, which directly reduced the textile output of the mainland China by 40 to 60%.

According to industry sources, the textile industry has entered the dilemma of high-value inventory and sharp drop in downstream orders. It added that the export tax rebate rate will be lowered, and the textile industry in mainland China is afraid to enter the coldest winter.

Last year up to now, cotton prices are always erratic. In May last year, the cotton price was 17,000 yuan per ton (hereinafter the same). In February this year, the cotton price hit a record high of 35,000 yuan per ton. However, since April, the cotton price in mainland China has averaged The price of 500 yuan per ton dropped rapidly every 3 days. In 2 months, the price of cotton dropped back to 22,000 yuan per ton, which plunged by nearly 30%.

"If you store 3,000 tons of cotton, you lose 30 million yuan, and 1 ton loses 10,000 yuan." People in the industry said that when cotton prices rose, many companies accumulated large amounts of cotton at high prices, and some large companies have sold goods. Ten thousand tons means that it will directly lose hundreds of millions of yuan.

On the other hand, the export orders for textiles in mainland China have dropped by one-third, which has also caused many companies to shout away. China's textile industry is an export-oriented industry, but Chinese mainland textile companies are producing at a cost that is 10% to 20% higher than the international market, making exports to China's textile industry face great challenges.

The misfortune is that even as many textile companies are forced to limit production and reduce production, rumors about “the textile industry has lowered the export tax rebate rate by 5 percentage points” have caused the industry to shudder.

Sun Huaibin, director of the China Textile and Economic Research Center, analyzed that floating up and down 1 percentage point is related to the textile industry's profit of about 5.2 billion yuan. Since textile companies have been at a meager profit for a long time, even a 1 percentage point cut implies that a large number of small and medium-sized enterprises will slip under the line of life and death.