After The Epidemic Situation, How Is Hubei Province Now?

Hubei is a major province of cotton textile industry in China. According to the quota of sliding Tax issued by the economic and Trade Department of the national development and Reform Commission, the data of textile enterprises' declaration information shows that, In 2018, the textile scale of Hubei Province is close to 6 million spindles, the annual consumption of cotton is more than 610000 tons, and the annual output of pure cotton yarn is close to 520000 tons, ranking the fifth in China.

As the epicenter of the epidemic, the social production and living order in Hubei Province has been completely restored to normal, but the local cotton textile enterprises are still facing greater production and marketing pressure, and some enterprises are in the dilemma of production reduction and production suspension, and the overall situation is not optimistic. In the face of difficulties, how can Hubei Textile enterprises save themselves? How to look at the trend of cotton price?

Market downturn, insufficient orders

Spinning enterprises to survive

Zaoyang area, Hubei Province The spinning scale ranges from 700000 spindles to 1 million spindles. Most of them are small enterprises, mainly producing medium and low-end yarns. Due to the impact of the epidemic situation, the overall operating rate of the enterprises has declined. From the perspective of raw material and product inventory, the cotton inventory of spinning enterprises was maintained at a normal level for about 1.5 months on average. Cotton yarn inventory showed signs of accumulation, which was at a high level compared with previous years. The main reason was that there were few downstream orders and high sales pressure.

A local enterprise with a scale of 30000 spindles said that since the resumption of production on March 14, the factory has been maintaining a 100% operating rate. In order to meet the current domestic market demand, it mainly produces combed 32S, 26S and other yarns. At present, the lint warehouse of the enterprise has existed for about two and a half months, which is basically the same as that of the same period last year, with an average monthly yarn output of 400 tons. Affected by the global epidemic situation and other factors, cotton yarn sales were hindered, and the inventory of finished products increased. Therefore, the company has expanded the sales market from Guangdong to Zhejiang to reduce the current pressure on cotton yarn inventory. It is understood that, The company mainly uses "double 29" Xinjiang machine to pick cotton, with the purchase price of 12350 yuan / ton ~ 12400 yuan / ton, while the sales price of cotton yarn is 19750 yuan / ton, so the product profit is limited.

"During the epidemic period, the speed of resumption of work and production in Hubei was slower than that in other areas of China, and the production and operation of enterprises did not fully return to normal until April. However, the rapid spread of the epidemic situation abroad made the situation of foreign trade orders more and more serious. Not only did a large number of foreign trade orders break the contract, but also the new orders were seriously insufficient, and the sales of enterprises were under great pressure. When the epidemic was at its worst, Hubei cotton yarn was rejected in other parts of the country A Hubei spinning enterprise boss said.

The market downturn, enterprises have to adapt to survive. A person in charge of a textile enterprise in Wuhan said that a few years ago, the enterprise made efforts in the middle and high-end cotton yarn Market and purchased the world's advanced cotton yarn production equipment, mainly producing combed 80 s 、100 s Yarn, the main reason is that the enterprise does not have an advantage in the low-end yarn market, and the production of high-value-added products is the core and direction of development, but the sudden outbreak of the epidemic has disrupted the pace of development of enterprises. Restricted by foreign trade and export, the high-end yarn market has fallen sharply, so it can only develop the domestic medium and low-end market. "The production equipment worth tens of millions of yuan to produce 40 combed and other middle end yarns is really overkill." The person in charge of the enterprise said.

However, it is not easy to enter the domestic low-end market. According to the company profile, Foreign trade orders are mainly high-end yarn, domestic market is mainly low-end yarn. Affected by the epidemic situation in foreign countries, enterprise orders are mainly for the domestic market. With the restoration of normal production order in China, the traditional enterprises which had been deeply ploughing into the domestic market have maintained stable orders and full production capacity due to their stable customer relationship. However, some enterprises engaged in foreign trade or production of medium and high-end products are under great pressure. As outsiders in the domestic market, it is not easy to squeeze into this circle.

Cotton price fluctuates slightly

Import cotton no longer has advantages

Although the epidemic situation led to the overall depression of the textile market, the business situation of cotton trading enterprises in Hubei was better than expected.

The head of a trade enterprise in Hubei said, Most of the local textile enterprises bought high price lint for production years ago. Due to the epidemic situation, cotton prices dropped sharply and orders decreased. Some enterprises faced great business pressure. However, since the resumption of work and production in April, the enterprise has been operating well, and the overall impact of the enterprise is small.

According to the person in charge of the enterprise, the company's operation was better than expected during the off-season period, mainly due to the following three reasons: First, cotton price has been relatively stable since April this year. After textile enterprises resume production, it has little impact on cotton trade, and sales are even better than the same period last year; second, the price difference between domestic and foreign cotton is small, and textile enterprises give priority to domestic cotton in raw material procurement. It is understood that the current price of lint in China is about 12000 yuan / ton, and the price of Indian cotton transported to Hubei is 11800 yuan / ton. Compared with domestic cotton with similar quality, the price advantage of imported cotton is not obvious. Thirdly, some enterprises affected by the epidemic situation have difficulties in financing, so the cotton reserves can effectively relieve the financial pressure of enterprises in production. In addition, the blockade and control in Xinjiang region lead to the transportation of cotton in Xinjiang It is to speed up the sale of cotton in the mainland.

It is understood that the enterprise's raw material procurement mainly adopts the "sales order" mode, fixed-point procurement, fixed-point sales, select some cotton in line with the enterprise customer group indicators, reduce the enterprise procurement risk from the source. At the same time, the enterprise from the source of procurement to later sales, the implementation of staff responsibility system, greatly reducing the business risk of the enterprise, so as to ensure the normal operation of the enterprise.

Industry analysis, This year's cotton price range of 12500 yuan / ton provides a good opportunity for the cotton industry to maintain the basic price of 12500 yuan / ton in 2009. Upstream raw material market stability, virtually for downstream processing products to provide protection. Trading enterprises said that chemical fiber prices have been greatly affected by fluctuations in crude oil prices, while cotton prices are relatively stable. Although the price of pure cotton yarn has declined slightly due to the impact of market supply and demand, textile enterprises can digest it through production processes. In addition, domestic and foreign cotton prices play a supporting role in domestic and foreign cotton purchasing.

In view of the late cotton price trend, Hubei enterprises believe that At present, cotton price is in the situation of "bottom down, top top", but there are different views on the top space 。 Under the interaction of macro environment, epidemic situation and Sino US economic and trade relations, cotton price will still be difficult for a period of time. Although the current situation of the cotton textile industry is grim, the industry insiders are relatively optimistic about the price trend next year, and are still full of confidence in the future development of the cotton textile industry.

Spinning enterprises, which mainly export products, believe that it is not easy to convert export to domestic sales. Traditional enterprises, which have been deeply rooted in the domestic market, have maintained stable orders and full production capacity due to their stable customer relationship.