Cotton Prices Rose More Than 30%&Nbsp; Garment Enterprises To Abandon Cotton Orders

The director of a ten thousand garment factory in Houjie, Dongguan, Guangdong, is worried.

He received a list of 3 million foreign garments recently, but the plant lacks raw materials. "I reckon it requires 60 tons of cloth raw materials, which is very tight." In May 26th, he was looking for cloth everywhere, he told me.

Its manufacturers have imported cotton yarn from Pakistan and India in large quantities since last year, but recently India has announced that it will stop exporting and Pakistan has to increase export tariffs, which has led the factory to find new sources of cotton yarn. Although there are still cotton yarn in the country, the price is very high. Usually, the price rises every few days, and sometimes it rises once a day.

This garment factory is a microcosm of the price of cotton yarn and clothing that has been rising since the second half of last year. According to the information from the cotton information network, the cotton price weighted index in May 26th this year was 17323, up 35% from the same period last year, up about 15% from the beginning of this year.

According to the National Bureau of statistics and the Cotton Research Institute of the Academy of Agricultural Sciences, 2010 cotton planting area decreased by 2-3% compared with last year. And because of the low temperature in April and the late planting of cotton, the annual harvest is still difficult to ascertain. In the face of tight cotton situation, the state recently announced an increase of 800 thousand tons of cotton import quotas, bringing the total import quotas to around 2 million 700 thousand tons. The state reserve cotton is also expected to put in 300 thousand tons, so that 1 million 100 thousand tons of lint have been put into operation recently.

The author is informed that the decision-making level is studying new price control measures and has targeted ways to raise prices of some commodities.

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　　 Factory shortage order waiver

The figures provided by China cotton information network show that in May 26th, the national cotton price weighted index was 17323, up 35% over the same period last year. Li Ren, an analyst with China Cotton outlook information consulting company, told the author that the price of lint from the market has already exceeded the level of 18 thousand yuan per ton in recent days.

The market expects that the next stage of cotton demand is still increasing, but there is not much actual inventory. For example, in April, there were about 2900000 tons of commercial stocks in the country and 30-40 tons of actual demand. In April, the national development and Reform Commission and the Ministry of Railways organized 284 thousand tons of cotton in Xinjiang to the mainland, but this was mainly used by 27 large and medium-sized textile enterprises, and did not circulate to the market.

This has led to the rising price of lint and to the downstream areas of the mills and clothing factories. Ma Junkai, Deputy Secretary General of Shandong Cotton Association, the important cotton producing area of Dezhou, told the author that the yarn price of the cotton mill and the lint price of the cotton plant are rising. For example, the price of 32 cotton yarns in the local cotton mill is now at 25200 yuan / ton, up 33% from the level of 18900 yuan / ton in October last year. And the yarn mill will take the price of cotton yarn to the garment factory, which is only 3-4 months.

Although the state has put a lot of cotton from Xinjiang to the mainland market, it is still difficult to change the pattern of short supply in short term. Li Ren, an analyst with China Cotton outlook information consulting company, points out that cotton in Xinjiang is only a few months' worth of cotton digested in the next few months.

"The core issue is economic development is accelerating, domestic demand is rising, almost all garment factories have hand held orders, but whether there is raw material determines whether production can be made."

Li Ren realized that although some clothing factories in the South had orders, cotton yarn prices had eroded profits, which led many manufacturers to abandon orders.

{page_break} Suspected fried cotton phantom

NDRC is also studying new measures to deal with the rise of cotton. The national price bureau meeting held in May 22nd put forward that we should improve the price information system, grasp the specific conditions of production volume, transaction volume, production cost, circulation price increase, government reserve, capital flow and inventory changes, and find out that abnormal situations should be promptly identified and reported promptly, and resolutely prevent and stop speculative speculation of "idle capital".

Some experts believe that several hundred thousand tonnes of national reserve cotton will be put into operation in the near future.

Bao Jian of Nantong Cotton Textile Co., Ltd. told me that the price of lint is too high at present, which has affected many downstream mills. But what is interesting is that the price of lint cotton substitute (cotton type man-made staple) is not rising.

Bao Jian suspects that the current lint size is not a problem, but the market circulation is small, and it may be organically fried like garlic. He suggested that colleagues in garment factories should not take high priced cotton because they are too risky.

According to our understanding, last year, the national cotton reserves had been collected about 370-380 tons, and the price was 13500 yuan / ton. The market price of lint rose to 18 thousand yuan per ton. It is estimated that there are still 1 million 500 thousand tonnes of state reserve stocks in the country. If all of them are sold, they can make about 7000000000.

However, the trend of overall cotton output this year is still difficult to ascertain. At the same time, because of the rising labor costs, the cost of cotton planting in the future will also rise.

Ma Junkai, Deputy Secretary General of Dezhou Cotton Association, said that the enthusiasm of cotton growers in Dezhou is still not high this year, and the planting time has been postponed. Up to April 27th, cotton planting progress is about 70%. It is estimated that the area of cotton planting in this city will be only about 2 million mu, which will be reduced by 15% over the previous year to the lowest level in ten years.