In April, The Wool Textile Industry Was Still Struggling

3. In April, the wool yarn production of enterprises above designated size showed a recovery trend, and the monthly output of wool yarn (wool yarn) in April increased by 11% month on month. The year-on-year decline of monthly output in April was 6 percentage points lower than that in March, and 28 percentage points lower than that in January to February. From January to April, the cumulative output of wool yarn fell by 16% year on year, with a decrease of 9 percentage points.

However, the production of wool fabrics did not recover in the same period, and the monthly output continued to decline. In April, the monthly output of wool fabrics of enterprises above designated size fell by 5% month on month. From January to April, the cumulative output of wool fabrics declined by 25% year on year, further deepening the decline.

The production of wool yarn is mainly used for knitted clothing, and wool fabric is the intermediate product of woven clothing. From the situation of these two types of products, the recovery of wool knitted clothing market is faster than that of woven clothing market.

Figure 1 Change of monthly output of wool yarn (wool yarn) from 2019 to 2020

Changes in monthly output of wool fabrics from 2019 to 2020

Source: National Bureau of Statistics

Since the outbreak of the epidemic, domestic sales of textile and clothing products have declined significantly. According to the data of the National Bureau of Statistics, in the first quarter, the per capita clothing expenditure of residents nationwide was 369 yuan, down 17.8% year on year, accounting for 7.3% of the per capita consumption expenditure, down 0.8 percentage points year on year. From January to April, the retail sales of clothing, shoes, hats, needles and textiles of units above the designated size nationwide dropped by 29.0% year on year, 3.2 percentage points lower than the drop from January to March. In order to make up for the loss of closing a large number of offline stores, textile enterprises generally strengthen the construction of online channels. From January to April, the retail sales of online clothing products fell by 12.0% year on year, 3.1 percentage points lower than that from January to March. Since this year, group purchase of wool products has also been generally delayed for more than 3 months.

According to the customs data from January to April, the total export of wool textile raw materials and products was 2.2 billion US dollars, down 27.7% year on year. The year-on-year decline continued to expand compared with the period when the domestic epidemic situation was the most serious from January to February. As predicted and analyzed last time, the recovery of the industry was hit harder by the stagnation of the international market. Among them, the export volume of various wool products fell by 34% year on year, and that of cashmere products fell by 25%, both of which were further expanded compared with the decline from January to February.

From the upstream and downstream of the industrial chain, the impact on the export of final products is greater than that of intermediate products. From January to April, the export volume of wool knitted clothing, wool woven clothing and blankets fell by 34%, 35% and 26% year on year respectively, but the export price was relatively stable. In the same period, the export quantity of wool sliver and wool yarn fell by 6% and 15% respectively, but the export price fell rapidly, down 27% and 16% respectively. Artificial fur fell by 17% year on year, but export prices rose rapidly. The export of wool fabrics also declined rapidly, with the export volume falling by 35% year on year.

From the perspective of export regions, the main consumer markets of wool textile continue to show a downward trend. Affected by the epidemic, the export of China's wool textile products to the European Union and the United States continued to decline at an accelerated pace, down 34% and 36% respectively year-on-year, both higher than the average decline. Other major export markets in Asia showed a narrowing decline, with ASEAN, Japan, Hong Kong, China and South Korea down 24%, 20%, 37% and 20% year on year respectively.

Figure 2 Exports of main export regions of wool products from January to April 2020

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From January to April, 436 of the 880 wool textile and dyeing and finishing enterprises above designated size showed losses, with a loss of 47%, down from January to February, but still 14 percentage points higher than the average level of the textile industry in the same period. From January to April, the operating revenue totaled 31.7 billion yuan, down 26.7% year on year, 7 percentage points higher than the average level of the textile industry. The average profit rate of the industry is 2%, 1.5 percentage points lower than the average level of the textile industry. Obviously, it is more difficult for wool textile enterprises to produce and operate. The industry benefit index level is basically consistent with the judgment of enterprises in the first quarter's resumption of work and production survey, and the data from March to April are not significantly improved compared with the data from January to February.

From January to April, the import volume of wool was 79000 tons, down 23% year on year, and the import unit price fell 12% year on year. Most of the import volume of major wool producing countries showed a decline, among which, the import of wool from Australia, New Zealand, Uruguay and the United Kingdom dropped by 22%, 34%, 41% and 27% respectively. Only South Africa, due to the stagnation of foot and mouth disease import in the same period of 2019, caused a year-on-year increase of 58% in the import of wool this year. In terms of cashmere raw materials, since April, transactions in the cashmere market have increased, and the low price of cashmere has also risen slightly. On the whole, the consumption of wool textile raw materials has recovered to a certain extent from January to February, when the epidemic was the most serious in China.

At present, the situation of epidemic prevention and control in China continues to improve, and production and living order are rapidly restored. However, the global epidemic prevention and control situation is still grim, and the comprehensive economic restart is facing challenges. It is expected that the income of wool textile enterprises in the first half of the year will decline by more than 20% year on year. Looking back over the past five years, the international wool textile consumption market has continued to decline, and the consumption of important final wool textile products in Europe, the United States, Japan and other consumer countries has declined between 15% and 30%. In addition to the fluctuations in the supply of raw materials, China's wool textile industry has been in a period of adjustment and fluctuation in recent years. The industry's operating income and profit level have continued to decline, and the number of enterprises has continued to decline, Enterprises unable to survive or adapt to the situation are eliminated or withdrawn from the industry.

On the market information forum of the 89th International Wool Textile Conference (online teleconference) on May 20, Peng Yanli, president of China Wool Textile Industry Association, made a speech entitled "Post New Crown Epidemic Period, Current Situation and Future of China's Wool Textile Industry", reviewing the situation of China and China's wool textile industry in response to the New Crown Epidemic since this year. As said in the speech, it may be the most difficult stage for wool textile enterprises since the 20th century, and this stage will continue.