On July 20th, heavy rains in Beijing and flights to Beijing from Beijing were almost cancelled. Sun Yingan, chairman and general manager of Hubei Xiaomian Industrial Group Co., Ltd., still changed to the high-speed rail and entered Beijing in a hurry. With him, he went to Beijing to participate in the cotton textile enterprise symposium, and there were more than 150 textile companies in the country.
"The price of cotton is really going crazy, and then we can't negotiate a way. It really can't live." This has become the opening remark of the bosses.
Delayed reserve cotton placement, skyrocketing reserve cotton prices, and “honey-free†reserve cotton stocks... Reserve cotton became the summer’s “pain point†for the textile industry. On the one hand, there is a backlog of treasury reserves. On the one hand, cotton prices are skyrocketing, and textile enterprises are not cotton-spun. What is wrong with this?
"Cotton palm" hits the textile industry
The national reserve cotton was put into operation for 3 months, and the price rose by as much as 30%. The psychological price of the company has been repeatedly broken.
In the spring of this year, the news that the reserve cotton will be put on the market in April will spread in the textile enterprises. Controlling cotton stocks to reduce costs has become a consistent decision of the company. However, the company was caught off guard by the fact that the announcement of the placement of reserve cotton was not released until April 15th, and the launch date was changed to May.
“We started to control cotton stocks in March. I didn’t expect the country to be launched in April. In order to keep the order, we had to go to the market to buy high-priced cotton.†Sun Yingan said.
After the release time of the reserve cotton was delayed, the cotton became a hot commodity, and the cotton price began to soar. Take Xinjiang cotton enterprises as an example. In March and April, the cost and price of cotton enterprises in Xinjiang increased from 200 yuan to 300 yuan per ton to 1,200 yuan to 1,500 yuan per ton. Enterprises were panicked.
The textile companies that thought they would get a respite in a month would soon find that after the reserve cotton was put into use, the cotton price was not only flat, but more and more crazy. Since the dumping on May 3, the export rate of the national reserve cotton has exceeded 98%, and the price has also risen from 12,428 yuan / ton to the highest transaction price of 16,350 yuan / ton on July 28, an increase of more than 30%. The high price of cotton in the country has driven the spot lint to rise. The price of lint has also risen from about 11,000 yuan/ton in early April to about 15,000 yuan/ton, with a cumulative increase of about 35%.
"In February and March, our cotton purchase price was 12,300 yuan / ton. We also communicated with others and said, 'I have to store it, don't ship it again'. The result is that the storage will not start, and later the national reserve cotton The price has started to rise all the way," Wu Mingfeng, general manager of Vosges Group Co., Ltd. revealed that the frequency of meetings for cotton purchases has been shortened from 10 days to 3 days. "When the meeting is over, everyone says the most." It’s crazy, and we can’t start with the price.â€
Di Hui, deputy general manager of China Resources Textile Group, also admitted that because the country wants to put stocks and auctions, the company deliberately controlled the inventory and the rhythm of buying cotton in the early stage. I did not expect to buy high-priced cotton now. "The orders of exporting enterprises are all signed at the end of last year, and the order price will not change, but the price of cotton will not catch up with the dead chase, and the psychological price will be broken again and again."
What makes the company unexpected is that cotton is not only expensive, but also "a cotton is hard to find." "Our original purchase intention was more than 11,300 tons. As a result, we have only sold more than 3,700 tons, and the turnover rate is less than 32.8%." Di Hui said.
Lu Xiping, deputy general manager of Henan Xinye Textile Co., also said that the company's cotton use is very tight. "Since June, the company's cotton stocks are in a very low state, but the reserve cotton has only 20,000 tons of daily output. Enterprises want to buy more and can't buy them. There are almost no spot resources on the market, in order to ensure enough cotton. The company has spent all its time thinking."
The person in charge of Huafu Color Spinning also said that the company had not bought the cotton with a micron value lower than the C1 grade. Now, the company only hopes to buy cotton.
Behind the price of reserve cotton
Human factors such as low reserves, traders’ “cutting†and escrow warehouse delays lead to “difficulty in using cottonâ€
"If you don't buy, you will stop production, and you have to go bankrupt." This is a summary of many textile companies' auctions for this round of national cotton storage. However, what puzzles the company is what is the reason for the soaring price of the national reserve cotton.
Is the cotton supply tight? Domestic cotton supply is quite sufficient.
"The trick is that there are a lot of cotton reserves, but there is no cotton available for textile companies." Wang Qiang, executive director of Shandong Ruyi Group, said, "There are more than 10 million tons of reserve cotton piled up in the warehouse. Last year, we caught up with the harvest. We have nearly 20 million tons. The supply of cotton. It is awesome that the supply of cotton is so large that the company is forced to stop production!"
Is the market demand breaking out? The external demand is sluggish, the domestic demand is stable, and there is no sign of a demand blowout.
“Enterprises feel that the cotton price surge is very strange. We have not experienced the skyrocketing cotton price, but the last round of increase is supported by orders, but this time, the downstream enterprises’ orders are not prosperous, the market is sluggish, and the raw materials are dry. Price increases." Di Hui said.
So where does the market change come from?
The size of the national reserve cotton was lower than expected, resulting in a mismatch between supply and demand. According to the "Announcement on Organizing the National Reserve Cotton Rolling Sales", under normal circumstances, the daily reserve cotton sales volume does not exceed 50,000 tons. For example, cotton prices have increased rapidly during a period of time, and the reserve sales rate of reserve cotton has exceeded 70% in three days or more, and the number of listed sales will be appropriately increased. After that, the National Development and Reform Commission also made it clear that the daily output of the national reserve cotton should not be less than 30,000 tons. However, since the launch on May 3, when the transaction rate is close to 100%, the daily storage volume of the national reserve cotton is less than 30,000 tons, which is lower than the market expectation of 50,000 tons per day.
"Throwing the storage means increasing supply, and it will certainly stabilize or even lead to lower market prices. This is the unanimous judgment of the enterprise and the law of the market. However, the reserves are very small, and a large amount of new cotton is also taken away by traders, resulting in the real economy not being able to afford. Cotton, can not use cotton." Wang Qiang said.
Some traders took the opportunity to stock up and speculate on the "cotton shortage" to make a fortune. According to statistics from the China Cotton Textile Industry Association, the proportion of reserve cotton auctions by textile companies and trading companies fell from 66%:34% to the current 57%:43%. During this period, the proportion of textile enterprises accounted for less than 50%. Many companies have reported that a large amount of cotton photographed by traders is stranded in the warehouse.
"The existence of the national reserve cotton is to protect the supply of raw materials for the manufacturing industry, but half of them have entered the hands of traders? And the traders are purchasing for small and medium-sized cotton enterprises, and small and medium-sized cotton enterprises are all cotton-free. How can it be? There are so many traders who have taken cotton but don’t pick up the goods?†Di Hui reflected that she repeatedly asked the warehouse when the cotton could be shipped out. The other party’s answer was always “Your cotton was not covered by the trader’s cargo blockâ€. .
Sun Yingan also said, "Some traders photographed cotton but did not pick up the goods, resulting in reduced efficiency of cotton production in the warehouse. Cotton prices rose every day, and the purpose was to speculate."
Some warehouses also boosted the trend of the cotton market. Enterprises generally reflect that after the transaction payment this year, at least 15 days to get cotton, and have to pay a series of "rigid donations" without invoices. "The warehouse charges for dumping fees, dumping fees, and package fees are all paid. In order to guarantee production, what the warehouse says is what, what to give, and even logistics allows them to specify high prices." Sun Yingan said.
Yu Xiaoxin, director of the Public Inspection Department of the China Fiber Inspection Bureau, also revealed that in addition to the 16 warehouses directly under the State, the remaining 265 are social repositories. These storage warehouses are in poor condition and are not willing to leave the warehouse because of the storage subsidies. Cotton spends more than one day in the warehouse, and the country has to pay an extra day. "Some warehouses are privately engaged in alliances. Whoever out of the warehouse has more than three batches a day, the rest of the warehouses will jointly pack it up. So when they are out of the warehouse, there are always excuses for these warehouses, and there are no workers for a while, and the car is broken. Now, the country There is no binding mechanism for social generation repositories."
Reduce institutional transaction costs
The company recommends increasing the daily volume of reserve cotton as soon as possible, while limiting the bidding of non-cotton enterprises.
When Sun Yingan came to Beijing, Xiaomian, the leading enterprise in Hubei textile industry, had decided to take a holiday for ten days. "In fact, the workers in the surrounding Huangshi, Honghu, and Jingzhou enterprises have all gone to Xiaomian. We don't want to stop production, but there is no way. Now the price of cotton has risen by three or four thousand yuan per ton, and the price of cloth is not at all. Up, the reserve cotton will not change again, and it will not work."
In Henan, Hebei, and Shandong, many textile companies are also planning to stop working. "Now it is a test of life and death. We are related to the employment of tens of thousands of people. We can't say that it is off, but on cotton raw materials, we are limited by quotas, we cannot allocate international resources freely, and we have to pay high institutional transaction costs. Let us not start in the international competition, we will lose at the starting point." Changshan Textile Group Chairman Tang Zhangming said frankly.
In the view of Yang Baofu, deputy general manager of the national cotton trading market, 2016 is actually the year in which the design of the storage system has been most in place over the years. However, in the process of implementation, it encountered many difficulties that the industry did not expect, in fact, industrial capital. Textile companies have been hit hard by the oppression of speculative capital.
Suppressing speculation, restoring normal market order, and increasing the amount of reserve cotton as soon as possible have become the voice of the textile industry. "The reluctant sale of the plate will inevitably damage the public fat. The extra year of cotton is a huge burden on the finances. It is a win-win situation to increase the volume." Sun Yingan said that the annual cost of the treasury reserve per ton of cotton is about 1,400 yuan, which means that the national treasury will be Paying the cost of tens of billions of dollars for cotton reserves does not include downgrades and depreciation. And once the cotton crisis forces companies to stop production on a large scale, the national reserve cotton will be more difficult to deal with.
The state should also issue regulatory rules for the reserve bank, and impose corresponding penalties on warehouses where cotton cannot be delivered on time. The company generally reflects that there is a fine for the company to be unable to pick up the goods within 10 days, and the reserve bank does not have the corresponding compensation within 10 days. Rights and obligations are corresponding, and the efficiency of the library should be borne by both parties.
It is also recommended by many companies to limit the storage of non-cotton enterprises for a period of time. "Orders were signed in the fourth quarter of last year. We can't default. And there are more than 100 small companies that we work with. If we stop working, what should these small enterprises do? Can the state ban or restrict non-cotton for a period of time? Enterprises take stocks, thus squeezing the hype space and protecting the real economy with cotton?†Wu Mingfeng suggested.
To fundamentally solve the "cotton robbery" faced by the textile industry in recent years, we must rely on deepening reform. Recently, the National Development and Reform Commission and the Ministry of Finance jointly issued a document. The storage time was extended from the end of August to the end of September. The total amount could exceed 2 million tons. The futures price and auction transactions decreased, and the company entered a new round of wait-and-see and market panic.
"The current rise in cotton prices is essentially a conflict between the planned economy model and the market economy model," Sun Ruizhe, vice president of the China National Textile and Apparel Council, suggested that the country raise the daily amount of cotton thrown, and the cotton throwing system to production. Enterprises are inclined to stop storing before the new cotton market, and in addition to the high-quality cotton gap, import quotas should be increased. "At present, the textile and garment industry accounts for about 13% of China's export trade and about 12% of employment. The importance is obvious. Continue to play a decisive role in the allocation of resources in the market, reduce institutional transaction costs, and further consolidate the textile industry. International competitiveness."
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