March 2020 China Cotton Textile Industry Boom Report

In March 2020, China's cotton textile prosperity index was 46.36, up 3.97 compared with February. This month, China's cotton textile enterprises basically returned to work, and the rhythm of production and marketing resumed at the beginning of the month. However, influenced by the continuous fermentation of the global epidemic situation, the foreign trade situation is not optimistic, and the domestic consumption has not seen any obvious improvement, and the textile enterprises are gradually slowing down the production rhythm.

In order to study the deployment and further promote the work of epidemic prevention and control and economic and social development, the Political Bureau of the Central Committee held a meeting in March 27th. The meeting made it clear that "we should study and put forward a package of macroeconomic policies and measures that should be actively dealt with", including expanding investment, expanding consumption and stabilizing exports, and strive to accomplish the goal of economic and social development in the whole year. With the support policies of the state coming to the ground one after another, enterprises have been strongly supported in finance, taxation, finance, stable jobs and so on. On the international side, the continuous deterioration of the global epidemic has a significant impact on the economic growth of various countries. The global financial market has started to collapse and the multinational stock index has been triggered off. In the face of this situation, governments and central banks have successively launched the bailout market and implemented various easing measures to curb the impact of the epidemic on the economy. The China Cotton Textile Industry Association (hereinafter referred to as the China Cotton Association) suggests that for the Chinese cotton textile enterprises, it is the primary task to open up the market, reduce expenditure and withdraw funds at this time. In addition, we should take advantage of this opportunity to "improve our internal strength" and make up for deficiencies in the internal system construction, personnel management, and installation safety management, so as to enhance the strength of our enterprises.

Raw material purchase price index

In March, the purchasing price index of raw materials was 45.60, down 2.92 compared with February. In March, domestic and foreign cotton prices declined. In the same month, consumer demand at home and abroad had not improved, especially in foreign countries, and foreign trade enterprises' orders dropped sharply. Affected by this, cotton spinning enterprises production rhythm slowed down, plus raw material prices plummeted all the way, enterprises to supplement the library to just need mainly, avoid excessive occupation of funds.

At the beginning of March, the Federal Reserve announced a 50 point cut in emergency interest rates, which exacerbated the market's concerns about the downside of the US economy. The US stock market plummeted, and domestic and foreign cotton prices linkage declined, and futures fell more than spot. Subsequently, OPEC+ alliance negotiations broke down, Saudi Arabia is expected to significantly increase production in April, opened the price war's impact, crude oil prices fell sharply. On the 9 day of March, the US stock market suffered the biggest decline since the financial crisis. The Dow Jones index fell into a bear market, ending the longest bull market in the history of the US stock market. In March 26th, the national development and Reform Commission announced the policy of improving the target price of cotton in Xinjiang. The target price of cotton per ton of 18600 yuan will remain unchanged for three years. This news will help stabilize the cotton growing area in the new year and form a certain support for cotton prices. But overall, the global new crown pneumonia epidemic is still very severe, and the environment for the global economy and consumption has not changed significantly. It is expected that demand will not improve in the short term, and the market confidence will return to light after a brief warmer.

Specific data, the average price of domestic grade 3128 cotton in the month was 11955 yuan / ton, down 1260 yuan / ton; the CotlookA index averaged 67.69 cents / pound, 8.89 cents lower than the chain; the average price of mainstream viscose fiber was 9480 yuan / ton, down 64 yuan / ton; 1.4D straight spinning polyester short average price was 5972 yuan / ton, the chain fell by 1069 yuan / ton.

Raw material inventory index

In March, the stock index of raw materials was 46.74, down 2.79 compared with February. In March, China's cotton textile enterprises started construction, raw materials inventory digested, but affected by the epidemic, the production rhythm slowed down. Export enterprises have been hit by some of the foreign downstream businesses, which frequently withdraw orders and suspend orders due to local import control and market expectations. Affected by the low demand for downstream industry chain and the decline of raw material prices, raw material procurement is more cautious, and raw material stocks of spinning enterprises remain in the range of two to three weeks. In addition, the operating pressure brought by the epidemic is constantly coming down from the downstream, reducing the risk of capital chain and ensuring cash flow is also one of the main considerations for most enterprises to buy and use. China Cotton Association tracking data show that in March, raw material inventories decreased by 3.09%. Although the price of raw materials has picked up slightly in April, the impact of the epidemic is continuing. Raw material procurement is expected to remain cautious.

Production index

In March, the production index was 45.14, an increase of 7.57 compared with February. In that month, China's epidemic situation has been effectively controlled, and cotton textile enterprises everywhere have been started. According to the coordination investigation conducted by China Cotton bank, more than 90% of the enterprises surveyed have started normal operation in March, but the opening rate is relatively low. The main reasons are three: first, because domestic consumption demand is still awaken, foreign orders "run alone" phenomenon is serious. The two reason is that the price of raw materials keeps falling, and the price of yarns and grey fabrics is short of price support. However, the cost of raw materials for producing products is higher and the price is not attractive. Three, the pressure of enterprise funds is great. In order to ensure the turnover of capital, the production of products is reduced as far as possible in the market environment, and the growth rate of product inventory is reduced. In April, some small businesses were considering reducing their staff as sales did not improve.

Product sales index

In March, the product sales index was 45.04, up 10.82 compared with February. In the same month, textile enterprises began to work, and sales work ended. At present, the downstream demand is relatively light, and the textile enterprises are guided by market demand to dig deeper into the market and strive to stabilize the market share. China Cotton Association tracking data show that sales of yarn and cloth increased by 143.56% and 108.55% in March. At present, the domestic market is in a slow recovery stage, and the demand still needs time to rise. The foreign epidemic intensifies, and many countries in Europe, North America, Southeast Asia and other regions take measures such as sealing up the country, closing the city, stopping the aircraft and stopping operation. According to the enterprise, since the middle of 3 months, orders from the US and Europe have been suspended and the cancellation of the documents has occurred. According to the China Cotton Trade Association, because the market is still in the doldrums of wait-and-see sentiment, the downstream purchasing atmosphere is light, and some textile enterprises have to reduce sales in order to return the funds and reduce the inventory pressure as soon as possible, and the price war has started.

Product inventory index

In March, the product inventory index was 49.46, up 1.11 compared with February. This month, as the consumer side continued to slump, the downstream procurement was light, and the shipping enterprises were difficult to ship. Even if the gauze production was kept at a low speed, a large quantity of product inventory would be generated. Some export enterprises were affected by the temporary withdrawal of foreign customers, and the products they had produced could only temporarily be warehousing, and also increased the inventory pressure. China Cotton Association tracking data show that as of the end of March, yarn inventory increased by 1.74%, and cloth inventory ring increased by 2.96%. Although the production speed of enterprises has been slowed down as far as possible, but because of the market downturn, sales resistance is greater, product inventory is still high, in March, most of the enterprise product inventory is more than 1 months, and it is expected to maintain this trend in April.

Business index

In March, the business index was 46.33, an increase of 8.91 compared with February. In that month, the domestic epidemic was effectively controlled, the progress of resuming work and resuming production was accelerated, the economic and social order was being restored in an orderly way, and the short-term impact caused by the epidemic gradually eased. According to the data of the National Bureau of statistics, in March, China's Manufacturing Purchasing Managers Index (PMI) was 52%. In addition to the price index, the sub index of the manufacturing purchasing managers' index all rebounded, which mainly presented the following characteristics: first, the policy effect was gradually showing, and the enterprise's pre period had picked up. Two, enterprises of different sizes have recovered and the recovery of large enterprises is relatively fast. Three, the supply and demand of the market has improved and the purchasing behavior has been active since last month. However, due to the rapid spread of the epidemic in the world, the growth of world economy and trade has been seriously affected, and the pressure of production and operation is still large.

Description: China's cotton textile industry prosperity index is collected from more than 200 cotton textile enterprises in the whole country. Through the weighted calculation of several main indexes, when the index is higher than 50, it indicates that the cotton textile industry's prosperity is better, and less than 50 indicates that the economic level is not good.