How do cotton textile enterprises forecast the market in 2019? Decline or shift?

China's cotton textile boom index in December 2018 was 48.67, an increase of 1.40 compared with November. According to the co-ordinated research of China Cotton Industry, the market demand in December was not strong as a whole, the price of gauze products was short of support, the pace of production and marketing slowed down, the pressure of product de-inventory was high, the pressure of cotton textile enterprises'fund return was high, and the industry as a whole was in an underdeveloped state. The orders of large and medium-sized enterprises and those producing differentiated products are still acceptable, which are not directly affected by Sino-US trade frictions. The order continuity of small and micro enterprises and those producing conventional varieties is declining.
In recent years, inventory removal has become the main task of enterprises. According to the survey results of China Cotton Banking Association, most enterprises expressed concern about the industry market forecast in 2019. About 37% of enterprises expected the domestic market to decline in 2019 compared with 2018, 43% of enterprises expected the export market to decline in 2018. About 35% of enterprises thought that the impact of Sino-US trade disputes on business operation in 2019 was worse than that in 2018, and 30% of enterprises thought that the domestic market would decline in 2019 compared with that in 2018. Industry thinks it will ease, 24% of enterprises think it is flat, 11% of enterprises say it is difficult to judge; in terms of investment transfer, 43% of enterprises say they will not increase investment or transfer in 2019 because of the macro environment and capital situation.

 

Purchasing Price Index of Raw Materials

The purchasing price index of raw materials in December was 49.92, which was 0.02 lower than that in November. At the beginning of December, the Sino-US trade frictions reached a stage consensus. The risk preference of the futures market rebounded. The domestic and foreign cotton futures rebounded quickly, which led to a small rebound in the spot price of cotton. However, under the background of weak market demand and uncertain final trend of Sino-US trade frictions, the spot price of cotton began to decline after a short recovery. The price of chemical staple fibers continued to decline, but the decline slowed down. In December, the average CotlookA index was 86 cents/pound, with a ring-to-ring decrease of 0.78 cents/pound; the average spot price of domestic 3128B grade cotton was 15026 yuan/ton, a ring-to-ring decrease of 46 yuan/ton; the average price of mainstream viscose fiber was 1377yuan/ton, a ring-to-ring decrease of 393 yuan/ton; the short-term average price of 1.4D direct-spun polyester was 8909 yuan/ton, and the ring-to-ring decrease of 219 yuan/ton. Recently, driven by the news of Sino-US trade consultation, market confidence has recovered slightly and cotton prices have stopped falling and rebounded. However, the supply pressure in the cotton market has yet to be released, coupled with the end of the year holiday, so the price increase will not be too large.

 

Raw Material Inventory Index

The stock index of raw materials in December was 48.72, an increase of 2.66 compared with November. According to the tracking data of enterprises, the inventory of raw materials increased by 2.49% in December. Among them, raw cotton inventory ring ratio increased by 2.32%, imported cotton inventory ring ratio decreased by 0.70%, non-cotton fiber inventory ring ratio increased by 3.00%. The main reasons are as follows: 1. Recently, China has been invited to visit the United States for Sino-US trade consultation. In this favorable macro-environment, market confidence has increased; in February and December, the declining trend of raw material prices has slowed down, and textile enterprises have gradually concentrated replenishment and increased stock of raw materials; in March and December, domestic cotton prices have fallen, the gap between domestic and foreign cotton prices has been narrowing, and in some cases there has been hanging upside-down, and textile enterprises have reduced the purchase of imported cotton. In mid-January, some textile enterprises began to take holidays one after another, and the purchase of raw materials slowed down gradually. There was no obvious sign of hoarding goods before.

 

Production index < br />
The December production index was 49.49, an increase of 2.16 compared with November. Investigation shows that the output of enterprises producing medium and low count pure cotton yarn has decreased, while the production of combed yarn, medium and high count yarn and color spinning yarn is relatively stable. Weaving mill production is slightly better than spinning mill, December festivals are more, coupled with business price reduction sales, downstream orders are still acceptable. The downstream market has increased demand for blends and elastic varieties, and the number of orders has increased. Tracking enterprise data show that yarn output increased by 4.51% and cloth output increased by 5.30% in December. Among them, cotton blended yarn output ring ratio increased by 11.96%, cotton blended fabric output ring ratio increased by 7.38%. At present, workers have taken vacations one after another, and the opening rate of enterprise equipment has declined.

 

Product sales index < br />
The December product sales index was 50.24, an increase of 1.44 compared with November. In December, driven by festivals such as Double Twelfth, Christmas and New Year's Day, downstream demand rebounded temporarily. In addition, in order to recover funds as soon as possible, enterprises generally reduced prices and sales, which accelerated the downward price of gauze products. In terms of price, the average price of 32 pure cotton carding yarns is 23245 yuan/ton, the ring-to-ring ratio is 375 yuan/ton, the average price of pure cotton grey fabric (32*32130*702/147" twill) is 5.62 yuan/m, and the ring-to-ring ratio is 0.05 yuan/m. Tracking enterprise data show that yarn sales increased by 11.65% and cloth sales increased by 3.38% in December. Recently, the price of pure cotton yarn and cloth has continued to fall, the delivery has slowed down, and the quotation of pure cotton yarn and cloth has remained stable.  

 

Product Inventory Index

In December, the product inventory index was 47.5, an increase of 2.28 compared with November. In December, the inventory level of the spinning mill has been reduced. According to the survey, the enterprises are affected by the occupation of funds. The inventory of products is relatively small, and they are basically produced on a single basis. The inventory of conventional products is maintained for about 15 days. The inventory of the weaving mill increased compared with November, mainly affected by the increase of pure cotton cloth inventory, while the inventory of cotton blended fabrics remained low. According to the data of tracking enterprises, yarn inventory in December decreased by 6.47%, cloth inventory increased by 5.29%, cotton cloth ring ratio increased by 8.95%, cotton blended fabric ring ratio decreased by 5.05%. In January, inventory removal was still the top priority for textile enterprises.

 

Enterprise Operating Index
The business index in December was 46.89, an increase of 0 compared with November..22. In December, enterprises increased their efforts to sell, gauze sales increased annually, and corporate income rebounded. However, due to the continuous downward trend in product prices and the poor market situation, in order to reduce inventory, enterprises have reduced their prices and sales, reduced their profit levels, and even suffered losses. In addition, with the rising labor costs, the increasing cost of investment in technological transformation, enterprises are facing many difficulties in operation, especially small and micro enterprises that produce conventional products have been in a long-term loss state, and some of them have stopped production. Although the recent Sino-US trade disputes have improved, before the final results were announced, enterprises still expressed concern. In the short term, the industry will still bear various pressures.
Explanation: China's cotton textile industry prosperity index is collected from more than 200 cotton textile enterprises in China. Through weighted calculation of several main indicators, it is concluded that when the index is higher than 50, the prosperity of the cotton textile industry is better, and when the index is lower than 50, the prosperity of the cotton textile industry is worse.