Cotton Price Crazily: Clothing Orders Offer An Increase Of 30% Over The Same Period

In just two months, the spot price of standard cotton rose sharply from 18 thousand yuan / ton in September to 28 thousand yuan / ton in November.

Under the impact of frenzied cotton prices, Chinese clothing exporters are trying to raise export quotas substantially.

Several garment exporters interviewed

Ling Fangcai, chairman of the Guangdong textile import and export Limited by Share Ltd, one of the largest exporters of textile and clothing in China, said that about 20% of the increase in the Canton Fair is still necessary, and the current order price is still difficult to cover the increase in costs.

What is more headaches is that the instability of raw material prices can lead to every order faced by exporters.

I dare not answer.

In November 1st, at the forum of the Guangzhou Trade Fair, Huang Yuefeng, director of the textile department of the Ministry of foreign trade of the Ministry of Commerce, analyzed that although the export situation of textile and clothing was better than expected in 2010, the consumption demand of the developed countries was still shrinking, and continued to tilt towards the middle and low end products.

"In the context of the sharp rise in cotton prices and labor prices, the situation of export enterprises has changed from a single financial crisis to a single dare."

He said.

In fact, when the exporter negotiated the order, he immediately locked the price with the cooperative factory to control the cost of raw materials and to ensure that he obtained the calculated profit from the earlier calculation.

However, it is difficult for factories to ensure that raw material prices can be stabilized at this agreed level.

In fact, in the whole chain of textile and apparel industry, the situation of various enterprises is different.

A large cotton spinning mill in Zhejiang

Just on the chain of the entire textile industry, the profit growth is only this link.

The above refers to the fact that the price pmission in the industrial chain has gradually weakened, and the closer the terminal enterprises are, the smaller the price increases will be.

A textile industry expert said that the textile industry cost push type price increase is in progress. In the domestic market, the price of autumn winter clothing has already seen how much the export clothing can increase. It is estimated that next year 1 and February will be clearer.

He estimated that the short-term increase in 15%-20% would be good.

It is never easy to raise prices at the Canton Fair.

Ling Fangcai said, the textile industry said the order of the comprehensive price increase of 30% can barely hedge cotton prices rise.

The price of raw materials such as cotton occupies the 60%-70% of the final garment export cost, while the current price of standard cotton of 28 thousand yuan / ton is more than doubled than that of 12 thousand yuan / ton at the beginning of the year.

Change is not just such a thing.

The exchange rate of RMB against the US dollar has risen to nearly 3 percentage points since September. In addition, recent surveys of Guangdong and Jiangsu's multi province foreign trade system also show that, as a typical labor-intensive industry, the labor cost of the textile and garment industry has generally risen by about 30% this year.

"Three pressures are squeezing the profit margins of enterprises."

Ling Fangcai said.

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About 30% of the price increase is difficult for foreign businessmen to accept. Lin Yan, manager of Hangzhou light industrial craft textile export company, said, "most purchasers only set the quantity and style in the Canton Fair, and the final price is still not negotiable."

Some European and American customers who are in contact with Lin Yan have begun to reduce their purchases in China, and some of the low-end commodities will tend to buy more Southeast Asia from the exchange rate and labor costs.

4 million tons of cotton gap

After two months of soaring cotton prices, there is imbalance between supply and demand, and there is also a push for speculative capital.

According to the analysis of textile industry experts, before and after September, the market expected cotton production in China to be close to 7 million tons in the year of 2010 cotton. However, the expected number has been drastically reduced in recent years, and the official forecast has also been reduced from 7 million tons to 6 million 600 thousand tons, while the market forecast is generally around 6 million tons.

"According to the estimated cotton consumption of at least 10 million tons in the new year, the gap will be at least 4 million tons."

He said.

In fact, at the recently concluded seven annual cotton conference of ministries and commissions, Zhang Xiaoqiang, deputy director of the national development and Reform Commission, pointed out that in recent intensive research and analysis, it is estimated that the supply and demand gap of cotton in 2010 will exceed the previous year.

Cotton gap in China last year was around 3 million 600 thousand tons.

Textile industry experts believe that the fundamental reason for the sharp rise in cotton prices lies in the imbalance between supply and demand.

As a large commodity, the capital plate of cotton is large. It is very difficult for domestic general speculative funds to control cotton prices, which is not the same as that before the price of mung beans.

He hints that there are few policy cards in the hands of the government. It is hard to expect effective cotton prices to be stabilized through effective policy regulation.

The policy of increasing import cotton quotas or reducing the sliding quasi tax rate of imported cotton will be gradually introduced.

However, such measures will not be effective in stabilizing cotton prices.

The US Department of agriculture report shows that the US cotton ordering process has been exceptionally fast this year, and more than 70% of the US cotton has been ordered, and the resources available to China are relatively limited.