Cotton Prices Plummeted 30% &Nbsp; Summer Wear Prices Remained Strong.

Since late February of this year

Cotton prices rose from 14 thousand yuan / ton to the highest level of 34 thousand yuan / ton in September last year.

"At that time cotton is not good to buy, many downstream customers to grab goods, orders are not open."

The person in charge of a cotton processing enterprise expresses to the media.

But a few months later, cotton has changed dramatically.

Now, in just two months, the spot price and the main contract price of cotton have fallen by more than 20%.

If it goes back to earlier February this year, cotton price diving is even more alarming.

According to reports, since late February, cotton prices have dropped from 34 thousand yuan / ton to the lowest point 22 thousand yuan / ton in the previous period, a drop of nearly 30%.

In May 27th, the price of China's main port of imported cotton fell again by 5 cents.

Insiders believe that the shrinking monetary policy and the excessive upward adjustment of cotton prices in the early stage are all factors that should not be neglected in this round of slump.

There is also a view that the collapse of international cotton prices is mainly related to the overall reduction of commodity prices.

With the recent euro zone debt crisis, including some economic data in the United States, some hedge funds began to withdraw from the commodity market, which led to a sharp decline in many agricultural products, including cotton prices.

In May 25th, the famous investment bank Morgan Stanley released the cotton report that the profit margins of textile mills were reduced and the import demand weakened because of the surge in China's yarn stock. From the end of 2010, the demand for us cotton exports, which had stimulated cotton prices to rise sharply, began to shrink.

Short term cotton demand decline and new year cotton supply will bring pressure on cotton prices will continue to 2011/2012 or even longer.

Therefore, Morgan Stanley is also expected that cotton prices and nearly 20% of the drop in space.

Downstream demand shrinks

Recently, domestic and foreign cotton prices have fallen from the peak, but this does not mean that demand is increasing.

Even the insiders believe that it is the expected shrinkage of downstream demand that is the key to the price collapse.

The head of the textile industry told the media that the biggest problem now is low demand.

"Downstream consumer enterprises also have the habit of catching up and killing. In the past cotton and fabric prices rose sharply, the downstream enterprises were very active in ordering, and they were worried that prices would continue to rise. But after the price fell, many people would not rush to purchase."

The official said, "the wholesale price of the cotton cloth with the highest price last year was 13 yuan / meter, now it has dropped to 9.6 yuan / meter, or about 26%."

However, the chain reaction of falling cotton prices did not end there.

The drop in cotton prices means that the price of cotton yarn and cotton cloth has gone down, and many enterprises have been buying high priced cotton at a high price before. This phenomenon of selling and raw material prices upside down has caused many textile enterprises to complain incessantly.

Faced with this situation, enterprises in order to avoid losses and limit production or even temporarily shut down, resulting in reduced demand for cotton, thereby promoting the further slump in the cotton market, cotton prices further lower.

Some investigators have demonstrated that the production capacity of 247 cotton spinning enterprises and 4 million 500 thousand spindles in Dezhou, Shandong has proved that about 20% of the enterprises have stopped production, and more than 60% of the enterprises have approved production reduction and production restriction measures to control losses.

There are also media reports that in Shijiazhuang, Hebei, there has been a decrease in operating rate, and the estimated number of enterprises whose production is down is estimated to be 30%.

Morgan Stanley also analyzed that cotton prices fell sharply after a record high, and finally began to curb cotton demand.

Wang Qian, chief analyst of the first textile network, reminded the market that the valuation of supply and demand gap for cotton this year has also revealed a big deviation. "The real gap is not as big as it was previously estimated."

In the past period, the estimated annual output of 5 million 970 thousand tons of cotton was estimated to be 6 million 600 thousand tons, and the total output of these two output amounts to China's cotton consumption in one month.

Summer wear prices are still rising.

Although cotton prices continue to decline, causing cotton prices to fall, but did not affect the price of clothing.

There are media reports that the price of summer wear has generally increased this year.

In Guangzhou, summer clothing rose by 20% to 30%, or higher in recent years.

The trend of Guangzhou summer wear price is also reflected in other parts of our country.

Cheng Qifei, vice president of Chongqing clothing and accessories Association, also felt the price rise of summer clothing.

"Compared with last year, the price of summer wear increased by 10% to 20% over the same period last year."

Cheng Qifei told the media that the wholesale price of only one dress rose from 110 yuan / piece last year to the current 130 yuan to 150 yuan / piece.

Why is the price of cotton still rising steadily as cotton prices fall by 30%?

Insiders say that the price of raw materials will decrease in the long run, which will reduce the cost of garment enterprises, but will not be immediately reflected in terminal sales.

Although the price of cotton is falling, it will take at least half a year to pmit to the garment making enterprises, and it will take another month or so to pmit to the retail market.

Huang Xueming, vice president of Guangzhou garment industry association, told the media that the rise in clothing prices was partly due to the sharp rise in cotton prices last year.

In general, clothing manufacturers will buy cloth several months in advance, and the cotton used for these fabrics is the one that went up last year.

That is to say, a small "time difference" makes the textile enterprises and consumers at the two ends of the industrial chain not get tangible benefits.

However, some people in the industry have analyzed that even after the "time lag", next year's spring clothes will not fall due to the fall in the fabric at present.

Xia Lijun, a senior analyst at ho sum, told the media that cloth accounted for a small proportion of the total cost of clothing, and labor and freight were the main ones, and the price increase was much higher than that of cloth prices.

Huang Xueming also believes that if other cost prices do not fall, next spring will not only depreciate prices, but will further increase prices.

In this way, the low price of cotton is most obvious for textile and clothing companies.

Some analysts believe that the drop in cotton prices is good for textile and apparel listed companies.

At present, cotton prices are hardly known for the time being, and the support for brand textile and garment enterprises will continue.