Textile Raw Material Market: Prudent Economic and Industrial Cycles

Editor's note: As of the fourth quarter of 2011, the textile raw materials market has entered a "dead end" that has been deteriorating. Except Zheng Cotton ** main contract slightly rose by 0.85%, the rest fell across the board, and about 60% fell by more than 10%.

In the fourth quarter of 2011, the textile raw material market entered a "dead end" that was deteriorating. Except Zheng Cotton ** main contract slightly rose by 0.85%, the rest fell across the board, and about 60% fell by more than 10%. Among them, viscose staple fiber, acrylic fiber, and nylon were among the top three decliners. In the fourth quarter, they declined by 19.70%, 17.67%, and 17.07%, respectively. With viscose staple fiber as the leading factor, after the last wave of rebound in the third quarter of 2011, the price fell sharply. The mainstream price dropped from 19,500 yuan/ton to 20,000 yuan/ton to 15,500 yuan/ton to 16,000 yuan/ton. The decline was more dramatic than when the initial rise was pleasing.

Careful analysis is not difficult to find, the reason why many varieties have such a bitter "frost injury", mainly due to the complex intertwining of the economic cycle and the industry cycle.

Under the stimulation of the "unfortunate ten years," last year, polyester, viscose, spandex, nylon, and other industries ushered in wave after wave of energy expansion. Almost every household chemical fiber company has a new project or is preparing for it. According to statistics, from January to November 2011, the national chemical fiber output exceeded 30.74 million tons, a year-on-year increase of 14.88%. However, since the beginning of this year, the sovereign debt crisis in Europe and the United States has been deteriorating and the inflation problems in the emerging economies have been prominent. The policy of continuous tightening by the central bank and the slowdown in the domestic economy have caused the downstream factories to experience sluggish demand. Exporters have suffered as the main force of the Chinese textile and garment industry.

Since last June, the growth rate of China's textile and apparel exports has declined month by month. According to the latest statistics from the customs, in December 2011, China exported 8.301 billion US dollars of textile yarns and fabrics, and exported US$13.442 billion worth of garments and clothing accessories, which was an increase of 3.32% and 9.28% over November, respectively, and the growth rate of textile and apparel exports decreased. To single digits. Under the circumstances that “downstream demand has not seen heavy volume and new capacity is ready to go”, there has been a dilemma of relatively oversupply in the market, and profit levels have continued to fall even closer to the cost line, and some of the varieties have even lost money.

The domestic market is also not optimistic. The growth rate of domestic sales of domestic footwear and hats has gradually slowed down from September to September. According to the latest statistics from the National Bureau of Statistics, the CPI rose by 4.1% year-on-year in December 2011, a decrease of 0.1% from November; the PPI rose by 1.7% year-on-year, a drop of 1 percentage point from November. Among them, the low CPI price index brought some support to the market, but the decline in the PPI price index significantly increased market concerns, indicating that demand is still weak and the profitability of the company is still being strangled.

In 2011, we witnessed the volatility of market conditions and the operational errors caused by too much empiricism. In 2012, the shrinking demand caused by the slowdown in global economic growth or slowing demand growth will continue to suppress the commodity market for some time. The textile raw material market is still full of uncertainties. The production capacity of those varieties of enterprises with overcapacity and bleak market will be reduced. The number of companies that have stopped production or converted will increase.