The cotton crisis hit the textile industry

China is the world's largest cotton producer and the largest cotton textile producer. This complete industrial chain guarantees the competitive position of China's textile giants.

However, the policy of temporary purchase and storage of cotton, which was initiated in 2011 and used for fire fighting in the city, broke this balance. The normalization of temporary policies has kept the domestic and foreign cotton price gap high. Coupled with the historical burden caused by the cotton import policy, such as the import quota system and taxation of high taxation, the cotton industry chain has fallen into the trap of “not benefiting farmers but hurting workers”.

The cotton price difference from the market -

8% of the nation's textile production capacity is idle in unfair competition, and domestic and foreign high price differences will demand the life of the textile industry. Since this year, Chen Yulan, general manager of Guangdong Qingyuan Detai Textile Industry Co., Ltd. found that the company’s orders have come much faster and have been revoked. . After many visits, Chen Xiaolan learned that old customers now prefer Pakistan Cotton Yarn .

"It wasn't the high quality of cotton yarn in Pakistan. It was people transporting one ton of cotton yarn to China, plus tariffs, and the price was 2,000 yuan cheaper than China's cotton!" Chen Qilan, who has been in the industry for 30 years, has succeeded in brushing textile ingots. The financial crisis and other difficulties, but at home and abroad in the cotton price gap in the face of helplessness, "Now the company is a day, and this year and next year there will be a large number of cotton textile companies shut down."

Not only is such a small and medium-sized enterprise such as Detai suffering from the pain of the cotton price difference, even large-scale state-owned enterprises such as China Resources have reached a critical juncture. "In the first quarter, orders did not collapse, domestic sales, and exports were satisfactory, but there was no profit, and it was barely alive." Di Hui, deputy general manager of China Resources Textile (Group) Co., Ltd., said that at present, the price difference between fine cotton wool at home and abroad is 3,000 yuan per ton. Up to 4,000 yuan, the spread of long-staple cotton is as high as 5,000 to 8,000 yuan. "No one accepts the offer made from domestic cotton."

According to the findings of the China Textile Industry Federation, the annual consumption of cotton in China is about 10 million tons. Last year, the domestic cotton consumption was only about 8 million tons, and the gap of 2 million tons was compensated by the substitution of imported cotton yarn or chemical fiber. This means that the nation's 10 million spindles of cotton cars have been shut down, which is equivalent to 8% of the country's textile production capacity being idle in unfair competition. Of these, SMEs were the hardest hit, with 40% of the 10,000 or less small businesses being forced to close down, and there were about 2.4 employees invisible unemployment in Xinjiang alone.

“High cotton prices are not the key issue. The key is the difference between cotton prices. The high price difference at home and abroad will require the textile industry's life. At present, in the international market, the yarns produced by China under 40 pure cotton are no longer competitive.” China Textile According to Yang Shibin, director of the Office of the Cotton Federation of the Industrial Federation, natural fiber yarn yarns with a yarn count of more than 60 are high-grade yarns, and ** high-grade fabrics have a relatively small market demand. "The loss of 40 yarns or less in the market means that China's cotton textile industry has been decimated in the international market."

So where does the cotton price difference of up to 4,000 yuan per ton come from?

“Different cotton price mechanisms at home and abroad are the main reasons for the current domestic and foreign cotton spreads. International cotton prices fluctuate according to market supply and demand, and domestic cotton prices are supported by the storage and storage prices and import quotas.” China Textile Industry Federation President Wang Tiankai said.

From September 2010 to August 2011, the international cotton price experienced a great ups and downs. In order to ensure the income of farmers and increase market confidence, in September 2011, China had normalized the measures for temporarily collecting and storing lint in the main cotton producing areas, and established an interim cotton purchasing and storage system. At that time, the state collected and stored more than 3.1 million tons of lint at a price of 19,800 yuan per ton. However, the temporary purchase and storage system did not end here, and left China's cotton purchasing and storage prices up to 20,400 yuan per ton this year. At the same time, due to the lack of demand in the international market and the anticipated impact of high yields, international cotton prices have continued to fall, resulting in a high domestic and foreign cotton price gap, and the difference is still between 3,500 and 4,000 yuan per ton today.

In the face of stubbornly high cotton prices, Chinese companies are not free to use overseas raw material markets to “cut peaks and fill valleys”. According to the WTO agreement, China annually imports 894,000 tons of cotton as a quota, and implements a preferential tariff of 1%. Imported cotton other than quota is subject to a 5%-40% sliding tariff. The levy of a sliding tax is equivalent to setting a floor for imported cotton prices. Its purpose is to reduce the impact of imported cotton on the domestic cotton market and ensure the income of cotton farmers. However, because the import quota is far less than the demand, companies that do not have quotas or too low quotas will face unfair competition and will not receive benefits even if they import cotton.

“We are participating in international competition at a raw material cost that is one-third higher than our competitors. This is a cost that cannot be digested by technological innovation, efficiency improvement, etc. It is lost at the starting line.” said Zhu Beina, president of the China Cotton Textile Industry Association. The malformed cotton price difference is actually making foreign companies cheap. More and more companies purchase cotton yarns directly from India, Pakistan and other countries, maintaining the high profit margins of foreign cotton yarn companies, allowing them to have a large amount of funds available for technological progress and improvement of the industrial chain. "The textile industry is a fully competitive market economy, while cotton is a planned economy. This misplacement is a devastating blow to the textile industry."

A headache for the national reserve cotton -

A year of storage and storage cost hundreds of billions, but the worrying quality of cotton has made the company worse. Despite the current situation, the temporary cotton purchase and storage system has not shown signs of loosening as quickly as possible. However, many people in the industry believe that this policy has become unsustainable. time.

On the one hand, the use of cotton companies intensified. According to data from the China Federation of Textile Industry, from January to April this year, the industrial added value of the textile industry increased by 10.4% year-on-year, a drop of 4 percentage points from the same period of last year. At the same time, China’s share of the major international markets such as the European Union and Japan continues to decline. According to the person in charge of Hubei Xiaomian, the factory with a capacity of around 30,000 spindles has basically closed down. "If this situation is followed, companies will not be profitable and they will not have the money to upgrade their technology. This industry is very difficult to do."

On the other hand, the demand for state reserve cotton is also shrinking. "Different from grain, not all cotton can be digested in the country. We must compete with the international market and we must consider whether the international market can accept it." Chen Tao, chairman of Louis Dreyfus China, said that after 2010, due to the high closing price At the average price in the international market, China’s consumption dropped by more than 20% when global cotton consumption fell by 8%.

Chen Jiumei, director of the China market for PCI fiber consulting company, also stated that after nearly two years of market regulation, a considerable share of the cotton market has been replaced by polyester and viscose fibers, which has brought enormous challenges to the digestion of the state reserve cotton. "If the policy of cotton collection and storage is not changed, then China's cotton stocks will exceed 40% in consumption next year, and how to inventory will become a thorny issue."

Year-to-date, the state reserve cotton market transactions are light, according to the current auction progress, by the end of July this year, the State Reserve cotton will be up to about 750 million tons, according to 2012 standard grade new cotton purchase price calculation, the state spending for storage will More than 100 billion yuan.

"Regardless of whether or not to receive a deposit, a ton of cotton finance will have to subsidize about 3,000 yuan, which is a heavy financial burden. And every year when cotton is stored, it will be reduced by one level, and the depreciation losses will be even greater," Yang Shibin said.

In order to reduce the pressure on inventory, it also reduced the pressure on cotton spinning enterprises to a certain extent. In the summer, the country ties the import quotas to the amount of shot reserves, that is, cotton spinning companies will receive a quota of 1 ton of imported cotton for each purchase of 3 tons of national reserve cotton.

However, textile companies do not pay for the New Deal. One of the most important reasons is that the quality of the State Reserve Cotton bundled with quotas has been declining year by year, and mixed grades and heterosexual fibers have become serious problems.

According to national standards, only grade 4 cotton can be collected and stored by the country. However, in the 2011/2012 season, the national average of the new system cotton fine cotton grade is 3.28, and only the average grade of Xinjiang cotton exceeds grade 3. Thus, blending high-grade cotton with low-grade cotton has become the unspoken rules of the industry.

“After last August, Henan, Hebei, Shandong and other places mixed grade 5 cotton with grade 2 cotton bought by Xinjiang and sold it to the country. At present, the testing instruments used in our country have no fineness indicators, and they have not engaged in fine measurement. Talents, so it is impossible to measure the cotton bales were made hands and feet.” Academician of the Chinese Academy of Engineering Yao Mu said.

Worrying cotton quality has created a new burden on company production. Hubei Xiaomian, which uses 3 to 4 tons of cotton per month, is one of the largest cotton users in China. The person in charge reports that the state reserve cotton has a yellowish color, and the colors of each bundle are inconsistent, resulting in a low output rate of national cotton and increasing the company’s costs. “We have a branch with a lot of special opinions. To produce one ton of combed yarn, we need only 1.3 tons of US cotton and Australian cotton and 1.5 tons of national cotton. If this is done, the quality will be hard to control. Ordinary low-end yarns will not work."

"You buy grade 4 cotton. The result is that 60% of grade 5 cotton and 40% of grade 2 cotton are bundled and bundled together." Chen Xiaolan reflects that the national reserve cotton not only has the problem of high and low grade "blending" but also hair strands, Plastic bags, chicken feathers, duck feathers and other impurity fibers are particularly large.

Policy protection should not be hurt –

While adjusting the structure of raw materials, we are looking forward to improving cotton control policies and achieving direct subsidies for cotton farmers in the face of the cotton crisis. Textile companies have rapidly launched a new round of “self-help”, and many companies have adjusted their raw materials structure to resolve cotton risks. Since the beginning of this year, Jiangsu Dasheng’s non-cotton fiber products have been increased from 80% to over 90%. At the same time, more and more blended products are being produced, and the batch volume is also getting bigger and bigger so as to avoid the cotton issue as far as possible. China Resources Textile's current 30% of its production capacity has shifted to non-cotton products, trying to stabilize the existing market by striving to open up new markets.

However, under the background of the unchanging national cotton control policies, the risk that companies can resolve is very limited. At the 2013 China International Cotton Textile Conference held in 2013, more than one textile company shouted. “The government’s intention to stabilize cotton prices is good, but extensive planning and economic measures such as storage and quotas have led to more than 30 years of textile trade. The international competitive advantage has come and gone. No enterprise has bought cotton, how much can the country rely on the city to store, and how long can the interests of the cotton farmers be maintained?"

In fact, the policy of storage and storage did not mobilize the enthusiasm of cotton farmers for planting cotton. The cotton acreage in China is decreasing year by year. Data show that in 2012, the national cotton planting area decreased by approximately 6% to approximately 74.08 million mu. According to the China Cotton Information Network May production survey, the 2013 cotton planting area was 70.65 million mu, which represents a decrease of 4.6% year-on-year.

The import quota itself has also become a speculative commodity, disrupting the market order and pushing up the cost of cotton. According to industry insiders, some enterprises applying for quotas do not have substantial cotton spinning production or trade. After obtaining quotas, they sell at a high price and resell them at a high price. Some also falsely report production trade volume, apply for cotton import quotas higher than the company’s own needs, and then Excess quotas changed hands to resell.

To solve the current difficulties, "cotton farmers directly supplement" has once again become the new policy that the textile industry looks forward to. Farmers directly subsidize, that is, state subsidies are no longer returned to farmers through the circulation of enterprises, but instead rely on the direct food subsidies policy and directly subsidize farmers according to the area planted. The United States currently monitors and subsidizes cotton planting areas through satellite systems. In the past ten years, since the intermediate links can be reduced and the efficiency of the use of funds can be increased, the farmers can truly benefit from it. The voice of the policy of direct subsidies for cotton farmers in China is increasing. However, in view of the fact that cotton cultivation in most parts of China still belongs to the family-style and decentralized small-scale peasant economy, it has not been able to come up with a set of highly operational solutions in determining the planting area and the possible false reports.

“It is feasible to subsidize farmers. We used to go to the Yangtze River Valley and Xinjiang to investigate and calculate. Apart from seed subsidies, the subsidy per mu is about RMB 100 to RMB 120, which is more than the state’s savings and savings. The direct subsidy can be completely piloted from Xinjiang. "Zhu Northa said.

In addition to the direct compensation mechanism, enterprises also suggest that the State should study the introduction of a long-term mechanism for cotton regulation from the perspective of a win-win situation between agriculture and industry, from the perspective of straightening out the upstream and downstream relations of the industry, and from the perspective of using the domestic and international markets to allocate resources.

"If the policy on storage, storage, and quotas remains unchanged, we can consider dynamically adjusting the purchasing and storage prices and stabilize the domestic and international spreads in the range of 1,000 yuan to 1,500 yuan." General Manager of Jiangsu Dasheng Group, such as Ma Xiaohui, suggested that the state When formulating purchasing and storage prices, reference should be made to the cotton price in the international market, and the quantity of storage and storage should be reasonably determined, and the collection and storage should be carried out flexibly according to market price fluctuations, so as to stabilize the market price of cotton. "We hope that policy adjustments will begin this year. We can't afford to wait and we cannot afford to delay."