Domestic cotton use ratio change and price trend analysis

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Original title: Analysis of domestic cotton use ratio change and price trend

In the first half of this year, the soaring cotton prices have made the downstream textile enterprises complain, and the price of viscose is also like a small rocket. It can be said that the fluctuation of cotton and viscose market will affect the nerves of cotton textile enterprises. What is the change in domestic and international cotton supply and demand in the new year? Where is the direction of the new year's cotton policy regulation? What is the trend of the cotton market in the later period? What is the change in the proportion of cotton and viscose used? On September 23, at the 2016 China Textile Marketing Summit hosted by China Yarn.com, Mr. Chen Tao, Chairman of Louis Dreyfus China, gave a wonderful speech.

Hello everyone! I am very happy to be here with you. I am Chen Tao from Louis Dreyfus. Louis Duff was the first French processing company to start trading in 1850. So far, it ranks 151th among the world's top 500 companies. Louis Dreyfus has the world's largest cotton company. The annual trade volume of cotton is between 2 million and 2.5 million tons. Basically, there are Louis Dreyfus or our representative offices where cotton is produced and consumed globally.

From a global perspective, in a short period of six or seven years, the proportion of cotton in fiber has dropped from 50% to 60% to 27%; Indian cotton is better than China, and India can be used throughout the year. Planting cotton, in the future, we can't compete with the competition of cotton raw materials.

Below, I will talk about three issues. One is the future of the cotton industry. The most important ones are India and China. The second is the problem of cotton prices. The third is the problem of cotton consumption, including the use ratio of cotton and viscose.

From a global perspective, after a short period of six or seven years, the proportion of cotton in fiber has dropped from 50% to 60% to 27%, but this is not to say that cotton is absolutely in production and consumption worldwide. The number has dropped, but other products have risen sharply, for example, viscose fiber has doubled. At the same time, global textile consumption is also exponentially growing, especially in China's textile consumption, which is growing at an alarming rate. In the past, we were able to buy a piece of clothing for 100 yuan. Now we can buy 2-3 pieces of clothes on the Internet, and the quality has not dropped. In fact, in many industries, the demand for the textile industry is better.

So far, China's cotton textile industry has been hit by all aspects. From the perspective of cotton, the use of cotton has increased from more than 11 million tons to more than 7 million tons. We should pay attention to this change in India. Due to the high price of domestic cotton raw materials in recent years, in the past few years, the average price has been higher than the international cotton price of 4,000 yuan / ton. Under such high internal and external price differences, it has given foreign companies good development opportunities, such as India, Pakistan, Bangladesh, Vietnam and other countries. In fact, many foreign companies are the ones we go out of. Whether it is objective or subjective, it has made our company unable to survive in the country well, which has caused many of our yarn spindles to be eliminated and prematurely limited the development of our industry.

Before Japan, Taiwan, and Hong Kong, the textile industry developed very well. However, with the further development of society, the acceleration of the modernization process, and the increase in costs, these regions gradually lost their competitiveness, and they were no longer the sunrise industry but the sunset industry. However, China is currently in a very good rising stage, but because of policy reasons, our industry competitiveness has declined, and our company has been in a state of loss for a long time. The surviving companies do need to be stunted, such as in the processing of cotton, in the production of high-grade yarns and other aspects of competitiveness, but in terms of raw materials and costs, we basically lost competitiveness, many companies even rely on Sideline to support the main business.

Next, let's talk about India. India's cotton planting area is three times that of China, with an area of ​​150 million to 160 million mu, while China has only 50 million mu. In the past few years, the yield of Indian cotton was only 25 kg/mu, now it is 40 kg/mu, and China is 110 kg/mu. If India invests in this aspect, India’s advantage is obvious because of the Indian environment and production period. They are better than China. India can grow cotton all year round, so in the future, we can't compete with the competition of cotton raw materials.

When I communicated with our government officials, I said that if our spread has been kept so large, our market will soon be replaced by others. If we give the yarn market to others for a long time, then it will not be very late. optimism. From the perspective of cost and raw materials, India and Pakistan are very promising.

There are still many problems in our cotton textile industry. Whether you go to Xinjiang or the mainland, companies face many challenges. It is difficult for companies that do not have a unique life to survive in the future. From a global perspective, the amount of cotton has been reduced to the level of rigid demand. In the next two to three years, our domestic cotton is definitely in short supply. This gap is huge, importing about 1 million tons of cotton annually.

There are still many problems in our cotton textile industry:

First, many companies in the Mainland are now investing in Xinjiang. The question is whether so many subsidies can be realized in the long run. So many people are planning to go back soon. Second, cotton in Xinjiang has so far subsidized 4,000-5,000 yuan/ton. This is a three-year plan, and this year is the last year. What if I don’t give a subsidy next year? The cost of cotton next year will be 18,000 yuan / ton. Third, at present, a large part of the domestic cotton gap depends on imports, and imported cotton goes to Xinjiang. The freight cost has increased by more than 500 yuan.

Fourth, how to sell products to downstream enterprises in Xinjiang spinning and weaving? At present, there are still some problems in the industrial layout. I think that these difficulties have led everyone to want to go to Xinjiang in the short term, but many people do not want to go to Xinjiang in the short term. They want to develop in the long run, but they can face long-term difficulties and face many difficulties.

Finally, look at the mainland enterprises, they face subsidies of 2000-3000 yuan / ton in Xinjiang. In addition, cotton is also in Xinjiang, and the quotas in the mainland are limited. Therefore, there are problems in not going to Xinjiang, and there are also many concerns in Xinjiang. Therefore, many companies have begun to go abroad, and Rainbow is the best example. Tianhong is the first company to go to Vietnam and the largest cotton company in China. Why is competition in Vietnam if it does not produce cotton? Because Vietnam has no quota restrictions and tariff restrictions, and is free to transport yarn to China, the development space is relatively large.

Looking forward, I think that if there is no stunt in the domestic cotton textile industry, it will be more difficult to survive. Our cotton ratio has fallen sharply, because according to various data, our cotton price is much higher than the international cotton price, there is no way to change, because our land and labor costs are too expensive. In Xinjiang, if you pick 1 kg of seed cotton by hand, the cost will be 2 yuan, and the cost paid to the picker will be one-third. The cost is too high. Now, although Xinjiang is promoting mechanization, cotton is not particularly competitive in other ways. Before the protection price is introduced, we can see that the cotton planting area has dropped drastically. If the government policy is not very strong, the cotton production is worrying. However, if the farmers are subsidized, they need a lot of money. One ton of cotton has 4,000 yuan and several million tons of cotton a year. This figure is very large.

Globally, the use of cotton has been reduced to the level of rigid demand, textile demand has expanded substantially, but cotton has only maintained the original amount, so the share of cotton continues to decline, it is relatively difficult, now Europe, the United States, the mainland, etc., there are still a lot of rigid demand for cotton. Although many products now change the proportion of cotton used, including jeans and fashion products, cotton cannot be lost as a raw material.

The price of cotton has exceeded 30,000 yuan/ton in 2010 and 2011. It is the surge of this wave of cotton that has made explosive growth in other chemical fiber industries. The price of chemical fiber has risen very fast. From then on, basically Not cheaper, after three years of storage and increase the price of cotton, to 18,000 yuan / ton, 19,000 yuan / ton, and the price of chemical fiber has more opportunities to enter the market. In the later period, if cotton has 200-2.5 million tons of throwing reserves per year, it is calculated that the country has 11 million tons, which seems to be very huge inventories, but 2.5 million tons can not be maintained for a few years. Returning inventories, since China’s cotton production, supply exceeds demand is basically invisible. For the next two to three years, our cotton is definitely in short supply. This gap is huge, importing 1 million tons per year. Cotton around. How the government arranges the input of reserve cotton in the market, and how to manage the quota will largely affect the market situation of cotton.

Individuals suggest that enterprises should not build high-priced stocks; after the second inspection of the reserve cotton, it has been widely recognized and used by the market. This cotton is becoming less and less valuable in the later period; it is more and more valuable after the new flowers are listed in India. And the price of cotton yarn will definitely drop dramatically.

What is the trend of cotton in the near future? We saw that some time ago, the price of cotton fell, and now it has rebounded. The price is around 14500-15000 yuan/ton. The two-month market is relatively strong. The first is because the stock is nearing the end, and by the end of September, the country At the end of the auction, the restart is three months, there is no reserve cotton input for four or five months; after the second seed cotton is greatly reduced, many ginning plants will be produced, after high-cost contracting of the ginning plant, and If cotton is not produced, where does the cost come from? What's more, at the stage of the acquisition, there is not much seed cotton. The price is rare and the price is higher. However, after the main body of cotton is listed, it is estimated that the price will fall in mid-October. From the monthly point of view, we have so much dumped. In addition, with the introduction of new flowers, the amount of our cotton is surplus, and the inventory of enterprises cannot be increased a lot. In this case, if there is no storage, the cotton will enter the market at the same time, and there is still pressure.

Individuals suggest that companies should not build high-priced stocks for two reasons: First, India's cotton market is significantly lower every year, because the market's financing costs are high, but also need to find buyers as soon as possible; Indian companies can not digest so much cotton, then Need to export, then the price is often the lowest in the world, the price of India's storage and storage is 63 cents / lb, the price will basically stabilize; Second, the US cotton planting area increased by 17%, so its inventory historically It is a very high, and the sales pressure is very large. India and the United States want to sell cotton in the early stage, and US cotton has reached 4.7 million bales in the whole year. It is also very high in history. In November and December, the world's cotton supply is the most concentrated. The sales pressure is great.

Back home, the domestic cotton price is 14500-15000 yuan / ton. I think that after the secondary inspection of the reserve cotton, it has been widely recognized and used by the market. This cotton is getting less and less in the later stage, and it is more and more valuable. It will not be so much different from the new flower. Now the daily reserve is 30,000 tons. With such supply, the price will gradually decline. I estimate that it can be reduced to 13,000 yuan/ton or even lower, even if it is 13,000 yuan/ton. The price of cotton is high. This price difference is inevitable. If cotton prices do not fall at this high level, more cotton yarns and cloth from India and Pakistan and Vietnam will flow into China. From January to July this year, domestic imports will decrease. It seems that the domestic competitiveness is strengthened, in fact, because the difference between inside and outside is only 500-1000 yuan / ton.

Now is the time when India's cotton supply is very poor, so the price is very high; Vietnam's cotton price is also high now, so it is not the time when our domestic cotton market is hot, but after the new flower is concentrated, the price of Indian cotton and cotton yarn, It will definitely drop drastically, so the new round of contests will begin, which will put a lot of pressure on cotton prices, so individuals do not recommend building too much inventory at this time.