Fujian: Cotton Spinning and Knitting

On August 15th, 2012, Yongan ** Cotton Committee and Yong'an ** Fuzhou Business Department lined up five people and visited JD, a large cotton spinning company in Fujian Province, and came to the factory gate, which coincided with the commuting time at 8 o'clock in the morning. The women workers who had recently worked in the night shift and had wet hair from time to time had passed by us. This scene of the old years of textile prosperity has become unusually exciting this year. Women workers are busy and the textile enterprises are strong. We always think so. . The company’s deputy head of the C-General, our old friend and leader of the China Textile Industry Association deputy director unit, warmly welcomed us and talked with us about the plant’s related issues and cotton-related issues.

The JD plant is a joint-stock enterprise that has been restructured from the old state-owned enterprises. The company has about 100,000 spindles and 312 looms. The main products are cotton yarn, Tencel, Modal and fabric cloths, of which fabric production is about 2,000 tons. This year, as with other textile companies, the company has also encountered the dilemma of large orders, reduced orders, and slippery prices. However, with the support of new fabrics and new fabrics, the plant has in tenaciously overcame many difficulties and achieved corporate production. Although the sales fell, but the personnel did not decrease, the continuous production situation. Up to now, the company's raw material cotton inventory is about 800 tons, and inventory days are about one and a half months. The company's full capacity utilization rate is about 75%.

On the current cotton-related issues, C has mainly elaborated on several views. First, the distribution of quotas is still unbalanced, and the production companies are expecting stronger. Different domestic and foreign prices to reduce the competitiveness of domestic enterprises must arouse enough attention. Second, it is worrying whether the storage capacity can meet the deposit requirements, whether the existing library meets the basic conditions for storage, and the quality of cotton storage is worrying. Third, he believes that it is more likely that stockpiles will be dumped in the later period. On the one hand, it will free up storage capacity to facilitate subsequent collection and storage; on the other hand, it will ease the tension in demand for follow-up cotton. Fourth, the textile situation in the future is not optimistic. The economies of Europe and the United States have not shown any signs of improvement, and the domestic economy is facing more difficulties. The outflow of textile orders is serious, the cost advantage is gradually weakening, and the export share growth is difficult. The domestic sales growth task is arduous. Fifth, the price of cotton is restrained by the downstream situation, making it more difficult to increase prices. Despite the collection and storage, the demand for monthly consumption of 600,000 tons has fallen more than in previous years. When the downstream market transitions, it is far behind in the near future. There are few factors supporting price upwards, and the cotton price may show a rebound in the future and then decline.

On the 16th, the research team visited the production base of our shoes and clothing in Jinjiang, Quanzhou, Fujian Province, in order to find some ignitable points that are worthy of our excitement. It is difficult to imagine that in this county-level city with a population of only 800,000, Lilang, Qipai, 361°, Jiumuwang, Seven-wolves, Hongxing Erke, Anta, Xtep, Jinba, rich birds, noble birds and other well-known domestic brands gathered here, the stars shining The result is that you can only shock. From Jinjiang City to the company we are going to visit, it takes about one hour to see all kinds of economic development zones along the way, among which there are many shoe and clothing companies. We had a discussion with the management of the plant. The plant is one of the top five companies in China's warp knitting industry. Its annual production value is about 200 million yuan, and its employees are about 400. Since 2007, the tax payment has been above 10 million yuan. As a leader in the domestic warp knitting industry, the company has its own unique advantages in business management, market sales, equipment level, research and development level, and product variety, and therefore it has not shown any resemblance to cotton spinning or chemical fiber in terms of market sales and business efficiency. Manufacturing companies have shown signs of fatigue this year. Although the company’s output value and profit growth rate were not as high as in previous years, the rate of decline was not significant and the company continued to be profitable. Of course, this has not been followed by rapid development of the enterprise, which has greatly increased the leverage and excessive expansion of the company. In the survey, we learned that warp knitting is a new category of China's textile industry. Although temporarily affected by weak economic growth and economic development, the market share has not been as large as other varieties, but with the economic recovery and improvement of living standards of residents, The demand for swimwear, underwear and other products formed by warp knitting has much room for improvement and the future market is promising. The raw materials of the warp knitting companies include nylon (60%), spandex (20%), and polyester (20%). This year, the price of oil has fluctuated widely, and the price of raw materials has fallen by a large margin (-25%-30%). The raw material inventory of enterprises has not fallen much compared with the same period of previous years. Since warp knitting companies use less polyester, companies are less likely to consider using PTA hedging. In general, warp knitting companies have better conditions than cotton spinning and chemical fiber spinning enterprises.

On the morning of the 16th, the research team also visited and inspected a large-scale polyester enterprise. The company’s current sensory product sales improved and the company’s inventory declined significantly. The reason is that, on the one hand, downstream demand has entered the traditional peak season, on the other hand, the prices of raw materials and polyester have fallen sharply in the early stage. Downstream companies generally judge that raw material prices have entered historically low and affordable levels. Therefore, there was a round of short-term advancement. However, everyone believes that this round of sales improvement is only the transfer of stocks, and the sustainability of the market is doubtful.

On the afternoon of the 16th, the research team also visited several printing and dyeing companies located in Shengfeng Industrial Park, Yinglin Town, Jinjiang. From the visit situation, the current production and operation of printing and dyeing enterprises have the following features. First, there are a lot of orders. The reason is that orders that were suppressed in the early stages of the previous period were released because of confidence. At the scene, the company’s production arrangements were relatively full, and only one work per day was arranged, and it changed to three shifts and 24 hours of continuous operation. Second, due to the advanced equipment of enterprises and the normal operation of environmental protection treatment facilities, the company has not been affected by the phase-out plan.

The situation of Fujian textile enterprises shows that the current situation in the textile industry shows different characteristics in different sub-sectors. Warp knitting, printing and dyeing companies have relatively full production schedules, and the sales situation is relatively good. The operating rate of cotton spinning enterprises is insufficient and the sales are general. The inventory of polyester enterprises has declined, the efficiency has increased, and the operation has been basically full-loaded. With regard to the relevant price market, the cotton price is expected to rebound, but the rebound space is subject to a variety of factors. The polyester market has been affected by the PTA rebound and has risen by around RMB1,000. Coupled with the expected negative profit from the release of new production capacity, the industry is still generally bearish. (Yongan ** Research Institute)