Is the 2017 cotton textile market full of uncertainty? Industry authorities monitor trends

On March 27th, the fourth expanded meeting of the fifth executive director of the China Cotton Textile Industry Association and the 2017 Cotton Textile Market Situation Analysis Meeting were held in Changzhou, Jiangsu.
Xie Ming, President of Jiangsu Textile Industry Association, Duan Xiaoping, Vice President of China Textile Industry Federation, and President of China Chemical Fiber Industry Association, Zhu Beina, President of China Cotton Textile Industry Association, Wang Shengmin, Deputy Director of Agricultural Product Price Department of Price Department of National Development and Reform Commission, Yu Xiaoxin, Director of Public Inspection Department of China Fiber Inspection Bureau, Ye Jianchun, Vice President of China Cotton Textile Industry Association, and Zhu Jianjun, General Manager of Zhongheng Dayao Textile Technology Co., Ltd, Guests such as Li Nan, General Manager of the Cotton Department of Louis Dreyfus (China) Co., Ltd., and representatives of cotton textile enterprises attended the meeting.
At this meeting, guests discussed the current hot topics in the cotton textile industry, including the domestic cotton textile market situation, foreign cotton market trends, and changes in cotton target price subsidy policies.
1. 2017 Textile Industry Forecast
Duan Xiaoping, Vice President of the China Textile Industry Federation and President of the China Chemical Fiber Industry Association: The signs of recovery in the textile industry are not obvious
In 2016, the economic benefits of the textile industry stabilized and slowed down, the structural adjustment accelerated significantly, the global layout trend was obvious, the domestic sales growth rate remained basically stable, and the operational quality and efficiency improved. Duan Xiaoping stated that at present, the signs of recovery in the textile industry are not obvious, and the operation of enterprises in 2016 was not as good as the statistical data. It is still too early to say that the "industry is recovering".
In 2017, the global economy is expected to grow, and the prospects for developed economies will improve. Emerging markets remain the core force of economic growth, but market risks are also increasing. Internationally, various factors such as US President Trump's New Deal, Federal Reserve rate hikes, and European elections have made world trade growth exceptionally difficult. Compared to the international market, the domestic market also faces both opportunities and challenges. The acceleration of urbanization in China, the relaxation of the national second child policy, the progress of internet integration, and the increasing potential of the light luxury market have promoted the expansion of the domestic textile industry market. However, with the decline in the proportion of people's clothing expenses, the deepening of rational consumption concepts, and people's pursuit of cost-effectiveness, The development of the textile industry is facing enormous challenges.
Duan Xiaoping predicts that international demand is expected to rebound in 2017, driven by the United States. In terms of domestic sales, Duan Xiaoping pointed out that macroeconomic stability and income growth will continue to expand domestic sales in the workplace. If we can seize the opportunity for consumer upgrading, improve product quality, reduce costs, and satisfy consumer experience at the retail end, the domestic demand market can maintain a certain level of growth.
2. Analysis of the domestic cotton textile market situation
Zhu Beina, President of China Cotton Textile Industry Association:
From adapting to the New Normal to leading the New Normal
Since the second half of last year, the market of the cotton textile industry has generally improved compared to the same period in 2015, and product prices have increased. However, this is not entirely driven by downstream demand, and enterprises should have a clear understanding. At the beginning of 2017, cotton textile enterprises overall performed well, with low product inventory levels, sufficient orders, and a rebound in the prosperity index.
The use of chemical fiber raw materials in the industry is becoming increasingly widespread, and cotton textile enterprises are more enthusiastic about chemical fiber raw materials, with richer products and reduced risk. The confidence of market entities has begun to rebound, and with the promotion of cotton system reform and high tax and low deduction reform, factors such as the steady narrowing of the price difference between domestic and foreign cotton have played a supporting role in the improvement of domestic cotton textile enterprises. At present, investment in Xinjiang is still growing, and the pace of enterprises going global is steadily progressing. Industrial transfer and investment are becoming more rational, and the market is becoming increasingly dominant.
Under the circumstances of various adverse factors in the market, enterprises actively respond, implement the "three product" strategy, and actively adapt to the New Normal. In the process of expanding profit space, enterprises have begun to lead the New Normal from the pursuit of speed to the pursuit of quality, from reducing costs to innovative development, from focusing on development speed to focusing on improving product added value.
Vice President of China Cotton Textile Industry Association, Ye Jianchun:
The competitiveness of the domestic cotton yarn market is gradually increasing
According to statistics from the China Cotton Textile Industry Association and the China Chemical Fiber Industry Association, in 2016, 7.15 million tons of cotton fibers were used in cotton textiles, a year-on-year increase of 6%; 12.63 million tons of non cotton fibers (including polyester staple fibers and viscose staple fibers), an increase of 0.2% year-on-year; A total of 1978 million tons, a year-on-year increase of 2.2%; Cotton fiber accounts for 36% and the yarn production is 18.84 million tons.
Since the release of the national reserve cotton release announcement in April 2016, domestic and international cotton prices have gradually been in line. After the end of September, the reserve cotton release ended, and in October, the price difference between domestic and international cotton has once again widened to around 2000 yuan/ton. At present, the price difference between domestic and international cotton is around 1000 yuan/ton. With the start of reserve cotton production, the price difference between domestic and international cotton is expected to further narrow due to the impact of the rotation pricing mechanism.
On March 6th, reserve cotton began to be put into use. As the placement work progressed, textile enterprises slowed down their bidding pace, and the daily average trading volume and transaction price of reserve cotton continued to decline. The decrease in the transaction price of the round out has had an impact on the spot market, resulting in sluggish sales and a price reduction of 100-200 yuan/ton. Currently, the pick-up price of Xinjiang's "Double 29" hand picking cotton platform is around 16000 yuan/ton, but the price of high-quality cotton remains firm. Futures, spot, and round out prices interact with each other, and downstream support is insufficient. Enterprises have a strong wait-and-see attitude, and cotton quality is good, but prices still have a significant advantage.
In 2016, due to factors such as tightening quotas, narrowing the price difference between domestic and international cotton, and the deployment of reserve cotton, China imported a total of 896600 tons of cotton, a year-on-year decrease of 575900 tons or 39.11%. In 2017, with the increase of quotas issued by the Ministry of China and the narrowing of the price difference between domestic and foreign cotton, it is expected that the cotton import volume in 2017 will not change much compared to 2016. It is expected that the cotton usage will increase, but the increase in quantity is limited. The import of cotton yarn is closely related to cotton imports. Currently, the import volume of cotton yarn in China is also decreasing. With the narrowing of the price difference between domestic and foreign cotton, the price advantage of imported yarn will weaken, and the competitive advantage of domestic cotton yarn will gradually strengthen.
3. How will the target price subsidy for cotton change?
Wang Shengmin, Deputy Director of the Agricultural Product Price Department of the Price Department of the National Development and Reform Commission:
Continuous optimization of target price subsidy policies
The pilot work of China's cotton target price reform was completed in 2016. This pilot policy ensures the basic income of cotton farmers and has played a good role in the supply measurement reform, leading to the clustering of cotton production in Xinjiang and the development of cotton towards high-quality and high prices. In the evaluation process of the cotton target price reform pilot program, which ended in March 2016, some problems were also found, such as the price being fixed every year and being adjusted too frequently. There are still unscientific aspects to the cotton subsidy method. How can we change it? And whether the target price subsidy for cotton in the future should be linked to the quality of cotton.
Wang Shengmin stated that on March 17th, the National Development and Reform Commission and the Ministry of Finance jointly issued the "Notice on Deepening the Reform of Cotton Target Price", which made some adjustments to the cotton target price reform, including changing the target price of subsidies from a fixed one year to a fixed three years, and determining the cotton target price level based on the production cost and reasonable benefits of the past three years, adjusting and optimizing the subsidy method, Manage the upper limit on the quantity of cotton eligible for target price subsidies in Xinjiang, with a subsidy limit of 85% of the national average cotton yield during the base period (2012-2014).
The next step for cotton target price subsidies is to study the reform of mainland cotton subsidy policies and provide appropriate subsidies for the cultivation of mainland cotton through appropriate policies. Implement Xinjiang policies, test effectiveness, track in a timely manner, and allow local governments to test methods for cotton price subsidies.
Yu Xiaoxin, Director of the Public Inspection Department of the China Fiber Inspection Bureau:
Significant improvement in cotton quality in China
From 2011 to 2016, the average length of cotton inspections in Xinjiang was 28.78mm, 28.53mm, 28.70mm, 28.71mm, 28.56mm, and 29.05mm, respectively. The micronaire value of cotton in Xinjiang is increasing year by year, reflecting the gradual coarsening of cotton fibers. Other inspection indicators, such as color grade, are superior to those in mainland China.
It can be seen that during the cotton harvest and storage period, the length of cotton decreased significantly, while after the implementation of the cotton target price reform policy, the quality of cotton in Xinjiang has significantly improved (due to weather reasons, the length decreased in 2015). Among them, the average cotton length in 2016 was the best in recent years. In 2016, the proportion of cotton with a length of 30mm or more reached 11.59%, while from 2011 to 2015, the highest proportion of cotton with a length of 30mm or more was only 5%.
According to Yu Xiaoxin's analysis, the first factor affecting cotton quality is policy factors, which have a guiding effect on cotton quality. Next is the impact of climate, followed by the impact of cotton varieties and planting factors, and finally, the impact of cotton processing methods. He particularly pointed out that currently, about 70% of the machine picked cotton in Xinjiang Production and Construction Corps is planted using machine picked cotton. There are significant differences between the machine picked cotton planting method and the hand picked cotton planting method, but there is no significant difference in the processing method, which greatly damages the cotton fibers.
Yu Xiaoxin suggests further deepening the reform of cotton target prices, guiding cotton to be priced based on quality, with equal emphasis on quantity and quality, implementing a separation of price and compensation, and guiding cotton production based on the needs of textile enterprises. Strengthen cotton variety management and scale planting to improve the uniformity and consistency of cotton. Utilize cotton planting and processing methods that are compatible with machine picking techniques to comprehensively improve cotton quality.
Yu Xiaoxin, Director of the Public Inspection Department of the China Fiber Inspection Bureau:
Ensure the speed of public inspection for this year's reserve cotton
Reserve cotton wheel export: The implementation of packaging inspection for reserve cotton has been welcomed by textile enterprises. In 2016, only two quality appeals were filed for reserve cotton wheel export. In order to avoid a shortage of supply in this year's rotation, the China Fiber Inspection Bureau began the inspection of reserve cotton in 2017 from October 2016. Therefore, according to the current pace of reserve cotton rotation, the China Fiber Inspection Bureau can ensure the speed of public inspection and ensure that the cotton captured by enterprises can be shipped out as soon as possible.
Sun Ying'an, Chairman of Hubei Xiaomian Industrial Group Co., Ltd.:
Suggest reducing the cost of storing cotton
Sun Ying'an introduced that Xiaomian Company mainly produces 5-100 pure cotton yarns. Every year, the company requires a large amount of reserve cotton, and 80% of the company's raw materials come from reserve cotton. Last year, the implementation of packaging inspection for reserve cotton rollers did ensure the quality of the reserve cotton purchased by the enterprise, which the enterprise was very satisfied with.
Sun Ying'an stated that the promotion of reserve cotton rotation is constantly being improved, but personally, he believes that the price of 45 yuan/ton for reserve cotton rotation is slightly higher. It is recommended to reduce the cost of reserve cotton rotation.
5. Domestic Cotton Market Demand Forecast
Li Nan, General Manager of the Cotton Department of Louis Dreyfus (China) Co., Ltd.:
Transition of World Cotton from Overproduction and Sales to Shortage of Production and Sales
The world cotton industry has reached a turning point, with the world cotton area decreasing by 20% from 36.11 million hectares in 2011/2012 to 29.31 million hectares in 2016/2017. The low price has already led to an increase in cotton consumption from 22.7 million tons in 2011/2012 to 24.5 million tons in 2016/2017, an increase of 8%. The surplus of production and sales has turned into a shortage of production and sales. By the end of this year, the world's year-end inventory had decreased from a record 24.4 million tons in 2014/2015 to 19.6 million tons, a decrease of 20%. At present, world cotton consumption is 8% higher than production, but growth is slow. two-thirds of the world's polyester production capacity is in China, and the price is only half of that of cotton. China's textile production has increased the use of chemical fibers, and world cotton consumption is gradually recovering to 24 million tons, while world cotton production is only 22 million tons. China's cotton policy has had a huge impact on consumption, with slow growth in global cotton consumption.
Looking ahead to 2016/2017, world cotton consumption should once again exceed production, with an expected increase of 2-3%. China's low-priced reserve cotton rotation should promote consumption, and world year-end inventory is expected to decrease by 1.5 million to 1.7 million tons. It is expected that China's future cotton production and sales gap will be around 3 million tons, and the national reserve cotton may reach a relatively ideal low level in 2018/2019. Assuming it is in the range of 2.6 to 3.3 million tons, the reserve cannot meet the production and sales gap and can only be solved by increasing production or importing.
Prediction of Hot Fabrics in 2017
Zhu Jianjun, General Manager of Zhongheng Dayao Textile Technology Co., Ltd.:
Downstream demand determines upstream production strategy
Zhu Jianjun analyzed the characteristics of downstream markets in the cotton textile industry - yarn and fabric products. He said, "In 2017/2018, the trend of cotton fiber woven products will be smaller and smaller in batch. Cotton will be blended with all fibers, almost without fabric elasticity, and super elasticity and super softness will become the biggest demand. Yarn should be able to be wrapped in black and white, which means it can be dyed black while also being bleached." He predicted that in 2017/2018, specialty coated fabric, double-layer fabric Four sided elastic fabric, high elastic twill, large jacquard, hollowed out fabric, single-sided dyed fabric, and shiny fabric will become popular trends in textile and clothing fabrics.
Zhu Jianjun believes that a good enterprise has several major characteristics: good raw material handling, good product production, and good model innovation. And companies that produce good products have the characteristics of good quality consistency, good continuity of supply, and fast product updates. To make a good product, the first thing is to have stable raw materials, otherwise orders can easily be lost. Create your own unique and flagship products, otherwise it is easy to have a large amount of inventory. The price of finished products for research and development of new products should pay attention to cost-effectiveness and avoid "quality" excess.
In addition, the meeting reviewed and approved the changes in the governing units and member units of the China Cotton Textile Industry Association.