Logical deduction of China cotton market under the background of reform and the impact on textile in
！！Xia Shihui, analyst from CCFGroup
2019-05-22 14:10:55
Xia Shihui, analyst from CCFGroup, delivers her report of Logical deduction of China cotton market under the background of reform and the impact on textile industry development
The report is mainly delivered from the export sales and domestic sales of textiles, cotton supply and demand, China textile industry structure and the influences of Sino-US trade friction on textile industry development.
For the export sales of textiles, Sino-US trade dispute has been the black swan to influence the exports of textiles. Since 2015, the annual export value of textile accounts for about 12%-13% of the total output value of above-designated enterprises, and the annual export of apparel accounts for 20% of the total output value of above-designated enterprises. Since the end of 2018, apparel export orders have been verified in Southeast Asia, and the capacity transfer has accelerated. However, Southeast Asia's industrial chain is still not perfect, which will increase the export of Chinese textile. Therefore, the change in the export of cotton textile is not easy to predict.
For the domestic sales of textiles, China's economy is good or bad, retail sales of the textile and apparel continues to weaken in 2019.
Besides, global stock/use ratio of cotton has risen to 53% outside China, and in 2019/20 season, the increment of production is larger than that of consumption. With the opening-up to the import and low-cost cotton reserves consumed, the driving force of consumption increases.
Viewed from the industrial structure change, as the cost edge brought by low-priced reserved cotton is lost gradually, switch of cotton yarn to blended yarn or replacement by competitive goods is imperative; the instability of the international environment also diverts export orders. At the same time, the destocking of downstream market in the domestic industrial chain has not yet ended.
In short to medium term, great uncertainty in macroeconomic policy and lasting China-US trade war will weigh on end-user orders. Focus is still the changes in macro environment. Currently, inventories were low in both raw materials and traders. Even if some plants may sell off, the time would be short. Meanwhile, ultra-low prices may also affect planting, so the trend could not sustain. In medium to long term, it is inevitable for consumption transfer. China has not fully opened cotton imports, and it is inevitable for rival products or capacity transfer.
The report is mainly delivered from the export sales and domestic sales of textiles, cotton supply and demand, China textile industry structure and the influences of Sino-US trade friction on textile industry development.
For the export sales of textiles, Sino-US trade dispute has been the black swan to influence the exports of textiles. Since 2015, the annual export value of textile accounts for about 12%-13% of the total output value of above-designated enterprises, and the annual export of apparel accounts for 20% of the total output value of above-designated enterprises. Since the end of 2018, apparel export orders have been verified in Southeast Asia, and the capacity transfer has accelerated. However, Southeast Asia's industrial chain is still not perfect, which will increase the export of Chinese textile. Therefore, the change in the export of cotton textile is not easy to predict.
For the domestic sales of textiles, China's economy is good or bad, retail sales of the textile and apparel continues to weaken in 2019.
Besides, global stock/use ratio of cotton has risen to 53% outside China, and in 2019/20 season, the increment of production is larger than that of consumption. With the opening-up to the import and low-cost cotton reserves consumed, the driving force of consumption increases.
Viewed from the industrial structure change, as the cost edge brought by low-priced reserved cotton is lost gradually, switch of cotton yarn to blended yarn or replacement by competitive goods is imperative; the instability of the international environment also diverts export orders. At the same time, the destocking of downstream market in the domestic industrial chain has not yet ended.
In short to medium term, great uncertainty in macroeconomic policy and lasting China-US trade war will weigh on end-user orders. Focus is still the changes in macro environment. Currently, inventories were low in both raw materials and traders. Even if some plants may sell off, the time would be short. Meanwhile, ultra-low prices may also affect planting, so the trend could not sustain. In medium to long term, it is inevitable for consumption transfer. China has not fully opened cotton imports, and it is inevitable for rival products or capacity transfer.
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