Spinning “paper” profits may have been basically achieved

According to reports from cotton spinning enterprises in Jiangsu, Shandong and other places, as the Zheng Cotton CF2301 contract price has continued to consolidate in the range of …

According to reports from cotton spinning enterprises in Jiangsu, Shandong and other places, as the Zheng Cotton CF2301 contract price has continued to consolidate in the range of 13,500-14,500 yuan/ton since mid-July, the fluctuation range of cotton prices has narrowed, and the decline in quotations of downstream cotton yarn, gray fabrics, etc. has also slowed down significantly. , most cotton spinning mills and cotton yarn traders no longer close their orders, and quotations continue to increase.

A medium-sized textile company in Zibo stated that after relatively intensive destocking in June/July, coupled with the operation of “reducing cotton yarn production capacity of 40S and above, increasing OE yarn and ring spinning capacity of 21S and below”, the company’s cotton yarn inventory so far has been It has returned to below the “warning line”; however, due to the longer payment period for end customers (1-3 months billing period) and the increase in credit debts, corporate liquidity continues to be tight and the pressure is high.

Judging from the survey, taking into account the reduction of gauze accumulation rate as much as possible, traceable export orders are still mainly “small orders, short orders, urgent orders” (not suitable for textile enterprises above designated size to receive orders) and the national large-scale sales in July/August this year. Due to the actual conditions such as high temperatures in the central region, more and more cotton textile companies have recently adopted employee rotation, staggered production, and even high-temperature holidays. The decline in cotton consumption demand has shown no signs of bottoming out or rebounding.

A yarn mill in northern Jiangsu reported that although based on the current market cotton prices and cotton yarn prices, the “paper” profit of cotton spinning mills has generally reached about 1,000 yuan/ton. In the second quarter of 2022, cotton yarn production and sales will be upside down and production will be in a passive situation. It has been alleviated and reversed, but the biggest problem at present is that cotton yarn profits cannot be realized in the short term. On the one hand, the current new orders are mainly “short and concise” traceability orders. On the surface, Xinjiang cotton yarn has a price and profit, but there is no market and lack of trading volume support. It is not easy to realize the “paper” benefits; on the other hand, even if the factory is not considered, The inventory of high-priced cotton has been around for about a month (if you consider it, “paper” profits have shrunk significantly). Due to the long period of time for consumer terminal repayments to occupy funds, the situation of financial costs eating up profits is also very prominent. If customers use 2-3 month account terms, payment by acceptance bill (which requires textile companies to discount by themselves) or even partial credit, spinning profits will be severely squeezed. It is understood that due to the difficulty in realizing profits from cotton yarn and the low market expectations for the new cotton listing price in 2022/23, it may be difficult for cotton spinning mills to adjust their strategy of buying raw materials as they are used before October, seeing more and saving less, and purchasing by order. .

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Author: clsrich