China cotton textile industry climate report in August: CCTA

In August, the national economy continued to recover, the main macro indicators were within a reasonable range, the foundation for stable economic operation was continuously consolidated. From an industry perspective, in August, the production of cotton textile enterprises in China slowed down, the quality and efficiency of operations declined, and market confidence weakened slightly.

In August, China’s cotton textile climate index was 50.05, down 1.77 from July, but still above 50 the threshold separating contraction from expansion. In terms of sub-indexes, the raw material purchasing index, raw material inventory index and product sales index were higher than 50, which were in the expansion range. Production index, product inventory index, enterprise business index and enterprise confidence index are below 50, below the threshold separating contraction from expansion.

Raw material purchasing index

In August, the raw material purchasing index was 53.47, up 0.22 from July. From the market price, domestic and foreign cotton prices continue to rise in August, domestic cotton prices are still higher than the international cotton price. Thee Cotlook A index averaged 101.3 cents/lb, up 3.68 percent month-on-month; the average monthly price of grade 3128 cotton was 18,128 yuan/ton, up 5.47 percent from the previous month. In terms of non-cotton fibers, polyester staple fiber prices fell slightly, viscose staple fiber prices rose, which was not as high as that of cotton. In August, the short monthly average price of 1.4D polyester was 7,061 yuan/ton, down 1.16 percent monthon-month; the average monthly price of viscose fiber was 13,151 yuan/ton, up 2.4 percent month-on-month. On August 23, the authorities issued a notice that only textile cotton enterprises could participate in the bidding for cotton reserves. Non-textile cotton enterprises were not allowed to participate in the bidding, and the number of cotton textile enterprises bidding for cotton reserves increased. Theerefore, the purchase of cotton increased in the month, and the purchase of non-cotton fibers was basically the same as in July.

Raw material inventory index

In August, the raw material inventory index was 50, up 0.97 from July. Thee price of raw materials rose in that month. Driven by the good traditional textile season, enterprises increased the inventory of raw materials to ensure production. Thee inventory of raw materials increased comparing with July. Among them, the cotton inventory index increased by 1.27, while the non-cotton fiber inventory index increased by 0.67, but it was still below the threshold separating contraction from expansion. According to the survey data of China Cotton Textile Association (hereinafter referred to as CCTA), in August, the proportion of enterprises with rising cotton inventory was 37.58 percent, 1.84 percentage points higher than the proportion of enterprises with declining cotton inventory. Thee proportion of enterprises with declining non-cotton fiber inventory was 34.19 percent, 1.8 percentage points higher than the proportion of enterprises with rising non-cotton inventory.

Production index

In August, the production index was 49.94, down 1.48 from July. Most enterprises maintain the early start-up rate. Among them, the overall startup of the spinning mills was good, the yarn output increased from the previous month; the start-up of weaving mills was lowered, cloth output fell. According to the survey data, the proportion of enterprises with increasing yarn output is 39.73 percent, 12.52 percentage points higher than that of enterprises with decreasing yarn output; the proportion of enterprises with decreasing yarn output is 38.16 percent, 4.28 percentage points higher than that of enterprises with increasing yarn output; the proportion of enterprises with decreasing yarn output is 16.84 percent, 6.56 percentage points higher than that of enterprises with increasing yarn output.

Product sales index

In August, the product sales index was 51.38. From the point of view of market price, cotton yarn price is stable in the early ten days, but gradually decreases in the latter half of the month. Grey cloth prices basically maintain stable. Specifically, the monthly average price of 32 pure cotton combed yarns was 26,980 yuan/meter, up 1,020 yuan/ton month-on-month, or 3.93 percent, and the monthly average price of pure cotton grey fabric (32*32 130*70 2/1 47” twill) was 6.2 yuan/meter, up 0.16 yuan/meter, or 2.65 percent. In terms of sales, the sales volume of cloth and yarn was lower than that of July, especially the sales of cloth decreased more. Survey data show that the ratio of enterprises with a decrease in yarn sales is 39.79 percent, 6.43 percentage points higher than that of enterprises with a rise; the ratio of enterprises with a decrease in cloth sales is 55.77 percent, 27.57 percentage points higher than that of enterprises with a rise. Thee rise of the product sales index is mainly driven by market prices.

Product inventory index

In August, the product inventory index was 48.48, down 3.25 from July. Thee market trading slightly cool down, especially weaving enterprises shipping slow, inventory began to accumulate, some enterprises have taken measures to limit production. Overall, yarn and cloth inventory increased comparing with July. According to the survey data, the proportion of enterprises with increasing yarn inventory is 39.97 percent, which is 8.3 percentage points higher than that of enterprises with decreasing yarn inventory. Thee proportion of enterprises with decreasing yarn inventory is 53.32 percent, which is 25.45 percentage points higher than that of enterprises with increasing yarn inventory.

Business index

In August, the business index was 48.5, down 3.3 from July. Among them, the main business income index was 49.37, down 3.65 month-onmonth; total profit index was 47.64, down 2.95 month-on-month. In August, the cotton price was still at a high level. Although the cotton yarn price rose, the downstream customer recognition was not high. Thee superimposed market trading was weak, and the profit margin of the spinning factory was compressed. As for the weaving mills, grey cloth price transmission is sluggish, the price is difficult to rise, the price of a single shipment is still high, corporate profits declined significantly. According to the survey data, the proportion of enterprises with a decrease in main business income was 43.18 percent, 6.33 percentage points higher than that of enterprises with a rise; the proportion of enterprises with a decrease in total profits was 51.17 percent, 23.64 percentage points higher than that of enterprises with a rise.

Business confidence index

The business confidence index was 49.59 in August, down 2.8 from July. The global pandemic is still continuing, the global manufacturing business continues to be lower than expected, and consumer confidence is declining. Domestically, natural disasters such as the spread of pandemic and flood have a certain impact on the operation of the industry. The phenomenon of textile peak season is not obvious. The rise of raw material prices in the upstream has not been effectively transmitted to the downstream, and the market expectation is weakened. In order to ensure the completion of the annual energy consumption target, part of the enterprise is facing power rationing production, confidence is slightly less than in July. Survey data shows that 24.83 percent of enterprises believe that the market outlook is optimistic, and 28.91 percent of enterprises believe that the market outlook is weak.