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China Textile Sector Hit By Volatile Raw Material Prices

2013-7-8

China is the world's largest cotton textile consumer. Since 2011, the difference between international cotton price and domestic cotton price has remained steep, the difference being as high as RMB 6,800 Yuan/ton at one point and staying at around RMB 3,500 and 4,000 Yuan/ton at present. As the pressure of material cost has yet to be mitigated, the textile is still advancing bearing great pressure.

Supply of raw material not satisfactory

According to the CE Prosperity Index of Clothing Industry, because of numerous pressures, like the rising of element cost, have not yet to be significantly mitigated, momentum for the rising of the prosperity of the industry remains weak. Information from textile enterprises shows that raw material is the main restraining factor that has caused the fall of the international market share of China's textile industry. How to break the material bottleneck, improve innovation, and increase the added value of products? This is becoming the main question that is facing the industry.     

In the 2013 China International Cotton Textile Conference & International Textile Resources Market Conference, Detai Textile from Qingyuan of Guangdong caught the reporter's attention. This is a medium-to-small-sized textile enterprise with a volume of 50,000 spindles, using around 1,000 tons of cotton monthly. However, with continuous structural adjustment and the sustained big gap between international and domestic cotton price, acquiring high-quality cotton has become a major concern for the company. "It is more difficult for a small enterprise to obtain cotton. Production suspension and factory shutdown may happen anytime", said Chen Jiaolan, who is in charge of the enterprise, helplessly.

"The quality of available cotton is not guaranteed, and the problem of fibrous extraneous contamination shows sign of deterioration. It is extremely difficult to get high-quality, high-grade, and high-added-value products", said a source from Hubei Xiaogan Cotton textile. According to the source, the unsatisfactory supply of material reduces the competitiveness of Chinese cotton products. Without smooth channels to purchase cotton and with uneven cotton quality, cotton enterprises cannot obtain raw cotton through normal channels, nor can they take part in cotton bidding without worries. They are restrained at the very link of raw material.

At present, raw material has become a fundamental problem influencing the development of the textile industry. Zhu Hongren, chief engineer of the Ministry of Industry and Information Technology, pointed out during the conference that the temporary collection and storage cotton policy being implemented in China is for the benefits of cotton farmers. It can stabilize cotton price in China, but it somewhat expands the gap between domestic and international cotton price. This produces a rather significant influence on the competitiveness of the textile industry. Particularly, medium and small-sized enterprises that specialize in pure cotton and yarn production face significant difficulty for survival.

Wang Tiankai, president of china Textile Industry Federation, believes that if the gap between international and domestic cotton price stays within RMB 2000 Yuan/ton, it is still possible for the industry to compensate it through technology advancement and product development, but when the price gap is more than RMB 4000 Yuan/ton, it is hardly impossible to compensate the loss caused by the high cost in any way.

Multiple measures to seek breakthrough

How to shake off the restriction of raw material? The industry is calling for appropriate adjustment to the temporary collection and storage policy. Besides, it is also making vigorous attempts to solve the material problem. Transition to non-cotton field and development of substitute fiber have been put on agenda.

Li Xin, Vice President of China Textile Science Research Institute, pointed out a detail on the China International Resources Market Conference: when buying clothes for children, parents tend to ask: is this all-cotton? It is well known that products made of natural fiber, including cotton, have advantages like air permeability, sweat absorption, and comfort of wearing.  However, the fact remains that growth of natural fiber, including cotton, wool, hemp, and silk, is insignificant across the globe.

According to Gao Yong, vice chairman of China Textile Industry Federation, fiber consumption in China last year was more than 45 million tons; among these, cotton accounted for less than 9 million tons, wool around 400,000 tons, hemp 700,000 to 800,000 tons, and silk 100,000 tons.

"Other fiber markets are relatively more open, and enterprises can choose freely", Di Hui from Huarun Textile told the reporter. Di Hui pointed out that upstream cost pressure is squeezing away enterprises' profit and forcing them to accelerate their transition to non-cotton fiber. At present, about 30 to 40 percent of the company' production has changed to non-cotton fiber.

At present, enterprises are increasing the proportion of mixed textile, producing more varieties and larger quantity of mixed textile products. Meanwhile, substitute fiber made of chemical fiber begins to be used in large quantity.

"On one hand, there is a glut of polyester fiber, and there is need for industrial adjustment and upgrading; on the other hand, there is a shortage of natural fiber resource. The development of synthesized fiber can integrate these two problems. I hope it can help to solve the material problem", said Li Xin, an industrial insider who has studied fiber for a long time. According to Li Xin, artificial cotton polyester has outstanding technical features: high quality, including fiber evenness and stability in post textile dyeing and finishing and in use; second, high performance. Centered on comfort, artificial cotton polyester is significantly enhanced in certain aspects. In addition, its energy consumption and emission during production are significantly lower.

Source:China Economic Net
 
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