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China cotton textile company monthly review – november, 2012

China cotton textile company monthly review – november, 2012 Source: www.china-cotton.org
Date: 30-12-2012
Visits: 257
Very Poor

In November, reserve purchase of the new season made historical record, reducing largely the domestic spot market resource and nudging spot price upward continually. Textiles expect more reserve release as soon as possible, and are very cautious with current raw material buying. Yarn market was weak, some was on sales now.  Orders from downstream reduced, bringing pressure on finished inventory and production output; therefore, some mills kept drawing back to manage the risks. 

1. Stocks
1.1 Raw cotton purchase increased in volume

Since mid-November, textiles generally run out of orders and shun from raw material purchase. According to survey, raw material purchase reduced by 0.2% over last month in November, due to large decrease in chemical fiber purchase. 

In aspect of cotton purchase, as reserve accumulates, high grade resource was limited, and domestic cotton spot price kept rising. The inventory replenishment occurs in some mills for maintain production, 12% increase over the month for the raw cotton purchase witnessed by company surveyed. 

In aspect of chemical fiber purchase, finished product inventory was large at the same time downstream demand was less, therefore, price of polyester staple and chemical staple reduced quickly, and then the purchase volume reduced largely. In November, chemical staple fiber purchase reduced by 40% over the month. 

1.2 raw material inventories increased over the month and on Y/Y level

Raw material inventory reduced to the lowest, so mills had to purchase some to maintain production in November. Due to relative high domestic cotton price, at expectation of low price reserve cotton release, mills dare not buy the high price market cotton currently, and at the same time the high price yarn was undesirable in downstream. In November, raw material inventory of company surveyed increased by 4.1% Y/Y and up by 3.7% over the month. Raw cotton increased by 3.85% Y/Y, and 4% up over the month; chemical fiber increased by 12.3% Y/Y and 1% down over the month. 

1.3 More yarn and cloth production inventory

During mid and later November, orders decreased and sale was sluggish in major markets, especially the chemical staple fiber price dived fast. Although capital pressure increase by the year end and market competition enhanced, the finished products inventory increased continually.

Among company surveyed, in November, yarn inventory increased by 4.16% over the month, pure cotton yarn was up by 3.7%, cotton blends increased by 12.3%, and chemical yarn increased by nearly 40%. 

Orders of rigid demand from downstream ran out, and new orders were rare, bringing more pressure to mills. According to survey, gray cloth inventory increased by 3.47% in November, and pure cotton cloth decreased by 0.29%, cotton blends cloth increased by 0.62%, pure chemical cloth increased by 11.54%. 

2. Production

Due to decreasing orders, more companies stopped operation in November. In company surveyed, three of them shut down and two turned to other industry. The operation rate of middle and small companies was very low, further reduction was prepared due to increasing pressure of sales and working staff mobility.  Orders more concentrated to big enterprises, whose yarn production increased. 

According to survey, yarn production of November reduced moderately, and cumulative yarn output of January to November reduced by 2% than the corresponding period last year, the reduction of pure cotton was 3%, and cotton blends increased by 3.34%, chemical fiber yarn increase also. 

Cloth output decreased, cumulative cloth production of January to November declined by 0.49% Y/Y, among which pure cotton cloth decreased by 3.04%, cotton blends cloth reduced by 2.17%, chemical cloth increased by 16%. 

3. Sales

Supported by steadily climbing cotton price, quoting price of cotton yarn rebounded in early November, however, the weak demand downstream limited the actual transaction, and then yarn sales price fell after mid- November. 

The 32s yarn average price in companies surveyed was similar with last month, and 3.28% down Y/Y, and the average counts grew slightly. 

In aspect of yarn category, the price of combed 40s pure cotton yarn with high grade cotton allocation increased slightly at 2%. Price of cotton blends yarn; spun rayon yarn and chemical blends yarn decreased, and spun rayon yarn decreased by 1%-5%.
 
In aspect of cloth production, production of different standards and materials varied. Pure cotton production wide in width increased slightly, and spun rayon yarn decreased, fine-denier polyester and cotton blends production increased slightly.

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