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China q1 textile exports beat expectations with 19.4% rise

China q1 textile exports beat expectations with 19.4% rise Source: www.texleader.com.
Date: 23-05-2013
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In the first quarter, China exported an aggregate of US$ 35.3148 billion of clothes and accessories, up 19.4 percent compared with the same period of last year; in March, international cotton price skyrocketed, with the difference between international price and domestic price once narrowing down to RMB 2,305 Yuan/ton. Even with weak foreign demands, growth of export has exceeded market expectation. Recently, the difference between international cotton price and domestic cotton price has shrunk, and the pressure of raw material cost can be expected to reduce. But at the end of the day can the good news really substantiate the recovery of the textile industry?
 
For the textile industry that has dragged languidly for more than one year, the beginning of the 2013 can be described as "steady on the whole with various highlights". In the first two months of this year, the 38,000 textile enterprises of above designated scale nationwide witnessed 14.3 percent of operation revenue growth, 2.8 percentage points higher than the growth of the same period of last year; total profit increased by 14.3 percent, 16.5 percentage points higher than the same period of last year. From January to March, growth of export of China's textile and clothes industry was 12.2 percentage points higher than that in the same period of last year; the volume of fixed asset investment projects of more than RMB 5 million Yuan cross the industry increased by 16.4 percent, 0.6 percentage points lower than that in the same period of last year. The growths of main economic index of the textile industry have been steady, a strong indication of mild recovery.
 
The shrinking of the difference between domestic cotton price and international price also brings hope to textile companies. In March, international cotton price climbed, the difference between international price and domestic price was as low as RMB 2,305 Yuan/ton. According to industrial insiders, the acreage of cotton plantation in 2013/2014 worldwide is undoubtedly reduced, and the difference between international cotton price and domestic cotton price is strongly expected to narrow further. With multiple contributory factors, the cotton production chain in China is expected to be extensively boosted. If some cotton textile companies would be able to obtain a larger import quota, their comprehensive raw material cost will not be greatly different from that of international competitors. In light of the high possibility of further shrinking of the price difference domestically and internationally, it is estimated that negative elements that affect the global competitiveness of China's cotton textile industry will be weakened.
 
Even with the contributory factors mentioned above, the recovery of the textile industry is still not highly optimistic. After the drastic growth of textile export in February, March saw an 11 percent decrease of export value of textile and apparel. The fluctuation caused concerns in the industry, and close attention should be paid to issues and risks currently existing in the operation of the textile industry. First, export pressure has not yet been substantially mitigated. China National Textile and Apparel Council points out that in the first quarter of this year, particularly in the first two months, the markedly rebound of export has been primarily attributed to such non-demand factors as low base number and collective delivery before the Chinese Spring Festival. Recent consumption statistics about the international macro economy and foreign markets indicate that foreign demands have not been significantly improved, and China's textile industry doesn't possess the external conditions needed for sustained rapid growth. Second, although the price difference between international cotton and domestic cotton has shrunk somewhat recently, the impact of cotton problem is still prominent. Moreover, taking into consideration such factors as comparatively high price of stock cotton, long delivery cycle, and instable quality, the cotton textile industry is still facing great pressure. Third, the majority of small and micro businesses are still having difficulty surviving and developing. According to CNTAC's survey recently, small and micro businesses in the textile industry are currently going through apparent difficulty, their operation rate and workers return rate being significantly lower than that of large and medium-sized enterprises.
 
It is noteworthy that although the era of two-digit growth of the textile industry, which had lasted for years, is now gone and the industry will go on to face low-pace growth for a long time to come, there are still some enterprises, facing all the same numerous difficulties, that have achieved outstanding operation results. The fundamental factors that have sustained their growth against the odds are their timely adjustment of product structure and innovations of brands and technology.
 
Information from CNTAC indicates that the market environment facing the textile industry in 2013 is generally better than that of last year. Foreign demands are relatively stable, and the fundamentals of the domestic market remain favorable. In addition, with the implementation of macro control measures and restoration of market confidence, there is still room for growth in the domestic market; the further advance of structural adjustment and transform and upgrading of the textile industry will increase momentum for the development of the industry and help the industry to overcome all kinds of pressure elements. The textile industry has the internal and external conditions for maintaining steady growth with accelerated growth month on month and quarter on quarter. It is estimated that production, sales, and benefit will all grow steadily in the first half of the year and the growth will be higher than that in the same period of last year.
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