According to data collected from 11,773 statistics-worthy Chinese cotton textile enterprises surveyed by National Bureau of Statistics of China, from January to May 2010, main business income of the industry increased by 29.2 per cent to 447.13 billion yuan; total profits jumped 75 per cent to 20.66 billion yuan; goods delivered surged 29.2 per cent to 36.04 billion yuan.Profit turned positive

According to data collected from 11,773 statistics-worthy Chinese cotton textile enterprises surveyed by National Bureau of Statistics of China, from January to May 2010, main business income of the industry increased by 29.2 per cent to 447.13 billion yuan; total profits jumped 75 per cent to 20.66 billion yuan; goods delivered surged 29.2 per cent to 36.04 billion yuan.

During Jan.-May period, enterprises in the cotton textile sector saw their ratio of profit growth edged up by 4.62% year on year, 0.2% higher than the average level of the whole textile industry. The growth was attributed to an increase in domestic sales and market confidence.

The production efficiency and management of Chinese cotton textile sector were quietly undergoing a welcome change. These, along with higher sales volumes of products, led to improvement in the operating profit margins of most large mills.

Materials price went up constantly

Cotton: The cotton production of China in 2009/10 marketing year is 7 million tons, and cotton quotas delivered was 3.6 million tons till now. It is estimated that mill use in the 2009/10 marketing year is 11 million tons.

Domestic cotton price has been going up in the first half of 2010. In July, China Cotton Index for 329-grade cotton reached at 18,500 yuan/ton. Accordingly, more and more cotton mills are begging the government to sell state reserve cotton by auction, as well as to give them import quotas for cotton as soon as possible. Moreover, the simultaneously skyrocketing prices of cotton yarn have also forced lots of cotton weaving mills to come to the end of their tether.

Production in the U.S. may rebound this harvest to around 19 million bales from 12 million last year. Output is forecast at 18.3 million bales by the USDA. Output in Brazil, the largest southern hemisphere shipper, had ??come back slightly?? from earlier expectations to around 1.1 million metric tons.

The daily world cotton indicator price in June 2010 was US95.7 cents a pound, the year-to-date high. The cotton indicator price is forecast to begin easing over the next few months as a result of a large increase in cotton production in northern hemisphere countries, particularly the United States. This expectation is reflected in the prices for the no.2 cotton futures contraction the Intercontinental Exchange where, at 15 June 2010, the July 2010 contract closed at US82 cents a pound, while the October 2010 contract closed at US79.3 cents a pound. The world indicator price for cotton (the Cotlook 'A' index) is forecast to average US82.5 cents a pound in 2010-11 (August to July), which is a 6 per cent increase from 2009-10. This forecast reflects an expected further fall in the cotton stocks-to-use ratio, despite a rebound in world cotton production in 2010-11.

Yarn: According to the National Bureau of Statistics (NBS), China yarn production was 2.16 million tons in March, up 535,000 tons or 33 percent from February. As of the end of March, the cumulative cotton yarn production of this marketing year reached 14.61 million tons, up 18 percent from year ago. In addition, according to China Customs, China exported 54,955 tons of cotton yarn, almost as twice as much of February. As of the end of March, the cumulative cotton yarn export of this marketing year reached 307,766 tons, up 31 percent from year ago.

Yarn price was running smoothly in Jan.-Feb. and then went up as stocks-to-use ratio declining in May-Jun. In Jul., Yarn price began easing as orders declining.

Grey Fabric: Grey Fabric price was running smoothly in Jan.-Feb. and then experienced high jumps in March. In Apr., price was running smoothly again and went up since May.

The China cotton market still looks bullish, though a number of uncertainties linger on. Tight supply from cotton imports, fast growth of cotton yarn exports, and the delayed cotton planting will support cotton price. However, the uncertainties of RMB appreciation, macroeconomic policy to prevent inflation, and the acceleration of the cotton shipping from Xinjiang to inland area should be noted.

Stable in 2nd half

To conclude, there is a long list of issues to keep an eye over the coming.

An unrelenting rise in the cost of raw materials and yuan appreciation could may pull down the performance of Chinese cotton textile industry in the second half of 2010 although substantial progress has been achieved by the industry in all areas of statistics in the beginning of 2010.

For the United States and the Euro area?? economy, most economists are quick to point out the uncertainties. Specifically, they refer to the fragile nature of the recovery. Although we??ve seen some improvement in consumer attitudes, their confidence in the economy is still well below where it was in 2007. One of the reasons behind that lack of confidence is the European debt crisis.

Finally, for the second half of 2010, Chinese cotton textile industry will see a continue recovery but risks still exist.
POST: 2024-11-24