Who is driving the soaring cotton price?

On July 20, there was a torrential rain in Beijing and almost all flights from Hubei to Beijing were cancelled. Sun Yingan, chairman and general manager of Hubei Xiaomian Industrial Group Co., Ltd., still took the high-speed railway and rushed to Beijing. Among those who braved the rain to attend the symposium of cotton textile enterprises in Beijing with him were the bosses of more than 150 textile enterprises across the country.

"the price of cotton is really crazy. If we don't discuss a way, we really can't live." this became the opening remarks of the bosses.

The delayed release of reserve cotton, the soaring price of reserve cotton, and the release of reserve cotton with "miscellaneous expenses". Cotton reserves have become the "pain point" of the textile industry at the end of summer. On the one hand, there is a backlog of treasury reserves, but on the other hand, cotton prices are skyrocketing, and textile enterprises have no cotton to spin. What is wrong with this?

"Cotton Palm" hits the textile industry hard

The national cotton reserve has been put into operation for three months, and the price has increased by as much as 30%, and the psychological price of the enterprise has been broken through repeatedly.

At the beginning of this spring, the news that reserve cotton will be put on the market in April spread among textile enterprises, and it has become a consistent decision for enterprises to control cotton inventory to reduce costs. However, to the surprise of enterprises, the announcement of the release of cotton reserves was not released until April 15, and the release date was changed to May.

"We began to control cotton stocks in March, but we didn't expect that the state did not release it at all in April. In order to keep the order, we have to go to the market to buy high-priced cotton. " Sun Yingan said.

The release of cotton reserves was delayed, making cotton a hot commodity, and cotton prices began to soar. Just take * * cotton enterprises as an example, in March and April, the upside-down range of costs and selling prices of cotton enterprises in Xinjiang expanded from 200-300 yuan / ton to 1200-1500 yuan / ton, and enterprises immediately felt panic.

Textile enterprises, which thought they would get a respite after a month, soon found that after the release of cotton reserves, cotton prices not only did not stabilize, but became more and more crazy. Since it was thrown into storage on May 3, the turnover rate of the national cotton reserve has exceeded 98%, and the price has also surged from 12428 yuan / ton to the highest transaction price of 16350 yuan / ton on July 28, an increase of more than 30%. The high price of national cotton reserves has led to the continuous rise of spot lint, and the lint quotation has also risen from about 11000 yuan / ton in early April to about 15000 yuan / ton, a cumulative increase of about 35%.

"in February and March, we bought cotton at a factory price of 12300 yuan per ton, and we communicated with others,'We need to store and not ship any more goods'. As a result, the storage did not start for a long time, and then the price of cotton reserves began to soar, "Wu Mingfeng, general manager of Vosges Group Co., Ltd., revealed that the frequency of the enterprise's meeting on cotton procurement was shortened from 10 days to 3 days." what people talk about most is' crazy again', and the price rises so much that we don't know how to start. "

Di Hui, deputy general manager of China Resources Textile Group, also said frankly that because the state wants to store and auction, the enterprise specially controlled the inventory and the rhythm of buying cotton in the early stage, but now it can only buy high-priced cotton. "the orders of export enterprises were all signed at the end of last year, and the price of the order will not change, but the price of cotton can not catch up, and the psychological price has been broken through again and again."

What is more unexpected to the enterprises is that the price of cotton is not only high, but also "it is difficult to get a single cotton." "originally, our purchase intention was more than 11300 tons, but now we have only completed a transaction of more than 3700 tons, with a transaction rate of less than 32.8 percent." Di Hui sighed.

Lu Xiping, deputy general manager of Henan Xinye Textile Company, also said that the company's cotton use is very tight at present. "since June, the company's cotton inventory has been very low, but the daily supply of cotton reserves is only more than 20,000 tons. Enterprises cannot buy more if they want to, and there are almost no spot resources on the market. In order to ensure that there is enough cotton, the company has made great efforts."

Huafu color textile person in charge also said that before, the micronaire value of cotton lower than C1, the company will not buy, now, the company only hopes to buy cotton.

Behind the "madness" of reserve cotton prices

It is difficult to use cotton due to man-made factors such as low storage, trader "intercept", delay in escrow warehouse and so on.

"if you don't buy it, you will stop production, and if you buy it, you will go bankrupt." this is the summary of many textile enterprises on this round of national cotton reserve auction. However, what puzzles enterprises is what is the reason for this round of soaring national cotton reserve prices.

Is the cotton supply tight? The domestic supply of cotton is quite abundant.

"the embarrassment now is that there are a lot of cotton reserves, but textile enterprises have no cotton to use." Wang Qiang, chief executive of Shandong Ruyi Group, said, "there are more than 10 million tons of cotton reserves in the warehouse, and we had a bumper harvest last year. We have a supply of nearly 20 million tons of cotton. It is really strange that the supply of cotton is so large that enterprises are forced to stop production! "

Is it the outbreak of market demand? External demand is in the doldrums, domestic demand is stable, and there is no sign of demand blowout.

"Enterprises all think that this sharp rise in cotton prices is very strange. It is not that we have not experienced a sharp rise in cotton prices, but the last round of rise is supported by orders, but this time, downstream enterprise orders are not prosperous, the market is in the doldrums, but the price of raw materials has gone up. " Di Hui said.

So where does the market change come from?

The scale of national cotton storage is lower than expected, resulting in a mismatch between supply and demand. According to the notice on organizing the rotation sale of national cotton reserves, under normal circumstances, the daily sale quantity of cotton reserves does not exceed 50,000 tons. If there is a marked rapid rise in cotton prices over a period of time, and the competitive sale rate of reserve cotton exceeds 70% for more than three days a week, the number of listed sales will be appropriately increased. After that, the National Development and Reform Commission made it clear that the daily input of cotton reserves should not be less than 30,000 tons. However, since it was launched on May 3, when the turnover rate is close to 100%, the daily cotton output of the State Reserve is lower than the requirement of 30,000 tons, and even lower than the market expectation of 50,000 tons per day.

"dumping reserves is to increase supply, which will certainly stabilize or even lead to lower market prices, which is not only the unanimous judgment of enterprises, but also the market law. However, very few reserves, a large number of new cotton has also been taken away by traders, resulting in the real economy can not afford cotton, do not need cotton. " Wang Qiang said.

Some traders take advantage of the opportunity to hoard goods and hype the "cotton shortage" to make a fortune. According to the statistics of the China Cotton Textile Industry Association, the proportion of cotton reserve transactions between textile enterprises and trading enterprises has fallen from 66 per cent ∶ 34 per cent to 57 per cent ∶ 43 per cent. During this period, textile enterprises once accounted for less than 50 per cent. Many enterprises reflect that a large amount of cotton photographed by traders is stranded in the warehouse.

"the existence of national cotton reserves is to ensure the supply of raw materials for the manufacturing industry, but why are half of them in the hands of traders? And traders are purchasing for small and medium-sized cotton enterprises, small and medium-sized cotton enterprises have no cotton to spin, how can so many traders bid for cotton but do not pick up the goods? " Di Hui reflected that she asked the warehouse many times when the cotton could come out of the warehouse, and the other side always replied, "your cotton is blocked by traders and can't get out."

Sun Yingan also said, "some traders bid for cotton but do not pick up the goods, resulting in a reduction in the efficiency of cotton out of the warehouse, and cotton prices rise every day for the purpose of speculation."

Some warehouses also contributed to the stir-fry. Enterprises generally reflect that after the transaction payment this year, at least 15 days or so to get cotton, and have to pay a series of "exorbitant fees and fees" without invoices. "the messy fees proposed by the warehouse for overturning, restocking and packing have all been paid. In order to ensure production, the warehouse gives what it says and what it wants, and even logistics is allowed to be designated at a high price. " Sun Yingan said.

Yu Xiaoxin, director of the Public Inspection Department of the China Fiber Inspection Bureau, also revealed that at present, in addition to the 16 warehouses directly under the state, the remaining 265 are social repositories. The conditions of these warehouses are poor and the willingness to leave the warehouse is not strong, because it involves warehousing subsidies. If the cotton stays in the warehouse for one more day, the state will have to pay for one more day. "some warehouses have an alliance in private, and whoever releases more than three batches a day will jointly clean up the rest of the warehouse. So when leaving the warehouse, these warehouses always have an excuse to procrastinate, for a moment there are no workers, and then the car breaks down. At present, the state has no restraint mechanism on social repositories. "

Reduce institutional transaction costs

The enterprise suggests that the daily supply of cotton reserves should be increased as soon as possible, while the bidding of non-cotton enterprises should be restricted.

When Sun Yingan came to Beijing, Xiaomian, the leading enterprise in Hubei's textile industry, had already decided to have a holiday of more than ten days. "in fact, a number of workers from the shutdown enterprises around Huangshi, Honghu and Jingzhou have all defected to Xiaomian, and we do not want to stop production, but there is really nothing we can do about it. Now that the price of cotton has risen by 3,000 to 4,000 yuan per ton, the price of cloth has not risen at all, and there will be no change in the release of cotton reserves. "

In Henan, Hebei and Shandong, many textile enterprises are also planning to stop work and wait for production. "now it is the test of life and death again. We have a bearing on the employment of tens of thousands of people, and we cannot just say so. However, in terms of cotton raw materials, due to quota restrictions, we are unable to allocate international resources freely, and we have to pay high institutional transaction costs, so that we can lose at the starting point before we start in the international competition. " Tang Zhangming, chairman of Changshan Textile Group, said frankly.

In the view of Yang Baofu, deputy general manager of the national cotton trading market, 2016 is actually the best year for the design of the dumping and storage system over the years, but it has encountered many unexpected difficulties in the process of implementation. in fact, industrial capital has been blocked by speculative capital, and textile enterprises have suffered a tremendous impact.

It has become the voice of the textile industry to restrain speculation, restore the normal order of the market and increase the amount of cotton reserves as soon as possible. "covering the market and cherishing the sale is bound to damage the public and the private sector. Putting cotton for one more year is a huge financial burden, and increasing the amount of cotton input is a win-win situation. " Sun Yingan said that the annual cost of the treasury reserve for each ton of cotton is about 1400 yuan, which means that the treasury has to pay tens of billions of yuan for the cotton reserve every year, not including downgrade depreciation. Once the cotton crisis forces enterprises to stop production on a large scale, the national cotton reserve will be more difficult to deal with.

The state should also issue regulatory rules for the reserves, and there should be corresponding penalties for the warehouses where cotton can not be released on time. Enterprises generally reflect that at present, there is a fine for enterprises not to pick up the goods within 10 days, while there is no corresponding compensation if the storage does not leave the warehouse within 10 days. Rights and obligations are corresponding, and the efficiency of collection should be borne by both parties.

It is also the suggestion of many enterprises to restrict the auction and storage of non-cotton enterprises for a period of time. "the order was signed in the fourth quarter of last year and we can't default. And there are more than 100 small businesses that work with us. If we stop working, what about these small businesses? Can the state prohibit or restrict the auction and storage of non-cotton enterprises for a period of time, so as to squeeze the space for speculation and protect the use of cotton in the real economy? " Wu Mingfeng suggested.

To fundamentally solve the "cotton robbery" faced by the textile industry in recent years, we still have to rely on deepening reform. A few days ago, the National Development and Reform Commission and the Ministry of Finance jointly issued a document that the selling and storage time was extended from the end of August to the end of September, and the total amount could exceed 2 million tons. Futures prices and auction transactions declined, and enterprises entered a new round of wait-and-see and market panic.

"the current rise in cotton prices is essentially a conflict between the planned economy model and the market economy model," Sun Ruizhe, vice president of the China Textile Industry Federation, suggested that the state should increase the daily release of cotton, and the cotton throwing system should be tilted to production-oriented enterprises. in addition, in view of the gap in high-quality cotton, import quotas should be increased. "at present, the textile and clothing industry accounts for about 13% of China's export trade, and about 12% in solving employment, which is of obvious importance. Only by continuing to play a decisive role in resource allocation and reducing institutional transaction costs can we further consolidate the international competitiveness of the textile industry. "