A survey conducted among 30 domestic cotton enterprises reveals that, even though data released for imports and exports of the textile and garment sector, was not so optimistic, all the operational indicators of large and medium-sized textile enterprises have relatively improved compared to the end of last year.
These parameters include operating rates and finished product inventories, which has also driven cotton prices to higher levels in recent weeks, which are all pointers to a slow but steady economic recovery in the textile industry. More than half of the surveyed enterprises continue to be optimistic about the markets.
However, because of the continued uncertainty of global economy and the US, EU and Japanese economies in particular, which are the three key markets for textile and garment shipments, the other half do not feel optimistic about textile sales in next few months and expect export situation to remain grave.
As per the survey, the inventory cycle of finished products has dropped to 28.75 days on average, cotton raw material inventory of large and medium-sized textile enterprises has dropped to 26.25 days and inventory of some enterprises has even come down to mere 10 days, reflecting that inventory of textile enterprises is near bottom.
The state had earlier launched cotton procurement and reserve programs, mopping up around 2,720,000 tons of the cotton in the process. As per the survey data the consumption rate of Xinjiang cotton among spinning enterprises is 26 percent on average, with the highest only 50 percent.
Cotton has also not been imported in huge quantities, due to lower prices prevailing in domestic markets, which compelled most of the textile units to consume domestic cotton. This in turn has increased the proportion of consumption of inland cotton and has also created a tight supply position of high quality inland cotton. .
Even though domestic cotton spot prices rose by 700 Yuan per ton in February, more than 54 percent of the enterprises still expect cotton prices will rise in next three months, while 16 percent enterprises do not expect any substantial change in the same period and 30 percent project a drop in prices in the next three months.
Fibre2fashion News Desk - China
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