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High cotton prices hit textile enterprises in Hebei
Jun '09
Hebei Province has hundreds of cotton textile enterprise and about 400,000 industrial workers. Cotton prices directly affect normal production of the textile industry and at present, about half of textile enterprises are partly shut down due to cotton shortage.

It is estimated that domestic cotton price is 2,000-2,500 Yuan per ton higher than in global markets, which has created tremendous pressures on domestic textile industry as nearly 50 percent of the capacity relies on exports.

The huge cost difference makes it very difficult for domestic textile enterprises to compete in international markets. After a large amount of cotton was purchased for state reserves, there seems to be a shortage, due to which prices keep on rising.

At the same time, cotton imports are subject to quota restriction and all these factors have exacerbated the difficult situation of the textile enterprises. In domestic market, the cost of spinning 21s count yarn is 17,000 Yuan per ton, while port import price of the same is only 14,000 Yuan per ton.

China's textile industry has been fully integrated into global competition, but now China's cotton textile enterprise are less competitive, because India and other countries have no quotas for cotton imports and market prices range in 10,200 to 10,600 Yuan per ton.

The Secretary-General of a trade body, Mr Geng Shu-Ping says that gross profit of the textile industry is 3 percent at present; the textile industry will be non-profitable if the average cotton price goes beyond 13,000 Yuan per ton and will affect jobs of hundreds of thousands of industrial workers.

Fibre2fashion News Desk - China

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