Chinese textile firms still pessimistic on future outlook

18 Mar '14

2 min read

New Year 2014 began with the implementation of a pilot cotton subsidy policy in Xinjiang autonomous region, but a survey carried out by the China Cotton Textile Industry Association said companies are pessimistic about the future outlook, especially short-term outlook, of the Chinese cotton textile industry.

Most textile companies still lack confidence in the market situation, and are not optimistic about the situation improving this year, and some companies are already planning or continuing to increase their production overseas, according to the findings of the survey.

In 2014, the Chinese domestic market is facing many changes, but these are not expected to reflect in the short-term. China currently has an estimated cotton inventory of 13 million tons or 60 percent of global cotton stocks, enough to last for three years for the domestic textile industry. This huge inventory while guaranteeing adequate supply to the cotton market will also continue to put pressure on cotton prices.

From September 2014, the Chinese Government would not be purchasing any cotton for national reserves, which means the domestic cotton price is bound to take a downward turn, which in turn, would also bring down prices of cotton yarn.

One of the respondents of the survey said, if the price of reserve cotton is decreased by a big margin, then it would mean devaluation of inventories of cotton and cotton yarn with the companies. Another problem with state reserve cotton is that it does not meet the quality demand.

In addition, several other problems remain, which include the rising cost of labour, electricity and other factors of production. Moreover, countries in the Asean region enjoy tariff concessions for exporting to developed countries. So, many textile enterprises are actively planning to move production overseas, including countries like Turkey and Ethiopia.

Fibre2fashion News Desk - India

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