February 2021 Cotton Textile Industry Report(1)

Update:16 Apr 2021
Summary:

In February, the domestic economic operation continued […]

In February, the domestic economic operation continued the development trend of stable recovery since last year, the economic cycle became increasingly smooth, and market expectations continued to improve. From the perspective of the industry, due to factors such as the Spring Festival holiday, the production and operation of enterprises have slowed down, and the industry's prosperity index fell to the contraction range below the prosperity line, but it was better than the same period last year.
In February, China's cotton textile prosperity index was 47.97, which was lower than that in January, which was a cyclical decline. In terms of sub-indices, in February, the raw material procurement index, raw material inventory index, and business confidence index increased compared with January, while the production index, product sales index, product inventory index, and business operation index decreased compared with January, especially the production index and corporate business index. The operating index declined relatively high, which drove the decline in the cotton textile prosperity index in February.
Raw Material Purchasing Index
In February, the raw material purchase index was 51.33. From the perspective of market prices, during the Spring Festival, global stock markets continued to rise, and international cotton prices rose sharply. The average CotlookA index for the month was 92.76 cents/lb, up 5.52 cents/lb from the previous month; the domestic Zheng cotton was driven by the large increase in the external market. After the gap, it opened higher and exceeded 17,000 yuan/ton in late February, which was much higher than the pre-epidemic level. The average price of 3128 cotton that month was 15,955 yuan/ton, an increase of 567 yuan/ton from the previous month. For chemical fiber staple fiber, the market sentiment is preferred around the Spring Festival, and prices continue to rise. The monthly average price of mainstream viscose fiber is 14440 yuan/ton, an increase of 1653 yuan/ton from the previous month; the short-month average price of 1.4D direct-spun polyester is 7096 yuan/ton, an increase from the previous month 835 yuan/ton. From the point of view of the purchasing situation of cotton spinning enterprises, the proportion of companies that have decreased in raw material purchases is relatively high. Among them, the proportion of companies that have decreased in cotton purchases is 38.16%, and that of non-cotton fiber purchases is 39%. It can be seen that the increase in the raw material procurement index in February was mainly driven by price increases.
Raw material inventory index
In February, the raw material inventory index was 50.17. The main reasons for the increase in the raw material inventory index of cotton textile enterprises during the month: First, most companies restocked raw materials before the Spring Festival to ensure later production needs; second, some companies had holidays during the Spring Festival, production slowed down, and raw material consumption decreased; third, February In the middle and late ten days, textile enterprises resumed work and production increased, and increased raw material inventories under the optimistic expectation of the market outlook. The enterprises reported that the trading atmosphere in the chemical fiber staple market after the holiday was good. According to survey data from the China Cotton Textile Industry Association (hereinafter referred to as the "China Cotton Industry Association"), in February, 39% of the companies with a month-on-month increase in cotton inventory, and 37.45% of companies with a month-on-month increase in non-cotton fiber inventories .
Production index
In February, the production index was 44.4, a significant decline. During the month, the number of normal production days for most enterprises decreased. In addition, local governments strengthened the prevention and control of the epidemic during the Spring Festival. Cotton textile enterprises actively responded to government advocacy by controlling the rate of staff employment and lowering the operating rate. Due to limited logistics, enterprises in some regions cannot deliver orders on time. They have to suppress production and shrink production, and the output of yarn and cloth has decreased month-on-month. After the holiday, enterprises actively resumed work and production, and the operating rate gradually recovered. According to the data from the China National Cotton Bank, in February, 53.98% of companies had a month-on-month decline in operating rate, 78.63% of companies had a month-on-month decline in yarn production, and 81.17% of companies that had a month-on-month decline in cloth production.
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