Textile raw materials prices increase textile manufacturing industry

As the largest fabric supplier in China and the leader in the textile industry, Ruyi Group did not feel the pressure from the rising prices of raw materials. Every day, Zhang Wei, deputy general manager of Ruyi Property Group, will look at ICE agricultural futures prices and domestic cotton futures prices.

In addition, changes in the price terminal of the textile and garment industry, export orders, cotton global supply and demand, China's supply and demand, exchange rate fluctuations and other data and Xinjiang cotton production, national policy changes are also closely watched.

Ruyi Property Group is specialized in providing reserves for the purchase of bulk raw materials. Ruyi's demand for cotton in the cotton spinning industry is 300,000 tons. The price of new cotton listed in October last year was not high, at around 14,800 yuan per ton. Ruyi has concentrated on purchasing 124,000 tons of cotton in the Corps and also engaged in cotton trade. "Only by combining trade and industry can we seize market opportunities and really reduce the cost of cotton procurement." Zhang Wei said.

Zhang Wei said that by November 11 last year, cotton futures prices had already reached 17,000 yuan per ton, and they have been adjusted back. Up to now, the spot price of Xinjiang cotton is around 16,600 yuan per ton.

Because the wishful purchase order is very large. For many years, Ruyi and the Xinjiang Construction Corps have maintained a good relationship. "When resources are tight, if you can get the goods, you can lock in the price, you can use the supply chain procurement model, and move the resources to the warehouse of your own factory." Zhang Wei said.

Because the orders are different, it needs to use imported cotton processing. Every year, the purchase of domestic cotton accounts for two-thirds of the total purchases, and the rest comes from the United States and Australia. Cotton prices in Australia and the United States are now rising.

In 2013, Ruyi acquired the Australian Krabi cotton field. Now, Ruyi has its own cotton production base in Australia. Through this cross-border resource allocation, increase control over upstream raw material resources.

From September last year to the present, Ruyi has purchased about 100,000 tons of imported cotton, and the US cotton has been rising. It has risen from 60 cents per pound to 70 to 80 cents, and then has been adjusted back. The increase is very large.

Zhang Wei said that based on market judgment, if cotton futures are higher than the spot price, hedging will be used to protect the price of the resources at hand.

From the international market, the global cotton gap this year is 2 million tons. China's cotton exports are subject to tariffs and quotas. Domestic cotton supply is relatively abundant. At present, domestic cotton commodity stocks are around 1.5 million tons to 2 million tons.

Zhang Wei admits that at present, prices, from yarns to grey fabrics to clothing, are rising and are being transmitted back and forth. Ruyi is the operation of the entire industry chain, so it is beneficial in this wave of price increases. It is difficult for SMEs to withstand the risks of rising raw material prices because they do not have the money to smear when cotton prices are low. In addition, some new business models cannot be carried out. For example, only by paying a deposit, suppliers can put cotton. When sent to the factory, only companies like Ruyi can get this credit.

However, in Zhang Wei's view, this round of cotton price hikes will soon be able to calm down, because 8 million tons of reserve cotton will soon be put on the market, this batch of reserve cotton will be put into August, the domestic cotton supply is relatively sufficient. .

Ruyi now has about 100,000 tons of cotton reserves on hand, which can support 3-4 months of production. Zhang Wei said that he will not blindly reserve a large amount of reserves, because he will be able to pick up the national reserve immediately.