Optimistic demand, leading cotton spinning companies accelerate capacity expansion
Recently, spinning processing profits have been relatively good, yarn prices at home and abroad have been rising steadily, and most spinning companies are optimistic about future demand. Against this background, leading companies have accelerated the pace of production capacity expansion, invested in building factories, and improved the industrial chain.
Tianhong Textile builds 300,000 spindles cotton spinning production line
On August 6, the signing ceremony for the Xuzhou Tianhong high-end textile fabrics R&D and production project was held in Suining County, Xuzhou City, Jiangsu Province. Hong Tianzhu, chairman of the board of directors of Tianhong Textile Group, said that the project will further improve the vertical integration of the light textile industry chain based on Tianhong’s existing industries, with the goal of creating an intelligent industrial chain and deepening industryintelligent Industrialization construction to achieve interconnection of industrial chains.
It is understood that Xuzhou Tianhong’s high-end textile fabrics R&D and production project has a total investment of approximately 10.5 billion yuan, building 1.2 million square meters of various high-standard factories, 300,000 square meters of supporting ancillary and functional facilities, and adding 300,000 spindles of cotton spinning production lines. 50 knitting dyeing production lines, 25 woven dyeing production lines, 30 loose fiber dyeing production lines, purchasing 10,000 looms and 200 eddy current textile machines. The project is expected to be completed and reached capacity in 2025, and is expected to achieve sales revenue of 15 billion yuan, with profits and taxes of 900 million yuan.
Since the second half of last year, Tianhong Textile has performed well. As of May 31, 2021, Tianhong Textile’s net profit after tax this year exceeded 1 billion yuan. Regarding the reasons for the changes in the company’s performance during the reporting period, Tianhong Textile explained that it was mainly due to the continued recovery of textile market demand and product gross profit margin since the fourth quarter of 2020, coupled with the increase in raw material prices, so the average product selling price increased accordingly, compared with the previous Due to the lower cost of raw materials purchased or ordered over several months.
Industry insiders judge that in the short term, the domestic epidemic will gradually be controlled, foreign orders will be transferred domestically, the textile and clothing industry will usher in the peak sales season, and market demand will continue to be released. Judging from the layout of Tianhong Textile’s downstream business, it is expected that its long-term The integrated layout improves stability, and the downstream business is expected to continue its performance in the second half of 2020.
In terms of yarn business, industry insiders said that Tianhong Textile’s yarn business demand has fully recovered to pre-epidemic levels. Although the gross profit margin will gradually return to normal levels in the second half of this year after the advantage of low-price inventory disappears, it is expected that in the second half of this year, As demand gradually recovers, the 840,000 tons sales plan formulated by Tianhong Textile at the beginning of the year has a high probability of being realized. Therefore, after the high gross profit margin advantage in the first half of the year has passed, Tianhong Textile’s yarn business is still expected to maintain steady growth in the second half of the year.
Fuchun Dyeing and Weaving invests in 500,000 spindles precision spinning project
On August 4, Wuhu Fuchun Dyeing and Weaving Co., Ltd. (hereinafter referred to as “Fuchun Dyeing and Weaving”) released its first semi-annual report after listing. Benefiting from the strong demand from downstream sock companies, the company achieved operating income of 925 million yuan from January to June, a year-on-year increase of 56.48%; and net profit of 103 million to 106 million yuan, a year-on-year increase of 318.87%. While its performance is growing, Fuchun Dyeing and Weaving has taken advantage of the trend and launched a 2 billion yuan investment plan to build an intelligent precision spinning project with a scale of 500,000 spindles to expand into the upstream spinning industry.
It is understood that the package yarn produced by Fuchun Dyeing and Weaving is mainly used for socks, T-shirts and other products. The industry prosperity and development prospects of the sock industry will directly reflect the package yarn printing and dyeing field where the company is located. The relevant person in charge of the company said: “As an upstream cotton yarn supplier for sock-making companies, Fuchun Dyeing and Weaving has broad development prospects. On the one hand, my country’s sock-making industry has formed an important role in the international market. Dominant position, has become the largest exporter of socks in the world. On the other hand, the improvement of domestic consumer spending power has changed many dressing habits in the past, and socks will inevitably become clothing The largest consumables in the field. Most of the products of domestic yarn companies are mainly high-count yarns, and Fuchun dyeing and weaving can produce 80-count or even 100-count or 120-count yarns.”
Domestic cotton prices have been rising for some time. The above-mentioned person in charge said: “Affected by the rise in cotton prices, the price of cotton yarn has been rising all the way in the first half of the year. Now it can be said that it is hard to find yarn. The reason for this situation is The epidemic abroad is developing rapidly, mainly due to the impact of the epidemic in countries such as India and Vietnam, where local production capacity cannot be opened, resulting in a shortage of cotton yarn.” According to his introduction, a large amount of cotton yarn purchased by Fuchun Dyeing and Weaving comes from Pakistan, India, Vietnam, Indonesia and other countries.
According to industry practice, the production and operation of enterprises must ensure that there is a certain inventory of raw materials. Taking Fuchun Dyeing and Weaving as an example, in years with normal market conditions, the company needs to maintain raw material inventory for one to one and a half months. “Cotton yarn is in particularly tight demand this year. Since the second half of last year, our monthly production of colored yarn has reached 5,400 tons, which requires 8,000 tons of raw material inventory. Without this inventory, production cannot remain stable. At the end of June, our inventory was only 3,000 tons. If it’s more than a ton, it’s close to about 60% of the normal monthly output.” said the person in charge.
Based on its own operating conditions and industry development, Fuchun Dyeing and Weaving began planning to launch an intelligent precision spinning project two months after its listing to enter the upstream yarn industry. An intelligent precision spinning production project with a total investment of 2 billion yuan.�The construction scale is 500,000 ingots and will be constructed in two phases. The investment in the first phase is about 1 billion yuan, and the project construction period is expected to be 36 months. The person in charge of the company said: “After the completion of this project, the strength, abrasion resistance, gloss and drape of the product will be very good, making it an ideal yarn for the production of high-end fabrics. In addition, our upstream raw material high-end yarn has Supply security while effectively reducing costs.”
Blum Oriental expands 390,000 spindles of yarn project in Vietnam
In addition to investing in and building factories domestically, Chinese textile companies are also actively accelerating their overseas expansion. In early July, Blum Oriental Co., Ltd. (hereinafter referred to as “Blum Oriental”) announced that the company plans to raise no more than 1 billion yuan in additional capital for the expansion of Blum (Vietnam)’s 390,000 spindle yarn project. Blum (Vietnam)’s expansion of 390,000 spindles of yarn project has a total investment of US$250 million. It is located in Fudong Industrial Park, Xining City, Vietnam. The implementation entity is Blum (Vietnam) Co., Ltd., a wholly-owned subsidiary of the company.
According to analysis by industry insiders, colored spinning, as an emerging branch industry in the textile industry, represents the development trend of yarn production. With the industry’s environmental protection standards, technical level and The continuous increase in personalized demand, as well as the increase in residents’ disposable income and the continuous upgrading of consumption, have put forward higher requirements for the design and development of textiles. The future market demand of the color spinning industry will increase significantly, and it has broad market prospects. As a leading enterprise in color spinning, Blum Oriental’s overseas expansion projects can enhance the company’s production capacity and meet future market growth needs.
Blum Oriental said that Vietnam is the only country connected to my country by sea and land in the construction of “One Belt, One Road” and has significant geographical advantages. As one of the important members of ASEAN, it enjoys various trade policy preferences within and outside ASEAN, has signed free trade agreements with Japan, South Korea, the EU and other countries and regions, and has issued a number of attractive policies. Preferential policies for foreign investment have good export-oriented economic characteristics, attracting brand companies to transfer orders to Vietnam. Coupled with its relatively low labor costs, for labor-intensive enterprises In terms of cost advantages, it has become one of the important destinations for overseas investment by domestic enterprises in recent years.
Overseas investment brings both opportunities and risks. Blum Oriental stated that due to the epidemic, Vietnam began to implement the second round of 14-day social distancing measures from 0:00 on August 2. As a result, Blum Oriental’s wholly-owned subsidiary Blum (Vietnam) Co., Ltd. located in Tay Ninh Province, Vietnam, has implemented the second round of the “three locals” policy since 0:00 on August 2, that is, employees in the factory work on site, Eat and rest on the spot. Due to restrictions on the movement of people in the places where some Vietnamese employees live, they cannot come to work within the above 14 days, which will affect the existing production capacity of Blum in Vietnam.
Up to now, Blum Vietnam has a production capacity of 1 million spindles, accounting for approximately 60% of Blum Oriental’s total production capacity. According to Blum Oriental’s preliminary calculations, during the implementation of this round of Vietnam’s epidemic prevention and control measures, Vietnam’s Blum production capacity will be reduced to about 32%. It is expected that for every 14 days that Vietnam Blum is affected, the company’s annual output will decrease by 2%. However, Blum Oriental said that the company’s current orders on hand have not been affected.
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