Cotton enterprises in northern Xinjiang face high operating risks, but textile enterprises operate basically normally
In the week of March 7, reporters visited cotton processing companies, textile companies, and cotton warehousing companies around northern Xinjiang to conduct research on Xinjiang’s cotton purchase and sales, textile production, and preparation for new cotton cultivation. Overall, Xinjiang’s cotton sales are progressing slowly, especially in northern Xinjiang, where ginning companies have greater operating risks. The Xinjiang Cotton Bill has a certain impact on textile companies, but its impact on mainland textile companies is greater than that of Xinjiang textile companies.
Judging from the research, the overall sales situation of cotton companies in northern Xinjiang was not good in the early stage, and the sales volume contribution in Xinjiang mainly came from some relatively low-cost cotton companies in southern Xinjiang. Since the increase in cotton purchasing price this year coincides with the peak period for the launch of machine-picked cotton in Northern Xinjiang, and the sales price of cotton seeds during the same period is generally lower than that in Southern Xinjiang, although the proportion of cotton “double 28” and above in Northern Xinjiang has increased significantly compared with the previous year, However, the clothing content has declined. Therefore, the average cost of purchasing and processing cotton in northern Xinjiang is generally higher than that in southern Xinjiang. It is expected that the curse of “first northern Xinjiang and then southern Xinjiang” in cotton sales will be broken this year.
During the communication with local cotton companies, the relevant person in charge reported that if there is no major change in later policies and downstream consumer demand, losses may be a foregone conclusion. At present, some companies are actively taking various measures to promote sales and minimize losses, and local cotton warehouse shipments are also significantly lower than the same period in previous years.
At present, the production of textile enterprises in Xinjiang is basically normal, but the inventory of raw materials remains low, downstream consumption and orders are lower than expected, yarn inventory is on the rise, and some enterprises are reducing production capacity. The person in charge of an enterprise said that at present, textile enterprises mostly supplement lint resources in the form of joint ventures with ginning factories, mainly buying them as they are used. The cost price of lint is too high, which is inconsistent with the increase in yarn price. Regarding the impact of the “Xinjiang Cotton Act” on the domestic textile industry, he said that since the Sino-U.S. trade conflict, textile companies have been constantly adjusting their business strategies. Products have either shifted to domestic sales or opened up other sales areas. Some companies have reduced production or reduced some of their products. Production capacity is transferred out to Vietnam and other places.
The new planting season is approaching. Since cotton farmers generally had better returns from cotton planting last year, they are very enthusiastic about planting cotton this year. Although the policy orientation is to ensure food production, planting cotton in Xinjiang will still be the first option for most farmers. Because the increase in land in Xinjiang has reached the “ceiling”, it remains to be seen whether the cotton planting area can continue to grow due to various factors.
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