Cotton Price Rise "Wake Up" Terminal &Nbsp; Low And Medium Brand "Upgraded"

Cotton prices have risen since the middle of last year, when industry insiders speculated when the price of cotton would trigger clothing prices, in March 2010, in Beijing, China International

How much cotton price will rise? When is it going to rise? What are the impacts of the rising cotton prices on the clothing retail terminal?

Reporter: from the market situation of textile and garment industry at the beginning of this year, the cost pressure driven by the rapid rise of cotton prices has been passed to the processing links such as yarn, cloth and clothing production. Do you think the cost pressure will be passed to the clothing retailing industry?

Wu Steel: this year's cotton yarn has been in full swing.

The demand for raw materials in cotton textile industry has increased dramatically, while supply and demand relations are obviously unbalanced.

Last year, many enterprises had stock, and this year, in turn, there was a gap in the supply of cotton yarn.

The sharp rise in costumes is a foregone conclusion.

But for the upstream industry, the rise of the garment industry should be relatively small, because the textile industry includes the upstream cotton and downstream garments, and there are links between fabrics and dyeing and finishing.

The impact of cotton prices on all links is decreasing. Cotton yarn prices are lower than cotton prices, while fabric prices are lower than cotton yarn prices. Similarly, as the last link, clothing prices are lower than fabric prices.

An obvious figure is that when the price of cotton reaches 40%, the increase of terminal products is around 10%.

Whether the retail price will be affected depends on the brand positioning.

For example, the high-grade brands whose production costs are small in proportion to the sales price are priced according to the consumption of the target population, and the production cost can be neglected.

Generally speaking, raw material rising generally digested in the intermediate processing link, and accounted for only about 5% of the garment cost.

Li Minghui: at present, the import price of American cotton is getting higher and higher, so the general clothing enterprises can not afford it.

In addition to the gap between supply and demand, there are still many factors: cotton business is reluctant to sell, and some enterprises' market speculation is an important factor in the rise of cotton prices.

It can be sold at full price according to the market price, but the resources are tight due to the reluctance of enterprises to sell.

This resulted in the formation of textile enterprises watching the price rise rush to buy cotton, while cotton business enterprises watched cotton prices rise, reluctant to sell cotton, the market atmosphere was more intense, resulting in unreasonable market prices.

Some clothing enterprises may digest cotton prices by increasing the amount of chemical fiber, reducing the cost of intermediate links or importing cotton yarn.

At present, our clothing brand is mainly cotton, and the price of fabrics has increased by 20%. We believe that the overall price of clothing will increase by 15% in the second half of this year.

However, because our brand is located in the first tier cities, terminal sales should not be affected too much.

On the other hand, if some garment enterprises reduce the use ratio of cotton and increase the proportion of fiber, it will also drive.

Dong Xiaomei: China, as the largest cotton producing country, consuming country and importing country, has always been the target of market speculation.

China's cotton price index 328 cotton to mid April 2010 average price of 16499 yuan / ton, the growth of 972 yuan / ton, an increase of 4063 yuan / ton compared with the same period.

Domestic cotton prices remain high, rising directly to international cotton prices, and the cost advantage of our textile and garment products has been greatly weakened.

Large exporters have been affected to varying degrees, and some smaller export enterprises are less affected.

The export tax rebate adjustment, exchange rate and appreciation of RMB have also been the focus of our attention.

Although the rise of cotton prices did not synchronize with the price rise of clothing materials, it objectively increased the price of downstream yarn and cloth.

As a result, customers are fighting for money.

Reporter: in the future, how will the rising pressure from the raw materials sector continue and what will be the impact on the apparel retailing industry?

Wu Gang: if the high-end brand is removed, it will be common.

Dong Xiaomei: according to the peers around us, the yarn and cloth shipped during the month are all customers' orders. The list we received this month will only be available after a month, and some enterprises' list has been placed in May.

In fact, a lot of peers are afraid to take orders, especially the long list and large list, because the cotton price is rising continuously, and the cost is rising after losing the order. However, some customers do not pay their bills at all.

Li Minghui: as we all know, the growth of cotton is greatly influenced by temperature.

The main cotton producing areas in the country are concentrated in Henan and Xinjiang. According to the March survey conducted by the China Cotton Institute, the national cotton industry technology system and the national public welfare cotton research special group, the cotton planting intention of the whole country decreased this year, the area decreased by 3.5% compared to the same period in 2009, and it was 72 million 20 thousand mu.

Therefore, this upward pressure will persist for a long time.