Market Observation: Textile Enterprises' Exports Continue To Decline, And Foreign Demand Orders Are Weak

With the rise of cotton prices, textile enterprises tend to be cautious in purchasing raw materials, and cotton yarn prices are rising with the rise of costs. However, textile enterprises' orders are still not warming up significantly, and yarn prices are not keeping pace with the rise. From the perspective of market prices, it is difficult to raise cotton yarn prices, and the prices of individual varieties follow the market. At the end of the month, the cotton spinning industry peak season is approaching, the cotton yarn market has improved, the Nantong market has improved relatively significantly, while Zhejiang, Guangdong and other places have not changed much. As of August 25, the yarn inventory of textile enterprises in major regions of the country was about 26 days, with an increase of about 5% month on month and a decrease of about 20% year on year, still in a low position.

The operating rate of textile mills has increased. As of the end of this month, the operating load of textile enterprises in the mainstream regions of the country was more than 70%. At present, textile enterprises are short of new orders, mainly small orders and bulk orders. Moreover, because of the high price of raw materials, most textile enterprises are in a loss state. From the order situation, the orders in Nantong home textile market are fair, the knitting orders in Foshan area have weakened, and the orders received by the weaving mills in northern areas are less than expected. The weaving mills are cautious about the orders in peak season.

　　 Export continues to decline, and external demand orders are weak

According to the data of the General Administration of Customs, the export volume of cotton products (including cotton blended products, not only pure cotton products, the same below) in July 2023 was 536700 tons, a year-on-year decrease of 17.89% and a month on month decrease of 1.14%. From January to July 2023, the export volume of cotton products was 3.6703 million tons, a year-on-year decrease of 14.04%. From the perspective of market sales, the situation of foreign trade is still grim, export orders are declining, domestic market demand remains weak, and orders are insufficient.

In July 2023, China's textile and clothing exports totaled US $27.115 billion, a year-on-year decline of 18.38%, showing a downward trend for the third consecutive month and the decline continued to expand, including textile exports of US $11.154 billion, a 3.57% month on month decline; Clothing exports reached US $15.961 billion, up 3.47% month on month. From January to July 2023, textile and clothing exports totaled US $169.79 billion, down 10% year on year. In July 2023, the cumulative value of single month and January July 2023 both declined significantly year on year. Foreign demand for domestic terminal consumption was poor, textile and clothing exports continued to be blocked, showing a weak trend. Europe and the United States were still in the process of going to the warehouse, and it was expected that textile and clothing exports would be difficult to improve for a long time.

Future market forecast: after the supply side performance was slightly relaxed in August, the cotton price fluctuated downward. At the end of the month, driven by the rise of the external market, the domestic cotton price stopped falling and recovered, but the demand side performance was poor, the transmission of the cotton textile industry chain was not smooth, and the spinning enterprises' profit loss or expansion dragged down the cotton price. At present, there is no new profit in the domestic cotton industry chain. Recently, some institutions have come to Xinjiang production areas for yield research, and the yield reduction rate is not as high as previously estimated. Under the policy background of stable growth in China, the traditional peak season may still be expected. At the same time, this year's rush harvest of seed cotton is expected to still support the cotton price. The business community expects that the short-term cotton price will remain high and volatile. Later, it will focus on the temporary order placement in the past ten years.