Three factors support the recovery of the cotton textile industry chain next year

The three factors that affect the volatility of cotton prices, supply and demand, policies, and funding, all changed in 2015: After the cotton policy was changed to direct subsidies, the cotton price has fallen by 30% since 2014; cotton for three consecutive years from 2011 to 2013 After the collection and storage, the current domestic reserve cotton scale is over 10 million tons, which is at the level of historical days. Considering that China's annual cotton demand is in the range of 6.5 million tons to 7.5 million tons, it is expected that the supply will be significantly higher than in 2015. "Demand" status; As cotton prices approach the bottom of history, companies in the industry may expand the scale of cotton procurement.

The drop in cotton prices affected the short-term performance of the company: Due to the prudence of customers placing orders, the gross profit rate of cotton textile enterprises will encounter certain resistance. The pressure of orders and gross margins will bring certain results to cotton textile enterprises in the 3rd and 4th quarters of 2014. Pressing effect.

Due to the impact of domestic cotton cost support, bottom-seat policy expectation and the reasonable price range of RMB 1,500-2,000/ton between the inside and outside cotton prices, combined with current cotton prices, domestic cotton prices are expected to fluctuate in a narrow range in the low range in 2015. For the 13000-13500 yuan / ton, basically in the 2005-2008 relatively stable historical low. In 2015, the demand for centralized restocking in the downstream will drive the recovery of the industrial chain. In addition, based on historical experience, the volatility of cotton prices has a significant cyclical effect on the supply and demand of domestic cotton and the inventory size of enterprises. It is expected that companies in the industry will follow cotton. With the arrival of the historic bottom of the price, there is an incentive to purchase additional raw materials to further amplify the performance growth.

In the medium term, the high cost predicament of cotton textile companies since 2010 is expected to begin to reverse in 2015: Since 2010, cotton textile companies have been facing rising costs of high costs, with the natural growth of human costs, environmental protection costs, The price of cotton, which is the top and the main raw material, has fallen, and cotton textile companies are expected to usher in a reversal of predicament in 2015 and enhance their international competitiveness. In addition, through the previous industry consolidation, smaller companies with relatively weaker operating capabilities have withdrawn from market competition, and the industry concentration is expected to increase overall. The main uncertainties: The demand in overseas markets did not reach expectations, and cotton prices were falling too slowly.