Orders Of Textile Enterprises Are Generally Lower Than Expec

Before the Spring Festival, the number of orders of textile enterprises was generally lower than expected. By the first ten days of January 2025, the orders had been basically completed before the year. As the number of orders received in the first quarter was very limited, it was planned to control the labor costs by extending the Spring Festival holiday and reducing the operating rate.

At the beginning of January, the operating rate of textile enterprises dropped by 8.5 percentage points to 67.5%, which has declined for three consecutive months. On the terminal market, the retail sales of clothing, shoes, hats, needles and textiles in December continued the negative year-on-year growth trend, with a year-on-year decrease of 0.3 percentage points.

On the whole, except that the year-on-year growth rate of domestic clothing retail sales reached 8% in October 2024, it has shown a negative growth trend since June 2024, indicating that the problem of insufficient domestic demand is still prominent.

China's textile and clothing exports ended in December more than expected, and "striving for exports" is an important support. The growth of China's textile and clothing exports will significantly expand by the end of 2024 under the combined effect of holiday consumption and the "rush for exports" to the United States. In December, the export of textile and clothing reached US $28.07 billion, up 11.4% year on year and 11.5% month on month; From January to December, the cumulative export was USD 301.1 billion, up 2.8% year on year.

In December 2024, China imported 150000 tons of cotton yarn, an increase of 25% month on month and a decrease of about 3.15% year on year. Among them, the proportion of 25S and below combed yarns exceeds 80%, especially the import volume of 8S-16S coarse count yarns (including rotor spinning, ring spinning and siro spinning) increases significantly. The medium and high count coarse yarns from Vietnam, India, Malaysia, Pakistan, Thailand and other places of origin are widely concerned by domestic cloth mills/cotton yarn traders, which is in sharp contrast to the continued weakness of the import of C40S and above count cotton yarns (including combed yarns).

In recent years, the textile market has a prominent feature of "low peak season", and the competition for homogeneous conventional yarn products in the market is fierce. Enterprises are facing the pressure of price war and seeking differentiated production routes to maintain their operations. According to the survey, a domestic enterprise that produced pure cotton products a few years ago recently adjusted its product structure by reducing the cotton blending ratio. After transforming to produce blended products, its profit margin was about 500 yuan/ton higher than that when it produced pure cotton products.

At present, the domestic new cotton production increase is expected to be realized, and the impact on the recent cotton price is marginal weakened. The downward trend of consumption in the downstream market has not improved. The support of the domestic demand expansion policy remains to be further observed. The external demand may decline after the stage of activity. The fundamentals of loose supply and demand are not enough to support cotton prices. In the short term, it is expected that changes in the macro environment will have a stronger role in boosting cotton prices, and the probability of cotton prices being stronger will increase.

As the holiday consumption atmosphere gradually dissipates and the overseas market makes some progress in replenishing the stock in advance, China's "rush to export" orders may decrease accordingly. Due to the strong uncertainty of the US tariff increase policy, it is expected that tariff barriers will inevitably drag down China's textile and clothing export market in the future. The pace and extent of tariff increase will determine the impact on China's textile and clothing exports.