Since May 4,The Cotton PriceIt hasined the upward trend, bringing positive offers to relevant trade enterprises, but for cotton and textile enterprises, it has to face the soft cotton market environment. Although the upward price of cotton has caused the price of related products to rise, but because the downstream demand is not too high, it can not provide long-term support for upstream prices.

Cotton Manufacturing Strategy
For cotton and textile companies listed in advance, the impact of short-term fluctuations in raw material prices is relatively small. Companies such as Ford Fashion and Brunei Eastern have begun to keep profits stable by raising prices, holding set values, etc. The raw material inventory of these companies is usually 3-6 months, so when cotton prices rise, their profits will also increase.

Challenges facing SMEs
However, for small and medium-sized enterprises with lower inventory levels and weaker bargaining capabilities, the rise in cotton prices has become a pressure.These enterprises are mostly short-cost and have begun to face the risk of profits being swallowed by Khmer prices.

The downstream demand is weakening
In terms of market demand, because cotton and textile enterprises are trying to transfer costs to product prices, the downstream enterprises are difficult to accept, and the price transmission is difficult.The head of Heining City Tianjin Socks Industry Co., Ltd. said that their profits have fallen greatly, and if the cotton sheet rises 500-1000 yuan / ton, it will eat the socks about 1 percentage point of net profit (rate) space.

2) Exporting pressure
In addition, the pressure on cotton textile exports this year is also greater, and some companies mention that this years export performance is weaker than last year.According to the data released by the General Administration of Customs, the first 5 months of this year, Chinas textile exports were 3904,8 billion yuan, down 2.4%.

Faced with the rise of cotton prices, all cotton fabrics companies are looking for tactics to deal with. Among them, one possible trend is that if overseas brands go to inventory end, consumption gradually recover, there is a demand turning point is expected.

Overall, the rise in cotton prices is more challenging for cotton companies, especially for small and medium-sized enterprises with fewer inventories and weak bargaining capabilities. But for large cotton companies with spare supplies, the rise in cotton prices may be a benefit for them. However, for large and small enterprises, the rise in cotton prices requires that they manage costs and profits more carefully, while also closely monitoring changes in market demand in order to respond to potential future market changes.