Looking from an international viewpoint of supply and demand, cotton production will decline due to decreased acreage and natural disasters this year, but demand has increased sharply with economic recovery, resulting in great increase of textile orders and output in the first half.
Textile industry's profits rose 61 percent in the first half, according to statistics from Ministry of Industry and Information, but it is a foregone conclusion that the industry cannot maintain the results in the second half.
Price hike of raw materials will certainly create larger negative impact on the industry's performance in the second half. Cotton price has hit a high of 15 years, as India has imposed a cap on cotton exports.
Textile orders are generally taken a few months in advance and at a time when raw material prices were at low level, but now with raw material prices rising, these contracts will have to be fulfilled, due to which, profits made in the first half, may be eaten up in the second half.
The appreciation of the RMB will definitely reduce export profits, the impact of power cut on operating rate and reduction of export rebates have wrought great blows on the textile industry, due to which, the industry is expected to record a declined performance in the second half.
Fibre2fashion News Desk - China
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