Chinese Spinners’ Profits Continue to Decline
With a steadily decreasing cotton yarn price, spinners' profitability continues to decline and the number of businesses operating at loss has increased rapidly.
June 19, 2012
While the added value of light industry in China still shows positive growth, that growth is slowing – and the decline is being led by the textile and spinning industries. Earlier this week, China’s National Bureau of Statistics and National Energy Bureau statistics showed that added value in light industries in China in May increased by 9.1% year-over-year, but it’s still a decrease of 3.8% from the previous year. Power consumption by light industries increased 4.4% from last year, but it’s less than half of the 9.1% it registered a year ago, according to the China National Cotton Information Center (CNCIC).
These data are the result of shrinking demand, both domestically and internationally, and the diminishing advantage of lower expenses in the textile industry, primarily due to rising labor and energy costs.
Fundamentally, with a steadily decreasing cotton yarn price, spinners' profitability continues to decline and the number of businesses operating at loss has increased rapidly. Many spinners have limited their operations or ceased running them completely for the time being, and the vast majority has adopted a hand-to-mouth policy for purchasing raw materials, buying lint only when they have an immediate need.