Since the beginning of 2010, production, domestic sales and export of China textile industry all maintained a strong growth momentum. Nevertheless, this momentum is accompanied with a host of uncertainties such as the RMB appreciation pressures, surging cotton prices and possible fluctuation of export tax rebates.

Added value downturned
Added value of textile industry in the first half year saw 12.2 percent of growth year-on-year with growth velocity rising 4 percentage points compared with the same period of last year. Textile industry added value in June rose by 9.8 percent year-on-year, which is 2.2 percent of decline compared to May.

Cotton prices maintained the upturning tendency adding woes to most textile companies
Cotton and yarn prices kept surging all the way up. Domestic Cotton Price Index in June is CNY 18,309 per ton, rising CNY 838 per ton as compared to May and rising by 42.6 percent from the same period of last year. Yarn prices surged by 60.1 percent year-on-year. The price upsurge was to a certain extent counteracted by sales increase. What really bothers textile companies is the cotton stock inadequacy. Nowhere can they find any resources.

Export situation kept bettering up
Export growth of textile products surpassed garments over the first half year. Overall exported value of textiles and garments in June amounted to US$ 18.67 billion, rising by 33.4 percent year-on-year.

Accumulated exported value of textiles and garments over the first half year reached US$ 88.88 billion, rising by 22 percent from the same period of last year.

Profit recovered quickly
Profit revenue over the first five months of 2010 reached CNY 70.1 billion, rising by 58.7 percent year-on-year with growth velocity rising by 57.7 percentage points from last year. Textile industry hailed profit revenue of CNY 41.8 billion, rising by 63.8 percent while garment industry saw profit revenue CNY 20.2 billion, rising by 26.4 percent.

Investment saw steady growth
The investment of textile and garment industry rose respectively by 21 percent and 22.9 percent year-on-year.

Situation not optimistic
Low cardinal number of 2009 The first half year of 2010 has witnessed substantial increase in production, domestic sales and export. This, however, was primarily due to the low cardinal number of 2009. Uncertainties and negative elements that China textile industry faced in 2010 is more than ever.

Exchange rate fluctuation pressure
Small and medium-sized textile companies will suffer from the blunt of RMB appreciation while some magnates could to a very large extent stand this blunt. Currently, 80 percent of exported textiles and garments were settled in US dollars. The magnitude of RMB appreciation will undoubtedly slash the profit of many companies.

Raw material price upsurge
The price of cotton has climbed all the way up to hit the record high level of history. A time difference exists for the price upsurge from upper streams passing down to the downstream. It is therefore estimated that downstream will suffer from more severe cost blunt.

Source: China Textile Leader