“First in, first out”, from the epidemic. China reverses the trend after a difficult start to the year.
From India to China
The episode of the orders from India is an example. Since September, many textile export companies in India cannot guarantee delivery due to the epidemic. Many orders have been transferred to China to be produced there. India has more than seven million confirmed cases and more than 100,000 deaths. Several large Chinese factories have their order books full until May 2021.
The price of cotton soars
Since the recovery after the national holiday, cotton futures have increased by 16 percent in just seven days. The price of the 2101 main contract reached 15,305 yuan, a new year-to-date high:
The bull market is explained by a sudden increase in demand and a likely cold winter this year. Shen Wan’s Textile and Clothing Index shows a gain of 11.55% since the end of the national holidays.
The increase is also fueled by usual year-end orders placed early to prevent the epidemic’s possible difficulties.
During these vacations, the textile mills worked overtime to record and process orders. Some mills even worked on October 1, a holiday. Henggang Company in Zhejiang received an order for tablecloths from Zara, representing 60% of its annual sales, which was to be produced in India. Other companies in various provinces, from Shandong to Canton, Jiangsu to Zhejiang, are experiencing the same phenomenon.
Alibaba Research Center shows that from May, the number of orders for fabrics and textile raw materials in China doubled and those in the clothing industry tripled compared to the same time last year. The catching-up effect of the previous months worked.
A “harmonious” performance?
In August, clothing exports reached $16.21 billion, an increase of 3.2% over the previous year, representing the year’s first positive monthly growth.
According to official data, textile, clothing, and the seven other labor-intensive product categories exported 2.59 trillion yuan during the first three quarters in China, an increase of 5.4%, which represents 20.4% of total exports. 828.78 billion yuan of masks were exported, an increase of 37.5%.
The field testimonies and comments collected by journalists on the 第一财经 website do not sound exactly like the official data. This type of figure is sometimes questionable. With the slowdown and halt in certain regions at the beginning of the year, the textile industry, over the year as a whole, the situation is not yet positive. Companies that recorded volumes equivalent to 60-70% of last year’s orders consider themselves happy, but overall, the figures are around 50%.
As for India, the sector is essential. In 2019, the Indian textile and clothing market was worth about $250 billion. It is the world’s largest jute cotton producer and the second-largest producer of silk, with 22% of the world’s yarn production capacity. The textile and clothing industry is also one of the significant foreign exchange sources, accounting for 15% of India’s total export earnings.
The drastic management of the epidemic from January 23 onwards has enabled China to come out of it better and faster. Currently, it is reaping orders from countries in difficulty, such as India. It will undoubtedly continue to benefit from returning to normalcy within the country, while many countries can not the end of the tunnel. How much longer?
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21 October 2020