Impact of multiple COVID outbreaks on China cotton textile industrial chain

Since Mar, the multiple outbreaks of COVID and epidemic-related control management measures have hit the cotton textile industrial chain in China and make the originally weak consumption even worse. The anticipated traditional peak season has not come.

1. Epidemic-related control management hits the cotton textile industrial operation

By Mar 24, Chinese mainland reported 2,054 new confirmed COVID-19 cases, with 2,010 locally transmitted and the cumulative infections were 25,712. Since Mar, the daily new confirmed cases and asymptomatic infections have been constantly increasing.

Source: Win.d

As the major producing, importing and consuming regions of cotton textiles, Shandong, Hebei, Jiangsu, Zhejiang, Fujian and Guangdong provinces are hit by the epidemic successively. The local government tightens the epidemic-related management measures successively, impacting the cotton textile industrial chain apparently. The survey by Mar 24 is showed below.

The influences of epidemic-related management measures on cotton textile industrial chain shows:

1. The quarantine measures on workers restrain the labors, and plants’ operation is affected;

2. Closure of warehouses and highways causes the unsmooth transportation and inadequate supply;

3. Epidemic-related measures leads to cumbersome procedures, low efficiency and rising costs.

2. Epidemic hits the cotton textile consumption

Currently, cotton inventory in spinning mills has reduced to a multi-year low of 25.6 days, and cotton yarn inventory is accumulated to 314kt. Operating rate of spinning mills reduces to 55.6%, partly due to the heavy losses, partly due to the limited new orders.

In the meantime, cotton yarn inventory in fabric mills has reduced to 7.9 days, similar to the level in the same period of 2020, while cotton fabric inventory has recovered to 31.5 days, and operating rate of fabric mills decreases to 54.5%, mainly due to lack of new orders.

The COVID outbreaks in the major cotton textile producing, importing and consuming regions make the originally weak consumption even worse. The anticipated traditional peak season has not come.

In general, the multiple outbreaks of COVID and epidemic-related control management measures have hit the cotton textile industrial chain in China and make the originally weak consumption even worse. The anticipated traditional peak season has not come. There is great uncertainty about when the epidemic will end, when the control measures will be lifted, and whether the consumption will recover.