China's textile and apparel enterprises generally raise their prices by about 30 percent at the 108th Canton Fair, as prices of raw materials represented by cotton are sharply rising this year, which is accompanied by decreased number of buyers and export orders.

The Department of Foreign Trade under the Ministry of Commerce points out that currently textile and garment exporters face greater cost pressure, the state is concerned about this rather special situation, continues to maintain stable development of textile and apparel industry and increases intensity of macroeconomic regulation and control over cotton market by taking various measures.

Earlier this year, spot price of domestic standard cotton was about 15,000 Yuan / ton, the price rose to 18,000 Yuan / ton in September, recently has risen to 30,000 Yuan / ton, some companies even say the price has increased to 40，000 Yuan/ ton.

There are several major reasons for cotton price rise, on the one hand, China faces a huge gap between demand and production, the Ministry of Commerce has planned to increase cotton imports, as China's production reduced, but China did not expect that cotton production of global major cotton-producing countries also declined. On the other hand, hot money speculates on cotton, funds withdrawn from real estate and overseas funds coming into China on betting RMB appreciation have together raised cotton price.

Chinese export enterprises are disappointed at two ends, first demand recovery of international market is slow, buyers are worried about rising prices in China, on the other hand, raw materials and labor costs are rising, in addition there are other factors, such as exchange rates and energy saving, therefore, it is hard to see this year's　"retaliatory" growth in next year.

Cotton price has risen about 10,000 Yuan/ ton in just over a month, one of the reasons is that China has 4 million demand gap, but there is also a lot of hot money pushing up cotton price, which will create mass destruction on China's textile and garment exports. China's textile and garment industry has reached the limit of cost tolerance, it could not afford any more pressure but raise prices.

Many textile and garment exporters generally consider it is difficult for cotton price to significantly decline in the short term, it even does not rule out the possibility of Further rise. So at the Canton Fair they hold firm attitude to increase their prices, they would rather give up orders and not make concessions on prices, they have to absorb cost pressures by seeking other means.

source:chh