Cotton price crisis forced Henan textile enterprises to close down
In 2009, the purchase price of seed cotton in Shangqiu was approximately 4.6 yuan per kilogram, but this year it has surged to around 11 yuan per kilogram. Similarly, the price of lint cotton rose from about 15,000 yuan per ton last year to 25,000 yuan per ton this year. These figures clearly indicate that cotton prices in the city have nearly doubled compared to the previous year, reaching an all-time high. According to a representative from Mulan Textile Company in the city, the price of lint cotton at the end of last year was below 20,000 yuan per ton, and now it has climbed to 30,000 yuan per ton.
Media reports also highlight the sharp rise in cotton futures. On September 27, the CF105 contract on the Zhengzhou Commodity Exchange hit a record high, closing at 21,635 yuan per ton, up by 380 yuan. Then, on November 8, the CF105 contract reached a peak of 33,295 yuan per ton, closing at 32,970 yuan per ton—an increase of 1,950 yuan. The price of cotton contracts has risen by as much as 106% this year, jumping from 16,000 yuan per ton at the start of the year to 33,000 yuan per ton on the same day.
The spot market has mirrored this trend. On November 8, China’s cotton price index increased by 733 yuan to 28,891 yuan per ton. At the beginning of the year, the index stood at 15,000 yuan per ton, representing a gain of over 90%.
This dramatic price surge has severely impacted local businesses. Zhumadian Kangmao Arts & Crafts Co., Ltd., an export-oriented private enterprise specializing in cotton cloth, non-woven shopping bags, and composite fabrics, has been significantly affected. The company exports its products to over 30 countries, including Western Europe, Japan, and the United States. According to Director Chen of Kangmao, cotton cloth constitutes 30% of their total product line. With the rising domestic cotton prices, the company has had to halt new orders for cotton-based products and now only maintains limited production of non-woven fabrics and other alternatives.
Despite joint measures issued by seven ministries and commissions aimed at stabilizing the market, the impact remains unclear and uncertain. For foreign trade companies, the current situation is even more challenging than the previous year. Many orders have shifted to countries like Vietnam and Pakistan, where labor costs are lower and raw material prices are more stable. This shift has started to erode the competitive edge of Chinese manufacturers.
Similarly, Zhengzhou Clothing Company, known for its branded pants, reports that over 500 large-scale clothing enterprises operate within the city. Many of these companies are now hesitant to accept overseas orders due to the risk of higher production costs. Contracts signed at current prices mean that actual production may result in reduced profit margins or even losses.
As the cotton market continues to soar, the ripple effects on the textile and garment industries are becoming increasingly evident, forcing businesses to adapt or face decline.
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