September-delivery cotton traded on the Zhengzhou Commodity Exchange, one of the four major exchanges in
In the international market, cotton prices surged by 28 percent to $4,927 during the six-week period that ended Feb 18.
"Pressed by surging cotton price, revenue of Chinese companies (in the textile and clothing industry) has further narrowed. Many of them now refuse to take long-term orders, for fear of losing the profits to future increases in raw material prices," said Xu Chonghua, an analyst with Jinshi Futures Co.
Xu said rising labor costs and appreciation of the yuan have made the competition fierce among companies, both at home and abroad.
"Orders are beginning to flow to countries such as
As of Feb 24, the yuan had appreciated by 3.8 percent since last June when authorities removed the peg on dollar.
Meanwhile,
Wu Rongjiang, director with the local government in charge of the childrens' garment industry, in Zhili, a town of textile products, in
Zhili is home to more than 7,000 textile factories and companies and the largest production base for children's garments in
"Children's garments sales are very small. The rising cotton price has seriously affected our production and sales," Wu said.
"To avoid potential risks (posed by the high cotton price), many small businesses have suspended production, and have begun taking manufacturing orders for large companies," he added.
Yet, there are companies that remain unaffected by the rising cotton prices and optimistic about future prospects.
"Our overall costs have grown by about 10 percent, including rising labor costs and cotton prices," said Rong Jie, assistant manager with Ningbo Weinuo Fashion Manufacturer Co.
"At present, we have not seen anything affected by the growing costs," she said.
The sowing area of cotton is expected to expand by 9.8 percent from last year to 5.64 million square meters, according to a report released by the China Cotton Association in January. However, analysts predict there may still be a cotton supply shortage of 3 million tons in
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