Spinning capacity increase: from the perspective of spinning machinery

Cotton yarn market caught a cold in 2020 with the price hitting new low and cotton yarn mills at losses for long time due to COVID-19. A part of cotton yarn mills were eliminated out of the market, resulting in reduction of cotton yarn capacity in China. However, since Oct 2020, cotton yarn market started to rocket, with the price quickly hiking and hitting new high continually and the profit improving. Conventional cotton yarn has gained a profit of over 1000yuan/mt for long in 2021 and high-count one higher, which has attracted cotton yarn mills to start up or expand the capacity again. On the other hand, long lines were heard to show up at the gate of spinning machinery plants.

From the perspective of spinning machinery, the imports surged in 2010-2011 and then declined in the following years until 2015. It increased again in 2016-2017 but fell further later. In 2020, it shrank obviously due to the pandemic and in Jan-Apr 2021, it sustained the fall, down 38.8% on the year. Comparing two sharp rises of cotton yarn in 2009-2010 and 2020-2021, it can be seen that the economic recovery and commodity spike were similar in 2010 and 2021 with different depression in 2009 financial crisis and 2020 Covid-19. Coupled with the sharp rise in 2010, the spinning machinery imports of China improved largely during 2010-2011, which was also seen in 2016-2017 when cotton yarn price also moved up obviously. However, it has not been seen since then.

Among the imported spinning machines, the air-jet spinning machine (vortex-spun yarn), mainly used for chemical fiber yarn spinning rather than cotton yarn, dominated in recent years. Especially in 2018-2019, it saw large increase in both import volume and proportion. In 2020 and Jan-Apr 2021, its proportion took up over 90% of the total imports. On the contrary, the imports of rotor spinning machine (open-end yarn) and spinning frame (ring-spun yarn) gradually reduced.

According to CCFGroup, new machines put into operation by cotton yarn mills are more and more made in China, so the import data above cannot represent the situation of capacity expansion in recent years.

Ring spinning frames used by spinners in China are mainly Jingwei Brand, so the sales status of Jingwei Textile Machinery reflects yarn capacity expansion or updates to a certain degree. From the chart above, the sales volume of spinning machinery of Jingwei slumped in 2020, a decrease of 43% on the year, mainly affected by the pandemic.

But its quarterly revenue showed a surge in the fourth quarter in 2020, and in the first quarter 2021, although it fell back, it was still at a medium-to-high level, which indicated ring-spun capacity expansion in China.

Rotor spinning machinery is represented by Zhejiang Taitan and Rifa Textile Machinery. Take Taitan as an example. In 2020-2021, the revenue increased, despite a low speed amid the pandemic. Before 2020, open-end cotton yarn market was healthy and with less labor, shorter process and high efficiency, many mills launched new capacity. But after 2020, it became the worst among various cotton yarn and the capacity expansion or equipment updates slowed down obviously.

In 2021, the rumor that spinning machinery plants take a lot of orders to be arranged spreads on the market. CCFGroup also learned that some mills were indeed investing and expanding the capacity, mainly using China-made ring spinning machine. According to current progress, the capacity will intensively come on stream in the second half of 2021 to 2022.