After entering May, with the slow decline of downstream start-ups, cotton entered the off-season of consumption, the domestic cotton market continued to fall, dragged down by the sharp decline in U.S. cotton, internal and external linkage, Zheng cotton's decline accelerated.
Recently, the market trend of Zhengmian's main contract
Recently, Zheng Mian fell sharply for two consecutive days, has approached the integer mark of 15,000, Zheng Mian's main contract closed at 15,200 yuan/ton on May 10, and fell 435 yuan/ton in two days.
Planting usually begins in April and May in the main cotton-growing countries in the northern hemisphere, such as India, China and the United States, while in the southern hemisphere, such as Brazil and Australia, start planting in December and September, respectively.
Now the sowing of cotton in Xinjiang has basically ended, and some new cotton has emerged, and the most critical thing for the yield expectation of cotton is the current sowing and seedling emergence period. If there is extreme weather such as a cold wave at the current stage, it may start a wave of weather speculation, and at this stage last year, because of the weather speculation, the domestic cotton price did speculate to more than 17,000.
Judging from the year-to-year comparison chart, cotton prices have risen from April to October last year, mainly due to the disturbance of weather factors during cotton planting in April, the market speculation atmosphere is strong, and the sharp decline in commercial inventories has intensified the worries on the supply side, making cotton prices rise to a high level. This year, cotton prices have entered a downward channel since April, with less weather disturbances, coupled with a sharp increase in imported cotton, weak overseas export markets, and the overall market is weaker than last year.
This year, there was no extreme weather such as cold wave and drought in Xinjiang, and the weather speculation failed, and cotton prices continued to fall.
Looking at the external disk, in February this year, in the reality of high demand and low inventory, U.S. cotton was once hyped to 100 cents, but after March, under the influence of weak demand, U.S. cotton fell all the way, and the price in May was less than 80 cents, so that the import cost of domestic enterprises moved downward, and domestic cotton imports continued to rise to a high level in recent years.
Zheng Mian fell sharply
The pressure on cotton yarn price reduction increases
According to the feedback of several cotton spinning enterprises in Shandong, Anhui, Jiangsu and other places, affected by the sharp decline in Zheng cotton since the beginning of May and the increase in the accumulation rate of cotton yarn in small and medium-sized textile enterprises, the cash flow of enterprises has tightened, and the downward pressure on cotton yarn quotations is increasing, and some textile enterprises and traders have begun to reduce prices and ship. Although textile enterprises above designated size did not immediately follow up, under the background of the off-season characteristics of textile and clothing orders (the trend of blended yarn and differentiated yarn has also slowed down significantly) and the pressure of peer price reduction, there is great pressure on enterprises to stabilize yarn prices.
A medium-sized textile enterprise in Tai'an said that with the main contract of Zhengmian falling to 15,000-15,500 yuan/ton and the off-season of cotton textile and clothing domestic orders, cloth mills and cotton yarn traders are increasingly reducing the price of cotton yarn and blended yarn, and it is not uncommon for textile enterprises to directly reduce the price of 300-500 yuan/ton on the basis of quotations, and the "buyer's market" is very prominent. In order to stabilize customers, maintain production, and reduce the pressure on funds, textile enterprises can only choose to reduce yarn prices and try to speed up shipments.
The operating rate of downstream weaving enterprises has dropped sharply
Yarn procurement slowed down
At present, the operating rate of yarn mills in various regions is stable and slightly declining, with large yarn mills in Xinjiang at more than ninety percent, large enterprises in Henan at an average of about 90%, and large yarn mills in Jiangsu, Zhejiang, Shandong, and Anhui along the Yangtze River with an average start-up of about seven to eighty percent. In the face of the off-season and the falling price of cotton futures, yarn mills just need to purchase lint, and the willingness of textile enterprises to reduce production capacity has increased. Judging from the survey, some small and medium-sized textile enterprises in Hebei, Henan, Hubei and other places have recently reduced the start-up rate and limited production capacity, and the procurement of raw materials such as cotton and polyester staple fiber has also been tightened or suspended.
The weaving order situation has dropped significantly, the price competition of quantity orders is fierce, and the profits are meager. Guangdong, Jiangsu and Zhejiang coastal areas weaving enterprises said that the weaving market spring and summer grey cloth shipment speed gradually declined, the market new orders are mostly small orders, bulk orders, the follow-up will be moderately inventory to maintain the operating rate, but cotton yarn and other raw materials are generally not expected to be strong, the plan to use the "buy with you, order on demand" way to support to the "golden nine silver ten".
Recently, the start of the cloth factory has also declined, the start of Nantong home textile has dropped to 7-8 percent, the start of some looms in Shandong has dropped to 3-4 percent, and the Foshan cloth factory has dropped from 3-4 percent to 2-3 percent.
Forecast for the future
On the whole, the current domestic cotton supply is sufficient, but with the sharp decline in cotton prices, the purchase volume of enterprises at point prices may increase, and the commercial inventory of cotton will enter the stage of destocking. However, due to the overall suitable weather during cotton planting this year, cotton seedlings and growth are generally better. Although the planting area has declined year-on-year, but the magnitude is not large, the market is expected to reduce production in the new year, the heat of capital speculation has declined, the weather driving force is insufficient, and the downstream demand has gradually weakened, the market confidence is insufficient, and the market outlook is slightly confused, and the weak demand side has formed a certain drag on cotton prices. It is expected that domestic cotton prices will remain weak in May, and follow-up recommendations should pay attention to the growth of cotton in the new year and changes in downstream orders.
Li Qiang inspected Changji Esquel, Xinjiang
Boost confidence in the textile industry
Li Qiang, member of the Standing Committee of the Political Bureau of the CPC Central Committee and Premier of the State Council, conducted research in Xinjiang from May 7 to 9.
On the afternoon of May 8, Premier Li Qiang came to Changji Esquel Textile Co., Ltd., accompanied by Yang Minde, Chairman of Esquel Group, to inspect the company's automation equipment, non-watermark dyeing technology, brand products and intelligent automated production workshop, learn more about the company's production research and development, market development, etc., and praise the company's innovation and development achievements.
Li Qiang pointed out that it is necessary to conform to the wave of energy reform and informatization, based on resource endowment, tap potential space, vigorously develop energy, agriculture and agricultural product processing, equipment manufacturing and other characteristic industries, give full play to the leading role of leading enterprises, and build a complete industrial chain. Support enterprises to increase R&D investment, accelerate technology accumulation and iteration, actively participate in the formulation of standards, create high-quality brands, accept inspections in market competition, and win the initiative. It is necessary to deepen cooperation between the eastern, central and western regions to better ensure the security of industrial and supply chains. Li Qiang fully affirmed the achievements of Xinjiang's economic and social development, and hoped that Xinjiang enterprises would work hard and work for a long time, promote various tasks to a new level, and make greater contributions to the overall development of the country.
In the context of the current weak global demand for textiles and garments, the textile industry, as one of the traditional advantageous industries in the mainland, is facing unprecedented challenges. Li Qiang personally went to Changji Esquel Textile and other enterprises for on-the-spot inspections, and paid great attention to the high-quality development of textile enterprises in Xinjiang, injecting confidence into the development of the textile industry.
Source: Business Society, Guangda Futures, China Cotton Network, Cotton Outlook, Xinhua News Agency
Editor: China Yarn Network New Media Team
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