While the commodity market was in a state of carnival, the foreign epidemic situation escalated again, causing the entire market to turn green today. Zheng Mian was not spared and fell sharply. The market volatility exceeded market expectations.
The lockdown in London, UK, can be the trigger for the sharp drop in the market. The new coronavirus has mutated and become more contagious, giving the market a sap. Starting from crude oil, most commodities experienced a correction, but the magnitude of the correction was limited and controllable. However, the commodities still ended with a sharp drop.
At this time, the market was completely dominated by market sentiment. While the fundamentals of cotton were stable, the main contract of Zheng Cotton fell 480 points in a single day, the second largest decline since the second half of the year. This correction will continue. How long it will take may depend on the fermentation of the epidemic. The Spring Festival holiday will be in just over a month, and the sharp drop in the stock market just gave companies the opportunity to purchase raw materials at a lower price, and also cooled down the rising costs of cotton yarn.
As the price difference between domestic and foreign cotton prices remains high and the RMB appreciates, the price of China’s textile and clothing products has become higher than that of other countries, and its competitive advantage is declining. According to relevant data, in September 2020, the EU’s clothing imports from China fell by 4.9%, while it fell by 20.8% in August; the EU’s clothing imports from other regions increased by 5.1% in September. This shows that the global consumer market is gradually recovering, and the number of imported Chinese products is lower than that of other countries, partly due to the lower unit price of Chinese clothing imports. In euro terms, the unit price of Bangladesh’s clothing imports fell by 7.8% that month, while the unit price of China’s clothing imports fell by only 0.3%. In terms of U.S. dollars, the unit price of China’s clothing imports increased by 6.7%, while the unit price of Bangladesh’s clothing imports fell by 1.3%.
Of course, the decline in raw material prices has given downstream cloth mills room to negotiate prices. Whether cotton yarn can usher in a round of price cuts depends on how long this round of correction lasts. The sudden turn of the market has just cooled down the cotton spinning industry. After all, too rapid a rise is not conducive to the healthy development of the industrial chain. Only by running smoothly can China’s cotton spinning industry be internationally competitive. </p
