Cotton yarn prices fluctuated and adjusted this week. As of January 21, 2021, CY C32S pure cotton yarn closed at 24,030 yuan/ton, which was the same as the same period last week. Compared with that, it dropped by 20 yuan/ton.
As we all know, the United States once again staged its “final madness” last week, and the U.S. ban on Xinjiang cotton was upgraded again , so that on January 14, Zheng Cotton’s main contract fell sharply by 2.41%, and the market performance was strong externally and weak internally. As of January 21, China’s cotton CC 3128B index closed at 15,299 yuan/ton, down 34 yuan/ton from last week. A careful analysis shows that the Xinjiang cotton ban has actually been evolving for a long time, and the market has already digested it to a large extent. Coupled with the consideration of whether the U.S. Customs will have enough manpower, material resources, financial resources and technology to conduct inspections in the later period, initially, the political performance of the ban will outweigh its actual impact on the market. On the contrary, the ban may prompt China to increase its purchase of imported cotton and imported yarn, thereby narrowing the price difference between domestic and foreign cotton and triggering the start of purchasing and stockpiling. In the short term, the raw material inventory of textile companies is already at a high level. With the Spring Festival approaching and textile companies about to have a holiday, their efforts to purchase raw materials will gradually weaken, and weaving mills have greater uncertainty about their orders after the year. Taken together, the risk of the cotton market fluctuating in the first quarter is relatively high.
Although the price of cotton yarn fluctuated and dropped this week, through surveys, the prices of various varieties of cotton yarn still remain stable. . In terms of sales, goods are still flowing smoothly, and textile companies have almost no inventory. As of mid-January, the inventory of finished cotton yarn products in textile companies averaged about 4 days a day, and many of them have completed order production. For post-holiday orders, some textile companies still insist on taking on the premise that downstream funds are in place and upstream lint prices are locked. In the face of epidemic prevention and control, some textile companies with non-local employees have launched hard-core benefits and heart-warming subsidies such as double salary benefits, red envelopes and New Year’s Eve dinners to encourage non-local employees to stay for the New Year and reduce personnel turnover. This can not only reduce the pressure of prevention and control, but also reserve sufficient labor for rushing orders during the Spring Festival.
In the downstream gray fabric market, many weaving factory owners reported that recent orders on machines are coming to an end and production on idle machines Mainly conventional varieties, and downstream inquiries and orders gradually decrease around January 10th. At the same time, orders after the year are generally scarce. Small and medium-sized factories often report that they have not received orders after the year, so the mentality of the weaving mills is confused. As for the textile factory in slightly better condition, orders can only be maintained until the end of March. Judging from the inventory levels of finished goods in weaving mills, weaving mill inventories fell sharply in October 2020. This was due to the surge in cotton futures, the increase in speculative purchases by downstream traders, the transfer of gray fabric inventories in weaving mills, and the release of pressure. By early December, downstream demand had recovered, spring and summer orders increased, and weaving mill inventories decreased again. In mid-to-late December, downstream customers of weaving mills began to stock up on goods for the year before, and this market lasted longer than the same period last year. In January, the goods shipped by weaving mills gradually decreased, but the inventory pressure on weaving mills was not yet great.
In terms of outer yarn, as of January 21, FCY INDEX C32S reported a closing price of 24,246 yuan/ton, which was higher than In the same period last month, it continued to rise by 130 yuan/ton. As can be seen from the table above, while the internal price of imported yarn is rising, the external price of imported yarn is also rising steadily, and far exceeds the internal price. Even if the exchange rate has appreciated by about 1,500 points in the past two months, it still cannot offset the increase in the external price.
Except for a few varieties that are barely flat, most varieties are already upside down, especially India. Affected by the epidemic, the startup rate of Indian textile companies was low in the first half of the year. In the second half of the year, as the global epidemic became normalized, downstream demand and the startup rate of textile companies gradually increased. However, the inventory accumulation rate could not keep up with the growth in demand. Therefore, the inventory of Indian textile companies was low and prices Gradually rise. Especially in recent months, demand has supported the rise in Indian yarn prices, with prices in both the local market and the export market rising significantly. In recent months, the operating rate of Indian spinning mills has generally remained around 95%, and the operating rate of some spinning mills has been at 80%-85%. The reason for the inability to reach full capacity is the lack of workers, and some migrant workers have not yet returned to the factory. Currently, the shipping schedules reported by Indian manufacturers to China are basically March-April, and there are very few shipping schedules in February, indicating that there is no inventory sales pressure on Indian yarns. This is also an important reason why the external price of printed yarns is difficult to fall.
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