On New Year’s Day 2021, the annual New Year’s Eve market begins again. However, compared with previous years, this year seems particularly “crazy”. As of January 14, 2021, CY C32S pure cotton yarn closed at 24,050 yuan/ton, a sharp increase of 2,150 yuan/ton, or 9.82%, compared with the same period last month.
Judging from recent surveys of some textile companies, raw material replenishment has been in full swing before the Spring Festival since late December. In comparison, large and medium-sized enterprises Textile companies are more willing to purchase and stock up, and some textile companies’ cotton raw material inventories have risen to about 40-60 days. Small cotton mills are less willing to replenish their stocks and have not yet clearly broken away from the “buy as you use” situation. However, a relatively high proportion of companies have cotton stocks that have risen to 20-30 days. The reasons may be as follows: 1. Since the situation of foreign trade companies, clothing and fabric companies, and cotton textile mills receiving orders was relatively smooth in October and November, the enthusiasm for foreign trade and domestic consumption that had been suppressed for more than half a year was released, and large and medium-sized enterprises Orders from textile companies are generally scheduled until late January or even before the Spring Festival; 2. A large number of manpower return to their hometowns during the Spring Festival, and the uncertainty of the epidemic increases. A large number of textile and clothing companies work overtime to rush orders before the Spring Festival, in order to deliver goods as early as possible. And recover the payment, reduce risks, and cotton purchases will increase accordingly; 3. Against the backdrop of the bull market for crude oil, energy and other bulk commodities and inflation in 2021, not only cotton processing, trading companies, and speculators judge that the cotton market is expected to rise in 2021, Textile companies also recognize that cotton prices are “easy to rise but difficult to fall”, so hoarding raw materials in an appropriate amount has become an inevitable choice.
Judging from the production and sales of textile enterprises, as of January 14, China’s yarn inventory index has dropped to 5.9 days, a record low. Many textile companies currently have basically no inventory and no spot cotton yarn for sale, so they need to arrange production according to orders. The operating rate of textile companies has also remained at a high level in recent years. The market situation this year is different from the market situation during the National Day in 2020. This time, the downstream market is supported by terminal orders. From a macro perspective, the release and use of vaccines has led to expectations for long-term consumption recovery, and overseas markets have entered a replenishment stage. During the cycle, orders from supermarkets and hypermarkets such as Wal-Mart began to be distributed to domestic processing plants; the domestic textile and apparel industry’s regular autumn and winter replenishment orders and spring and summer orders issued, resulting in concentrated demand.
In terms of profits, textile companies did not have an easy time before August last year. After experiencing a long period of losses, they finally showed hope in the market in October. As a result, due to raw material Cotton rose too fast, and the market came to an abrupt halt in mid-October. Some textile companies that ordered raw materials in advance were caught off guard and did not enjoy the benefits of the increase in cotton yarn prices at all. But this time the market is different. At present, whether it is spot profits or profits from using raw materials for 20 days, the profits and losses of textile companies have exceeded 1,000 yuan. With almost zero inventory and acceptable profits, this period has become a key point for textile companies to turn losses into profits. Therefore, textile companies often adopt a price-raising strategy when making external quotations. They have a strong willingness to increase prices and continue to accept orders. They are unwilling to accept large or long orders.
As can be seen from the above figure, although the inner yarn is still rising, the price has returned to rationality from madness. However, the external price of imported yarn is still rising, and the internal and external yarn prices are upside down. As of January 14, FCY INDEX C32S closed at 24,116 yuan/ton, an increase of 2,364 yuan or 10.87% from the same period last month. Due to the mismatch between supply and demand caused by the epidemic, the spinning production capacity of overseas countries has not yet been fully restored, with operating rates around 70-80%, but demand has recovered well. On the other hand, due to the epidemic, logistics and transportation problems are also relatively large, the shortage of containers is still severe, and the increase in sea freight has become one of the main reasons why outer yarn cannot stop the car.
On the other hand, yesterday, the U.S. Customs and Border Protection stated that the United States will ban the import of all cotton and tomato products from China’s western Xinjiang region, and at the same time It also applies to products processed or woven in third countries. This means that textiles and clothing made of Xinjiang cotton will not be able to enter the US market in any way, which will have a negative impact on Xinjiang cotton and domestic pure cotton yarn using Xinjiang cotton. In fact, on November 30 last year, the United States had already begun to impose a ban on Xinjiang cotton in my country, but it only targeted Xinjiang Xinjiang cotton, and the impact was relatively limited. However, this time it was upgraded to target all Xinjiang cotton, and the impact has deepened. On the surface, if orders exported to the United States can only use imported yarn, it will be good for imported yarn. If the price of domestic yarn and imported yarn is inverted, then the advantages of domestic yarn will also appear. If the downstream order is exported to Africa For domestic or domestic sales orders in the United States, orders that originally use imported yarn will be more inclined to use domestic yarn. In other words, the new ban may cause a shift in downstream use, and the overall reduction in demand for pure cotton yarn does not necessarily mean there will be a substantial shrinkage. But looking at it from a deeper perspective, it is forbidden toThe issuance of the order will affect downstream expectations for future orders. The current downstream stocking of cotton yarn or gray fabrics is mostly based on optimism about the peak season after the year, including exports and domestic sales. If export orders to the United States are blocked, it is expected that some of them will be eliminated, which will have a certain impact on the entire industry chain. </p
