According to feedback from cotton trading companies in Qingdao, Zhangjiagang and other places, since early January, the main ICE cotton futures contract has exceeded 80 cents/pound and 81 cents/pound (US cotton, Brazilian cotton, West African cotton and other spot CNF /CIF quotations continue to rise), the 2020 cotton import quota within the 1% tariff has been exhausted, and the appreciation of the RMB has significantly slowed down. Inquiries and transactions for shipments and bonded cotton quoted in US dollars have not improved much compared with December. The performance is weak (although some traders quote bonded cotton, such as Indian cotton, Brazilian cotton, and West African cotton in RMB, they require purchasers to bring their own 1% tariff quota for customs clearance, and shipments are not active), but those that have cleared customs and quoted prices in RMB However, foreign cotton is very popular among domestic cotton textile mills and middlemen. In particular, “fixed price” transactions are relatively good and even account for the mainstream of foreign cotton transactions at ports.
On the one hand, as the Zheng Cotton CF2015 contract broke through the integer mark of 15,600 yuan/ton, the net profits of trading companies improved significantly. When the basis difference remained stable or the basis difference was raised, traders were interested in “fixed price” transactions. The bargaining and preferential space has been relaxed; on the other hand, the 2019/20 cotton currently cleared at the port is characterized by “small quantity, large batches, and large quality differences” (some varieties and batches only have a few containers, and a contract even requires several Trade gathering is completed), so it is more suitable for “fixed price” transactions.
It is worth noting that in the past half month, the signing and shipment of Indian cotton quoted in RMB at the port has been very active. The medium and high-quality cotton resources rotated by CCI are especially popular among cotton-using enterprises. The “limelight” of Indian cotton has completely Overshadowing competitors such as Brazilian cotton and West African cotton. A cotton importer in Huangdao said that some customers in Shandong, Jiangsu, Henan and other places have recently been able to place actual orders with the commodity inspection certificate provided by the seller. They do not need to go to the port warehouse to view bulk goods or take samples for testing, and they can afford the price. , The willingness to receive goods is also relatively strong.
Why does Indian cotton RMB spot inquiry and transaction “stand out”? The author summarizes the following points:
First, in the past half month, the price difference between Indian cotton, Brazilian cotton, and American cotton of the same grade and quality has been 800-1,100 yuan/ton, and the price competitiveness of Indian cotton has become increasingly prominent; second, 11 Since January, traders and international cotton merchants have quoted Brazilian cotton mainly based on the December/January shipping date, while port customs clearance and bonded spot stocks have been significantly less. However, Indian cotton customs clearance stocks in 2018/19 and 2019/20 are relatively large. The seller is well prepared; thirdly, the recent quotations of OE yarn, C40S and lower low-count yarn have started to rebound after the price surge of Zheng cotton, Zheng cotton yarn and high-count yarn above 50S. Spinners’ ability to digest raw materials such as cotton has rapidly improved. There are opportunities for low-quality Indian cotton in port customs clearance; fourth, concerns about the continued appreciation of the RMB in January and February make textile companies and middlemen more inclined to purchase customs-cleared spot goods (or bonded cotton), while for ship cargo Be cautious, especially after the main ICE contract exceeded 80 cents/pound, Chinese buyers have a strong wait-and-see attitude towards purchasing US cotton and Brazilian cotton for January/February/March shipping dates. </p
