Since mid-December 2020, the textile industry has ushered in a small peak of the year before. Although Zheng Cotton fell slightly due to the impact of the British mutated virus, Zheng Cotton has continued to rise since then, giving this rare opportunity The market provides confidence support. Recently, although the enthusiasm for cotton yarn transactions has not been as high as some time ago, the market is still willing to raise prices despite low inventories of gray fabrics and cotton yarns. As New Year’s Day approaches, textile companies are operating cautiously out of hedging needs, but most textile companies are still relatively optimistic about the market outlook.
Cotton Market
Textile enterprises’ year-end replenishment push in December The increase in yarn prices will in turn lead to an increase in cotton prices. Although the news of the mutation of the British virus caused panic in the market, and Zheng cotton once plummeted by nearly 500 yuan, market confidence was not greatly affected when downstream inventories were low and the epidemic in China was controllable. In recent days, the rising trend of Zheng cotton is still irreversible, and CF101 has once again surged close to the 10,000 mark. On December 30, Zheng cotton prices rose across the board. Among them, the settlement price of Zheng Cotton’s main product CF101 was 14,990 yuan/ton, an increase of nearly 100 yuan from the previous day. Along with the futures market, the spot market is also on the rise, with most companies’ quotations rising by 50-100 yuan/ton. On December 30, the spot price of 3128B was 14,963 yuan/ton, which was also close to the 10,000 mark. The simultaneous rise in futures and spot prices once again showed the mentality of market participants.
Cotton yarn market
Recently, the pure cotton yarn market is still actively stocking up, and the market mentality is good. Domestic cotton yarn prices maintain an upward trend, boosting the confidence of cotton and textile companies. The current price of pure cotton yarn has increased by nearly 3,000 yuan. According to China Yarn Network, the Zheng cotton market rose after a day of decline under the influence of the British new coronavirus variant, which has provided certain support for the yarn market. There is a high enthusiasm for transactions in medium and high count yarns in the market, and there is even a phenomenon of “hard to find”. At present, the production and sales of small and medium-sized textile enterprises in the coastal areas along the river are good. Although the transactions in the Qianqing market have slowed down, the market mentality is good. It is understood that most downstream textile companies currently have sufficient orders, and most textile companies have reached a start-up rate of 95%-100%. Full production operation has a positive impact on the market. Recently, downstream home textile orders have been rising steadily, and the price of gray fabrics has also “raised all boats”. Dyeing factories have also followed up with price increases due to the surge in orders. The “Little Indian Spring” market a year ago caused the inventory of some textile companies to drop rapidly. This year’s two waves of market have caused Enterprises have digested their inventories to this year’s historical lows, and the market is very particular about “putting money in the pocket”. Without the pressure of inventory, there will be more room for price increases in the future.
Imported yarn
Recently, with the cost of foreign cotton rising, freight rising, and the appreciation of the RMB, imported yarn has maintained an upward trend, especially in the medium and high The transaction situation in the branch market is good. The price difference between domestic and foreign cotton yarns has widened significantly, and the competitiveness of imported cotton yarns continues to strengthen. Judging from the survey, the current price of Indian-Pakistani C32S yarn in the light textile market in Jiangsu, Zhejiang, Guangdong and other places is 600-800 yuan/ton lower than that of domestic yarn. Some export-oriented and OEM companies have shifted their procurement focus to spot and customs-cleared foreign yarn. In recent days, the RMB quotations for customs clearance cotton yarn from India, Vietnam, Pakistan, Indonesia, Central Asia and other origins have been increased by 100-200 yuan/ton (C26S, C32S, C40S high-quality packaged bleached yarn has been increased by 200 yuan due to tight supply and traders are reluctant to sell) / ton), except for OE yarn, C10S and below ring spinning yarn inquiries and shipments continue to be “tepid”, the transaction of C32S and above imported yarn is still relatively smooth, traders prefer to take their time and not rush. impatient.
Looking forward to the market outlook
It is understood that USDA’s December report global cotton production in 2020/21 decreased by 1.79 million tons to 24.8 million tons compared with the previous year. million tons, USDA significantly increased global consumption to 25.17 million tons. After this adjustment, the global cotton supply and demand changed to a shortage of 375,000 tons, and cotton was difficult to fall deeply due to gap logic. According to news on December 7, the United States Department of Agriculture (USDA) stated in a report that after declining due to the new coronavirus epidemic in 2019-2020, China’s cotton consumption and imports in 2020-2021 are expected to rebound to 8.1 million tons respectively. and 2 million tons. USDA added that U.S. cotton exports to China are expected to increase in 2020-2021, mainly driven by the recovery in Chinese textile demand and the implementation of the first phase of the China-U.S. trade agreement.
A cotton practitioner said when communicating with China Yarn Network (public account: newyarn) about the cotton market after the Spring Festival : “The United States estimates that China’s cotton consumption in 2021 will be 8 million tons, but now that the off-season is not weak, it may exceed 8 million tons. In addition, the United States has reduced production, the quality of Chinese cotton has declined, and China’s national inventories are low, and now traders and capital companies have begun to Stocking up on cotton, even flower-making factories have started stocking up on cotton, and supply and demand affect prices.” He said there is a high possibility of a surge in cotton prices next year.
The main influencing factors of future cotton yarn price trends mainly come from three aspects:
1. Macro factors.
align=””>
On the evening of December 30, the leaders of China and the EU jointly announced the completion of the China-EU investment agreement negotiations as scheduled. The China-EU investment agreement will effectively stimulate the recovery of the world economy in the post-epidemic period and promote the liberalization and facilitation of global trade and investment. If Europe can control the epidemic in 2021, it will usher in the post-epidemic reconstruction stage. The continued recovery of household consumption can support the Demand for Chinese products. The EU is China’s third largest export partner this year. In November, the proportion of China’s exports to the EU dropped to 14%, lower than the United States and ASEAN. Western Securities said that the signing of the China-EU Investment Agreement will help investment and trade. , is expected to drive an additional 5% of China’s exports to the EU in 2021, and China may be expected to expand the EU’s export market share; RCEP has been signed and is expected to take effect next year. In addition, China will also start negotiations to join the CPTPP next year.
2. Epidemic factors. Currently, the global new crown vaccine is in the stage of research and development and put into use. On the 31st, the Joint Prevention and Control Mechanism of the State Council held a press conference. At the press conference, Chen Shifei, deputy director of the State Food and Drug Administration, introduced that Sinopharm’s Sinopharm COVID-19 inactivated vaccine has been approved by the State Food and Drug Administration for marketing with conditions. Existing data shows that the protection rate is 79.34%, which meets the relevant standards of the World Health Organization and the State Food and Drug Administration. This will have a certain boost to the recovery of market confidence after the epidemic.
3. Demand issues.
Downstream demand is still strong at the end of the year. So far, gauze stocks of weaving factories and middlemen are generally low. At present, a large number of Chinese textile and clothing companies are not willing to accept medium- to long-term orders or large orders. , many textile companies have plans to appropriately increase raw material reserves despite falling inventories. China’s textile and apparel exports are expected to grow, coupled with the expected recovery of domestic market demand next spring, which may affect the good development of the cotton and cotton yarn market.
As long as there is no substantial change in the fundamental supply and demand logic, the factors supporting cotton’s rise will not change, and it will still have the value of buying on dips. </p
