Short fiber futures have attracted much attention since their listing on October 12, 2020. It rose continuously in the first 6 trading days, with 4 daily limits appearing, and fell continuously in the next 3 trading days, with the daily limit falling for the first time yesterday. In just 9 trading days, what is the internal logic behind the ups and downs of the market? What happened in the market?
During the interview, the reporter learned that the early strength of short fiber futures was supported by certain fundamentals. “Since the second half of this year, the demand for home textiles and non-woven fabrics has been good. Before and after the National Day, a large number of Indian orders were transferred to the country. Superimposed on domestic ‘Double Eleven’ orders and the expected cold winter, the demand for quilts and cotton clothing is expected to increase. The market’s expectations for short fiber prices are relatively consistent.” Zhang Xiaozhen, senior analyst at GF Futures, said that the early rise in short fiber futures is also reasonable.
The reporter learned from China Yarn Network that India’s yarn production capacity accounts for 22% of the world. Affected by the epidemic, India’s entire industrial chain including cotton processing and export, cotton gauze production, etc. Suffering a strong impact, a large number of orders poured into China.
In the opinion of industry insiders, although the rumors in the market that “orders have been scheduled until May next year” are somewhat exaggerated, there has indeed been a return of orders, superimposed on seasonal peak seasons, Affected by factors such as domestic demand, orders are mostly scheduled until the end of the year.
However, the improvement in demand may come more from domestic orders, while foreign trade orders account for a relatively low proportion. “The recent return orders should be more emergency orders, because such orders transfer very quickly, and buyers pay more attention to factors such as price and processing speed. Since they do not have an advantage in labor costs, it is difficult for these orders to stay in the country for a long time.” Industry insiders said.
Starting from the second half of 2020, China’s textile and apparel operating rate has recovered significantly, and the performance of textile and apparel export trade data in the third quarter is particularly eye-catching. At the same time, the reporter learned that during this year’s “National Day” Golden Week, the retail sales of 100 key large-scale retail enterprises across the country increased by 8.5% year-on-year. Compared with the retail sales growth rate in 2019, the growth rate increased by 14.3 percentage points. The growth in clothing retail sales was particularly eye-catching. The year-on-year growth rate reached 16.8%, of which the year-on-year growth rates of men’s clothing, women’s clothing, and children’s clothing were 23.9%, 13.1%, and 27.3% respectively.
The consumption situation during the “Eleventh” Golden Week has restored the confidence of the clothing industry in the “Double Eleven”. At the same time, the prediction of cold winter this year has made the terminal optimistic about the sales of winter clothing. , have been actively stocking up. The improvement in domestic demand has lasted for a quarter, and the return of orders during the National Day holiday was just the trigger for the market.
Zheng Youfei, a senior analyst at Yide Futures, said that the fundamentals of short fiber have always been the healthiest among all polyester products. The demand explosion around the National Day has triggered As a result of the centralized replenishment of the industry chain, the prices of both upstream and downstream of the industry chain and competing products have increased sharply.
“From September 30 to October 20, the spot market prices of cotton, viscose, and staple fiber increased by approximately 15%, and pure cotton yarn and pure polyester yarn increased by approximately 15%. The price increase is about 20%, and the price increase of polyester and cotton yarn is about 15%.” said Huang Tianyuan, an analyst at Guotai Junan Futures.
Against this background, short fiber futures prices have also risen sharply. “Short fiber futures have a significant premium to spot prices, with the highest premium being 594 yuan/ton, which has covered the risk-free arbitrage costs. At this time, there are futures and spot traders participating in the arbitrage of selling futures and buying spot.” Zhang Xiaozhen said that the influx of futures and spot traders has This has further strained the already tight spot market resources.
“After this round of centralized replenishment, short fiber factories have significantly destocked, and the average inventory has dropped to -8.52 days.” Xiang Hongjiao, an analyst at Longzhong Information, said that downstream Large-scale spinning mills have sufficient stocks, and their raw material inventory can meet one month’s consumption. After the price of short fiber has risen sharply, the spinning mills are not very willing to accept orders for high-priced short fiber supply.
On October 20, the Zhengzhou Commodity Exchange issued a notice, deciding to increase the margin level and price limit of short fiber futures starting from the settlement on October 22, and reminded investors Strengthen risk awareness and strengthen risk prevention.
Industry insiders said that increasing the trading margin level and price limit of short fiber futures was aimed at curbing excessive speculation in the market. Short fiber futures peaked and fell that day. At the same time, the production and sales of the short fiber spot market have also dropped significantly, and transactions are mainly concentrated among futures traders. The market has begun to return to calmness, and some short fiber factories have locked in profits from processing differences at historical highs. The price of competing cotton has also begun to fall. The spot production and sales of short fiber have declined for three consecutive days. The short fiber futures closed at the limit yesterday, which is actually a recovery from the rapid rise in the early period.
“From the perspective of supply and demand, the overall short-term supply and demand of short fiber is still good. At present, short fiber is still in a state of high load, high profit and low inventory. The overall situation Compared with other polyester products and raw materials, it is still at a good level.” Zhang Xiaozhen said.
In Zheng Youfei’s view, there will be basically no growth in the short fiber supply side before May next year. At present, short fiber factories are close to full capacity, and most of them are operating at a negative rate. Inventory, terminal weaving orders can be maintained until at least December. “Basically, the fundamentals are still the same, and there has been no deterioration.” Zheng Youfei said that short-term price fluctuations are normal adjustment behavior, so there is no need to worry too much, and the market should be viewed rationally.
In the opinion of industry insiders, we need to pay attention to future market changes.The continuity of outbound orders and downstream replenishment behavior.
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