Since the start of cotton reserve rotation on July 1, cotton textile companies have actively participated in the bidding and increased prices fiercely. The average daily transaction price of reserve cotton has also increased from 11,139 yuan/ton to 11,567 yuan/ton, and the price increase has also been increasing day by day, which shows that reserve cotton is favored by enterprises. In contrast, in the past week or so, some cotton traders and Xinjiang cotton companies have reported that spot inquiry transactions have been deserted, and as Zheng cotton’s main contract CF2009 has continuously exceeded the 11,800 yuan/ton and 12,000 yuan/ton mark, textile enterprises have Price purchases have also been significantly reduced or even suspended. In particular, the outflow of high-quality and high-premium Xinjiang cotton warehouse receipts and quasi-warrants such as “Double 29” and “Double 30” has slowed down significantly.
In addition to vigorously bidding for cotton reserves, what kind of cotton are domestic textile companies currently purchasing? According to the survey of some customers and cotton-using enterprises, the following situations can be summarized:
First, large and medium-sized cotton textile enterprises, the cotton yarn varieties produced are still in the 40S and above. Since the decline in export orders is mostly within 20%, customer demand for mid-to-high-end gauze is relatively stable and profits are high. Therefore, cotton procurement is still dominated by Xinjiang cotton, US cotton, Australian cotton, Brazilian cotton and Xinjiang local cotton in 2019/20. There are relatively few purchases of cotton from reserve cotton.
The second is a textile enterprise that mainly produces carded yarn 21S-40S or JC32-JC40S. 80% of yarn sales are supported by domestic sales orders, and occasionally we receive export orders or process 40S-60S cotton yarn for large companies. At present, we mainly purchase 2019/20 Xinjiang cotton at price points from traders or reserve Xinjiang cotton through auctions, and receive customs-cleared medium and low-quality foreign cotton from traders. We have no intention of purchasing Xinjiang cotton with poorer quality in the later period.
The third is a small cotton spinning enterprise that spins OE yarn and C16S-C32S carded yarn. Due to the low yarn count and low cotton grade, cotton yarn is mainly sold domestically and is mainly supplied to denim factories, home textile companies, towel factories and mid-to-low-end shirt factories. It is characterized by low prices, low delivery standards and flexible payment. Therefore, cotton procurement is mainly based on reserve real estate cotton, 2019/20 real estate cotton, and low-index lint cotton with low horse value (C1) in Xinjiang, length below 28mm, or breaking strength below 27CN/TEX. Occasionally, low-quality lint has been purchased for customs clearance at the port. Indian cotton and African cotton, provided they are cheap. </p
