Recently, the Port of Houston, Texas, USA stated that two workers at the port were diagnosed with COVID-19. Its Bayport and Barbours Cut container terminals have been closed and operations have been suspended, causing US cotton export companies, international cotton merchants and buyers to express doubts about the 2019/ Concerns about U.S. cotton shipments and shipments have intensified in 2020.
Some institutions and cotton-related companies believe that the new coronavirus pneumonia epidemic in the United States has entered a concentrated outbreak period (confirmed on Japan) The number of cases exceeded 10,000, and the local government issued a stay-at-home order). In addition, the government’s prevention and control measures are ineffective. Therefore, it is unlikely that the two container terminals will be reopened in the short term. Therefore, the impact on U.S. cotton shipments and exports will be extended indefinitely. The World Health Organization (WHO) said on the 24th that considering the very rapid growth rate of confirmed cases of new coronary pneumonia in the United States, the United States may become the “epicenter” of the global epidemic.
How much impact will the closure of the two terminals at the Port of Houston have on the cotton supply in Asia? Several international cotton merchants and large and medium-sized cotton importing companies said that from the current point of view, the impact is not significant. The key is to see whether the US cotton epidemic can be effectively controlled in April and May and an “inflection point” will occur, without causing damage to cotton shipments at other ports. (like West Coast ports).
First, the Port of Houston mainly ships crude oil and wheat, and is not the main port for cotton export shipments. Some cotton companies reported that the West Coast port shipment of U.S. cotton accounts for a relatively large proportion, while the East Coast accounts for a lower proportion. Its main producing areas, such as Texas, California, Oklahoma, and Arizona, are all southwest and western cotton regions;
Second, under the COVID-19 epidemic, factors such as the varying declines in cotton consumption in various Asian countries and the sharp depreciation of currencies against the U.S. dollar have diluted to a certain extent the impact of the closure of the two terminals at the Port of Houston on shipping demand. Impact; Under the epidemic, demand has decreased, trade, transportation, and exchanges have been affected, and some Asian buyers also have plans to temporarily slow down shipments and contract fulfillment (the plunge in ICE futures is an important reason);
Third, not only the bonded volume + non-bonded inventory of foreign cotton in China’s main cotton ports continues to rise, but the inventories of US cotton/Brazilian cotton/West African cotton/Urban cotton/Australian cotton in ports such as Vietnam, Indonesia, Pakistan, and India are also higher than those in the previous few ports. Significantly increased year on year. Since the trade war broke out between China and the United States in 2018, some international cotton merchants’ US cotton sales focus and Asia-Pacific branches (or representative offices) have gradually shifted to Southeast Asia (Mumbai, Delhi, Ho Chi Minh City, Klang, Singapore and other ports), playing an increasingly important role. The bigger);
It is worth noting that in order to curb the accelerated spread of the new crown epidemic in India, Indian Prime Minister Modi announced that India will implement 21 A complete blockade for days will severely impact the cotton import and export trade. Recently, almost all ports in India have issued force majeure declarations. The content of the declaration mainly includes that the blockade measures will lead to unprecedented restrictions on the entry and exit of personnel and materials, and the port will be unable to fulfill its obligations under the contract to a certain extent. India’s cotton import and export and cotton yarn export are facing the risk of sharp decline or even semi-stasis. Therefore, the inquiry and procurement focus of some buyers such as Bangladesh, Pakistan, and China may once again turn to US cotton. The impact of the closure of the two container terminals in the Port of Houston has been amplified by the market. , becoming the subject of speculation by funds and bulls. </p
