The United States recently announced product exclusion announcements under the ninth batch of US$200 billion tariff-increased goods list, which is beneficial to the export of cotton products. At the same time, domestic cotton downstream market demand has improved, but the main contract futures price of Zheng Cotton remained unchanged during the session yesterday. It was once close to the limit. Why did cotton prices perform so abnormally in the short term? What kind of operating trend will cotton prices maintain in the future?
On February 19, 2020 local time in the United States, the Office of the United States Trade Representative (USTR) announced the product exclusion announcement for the ninth batch of US$200 billion in tariffs. This exclusion involves a total of 47 items. products, including 8 tax codes for textile and clothing products. Among the previous exclusions, the first batch involved two textile tax numbers, the second batch involved three textile tax numbers, the third batch involved seven textile tax numbers, the fourth batch involved three textile tax numbers, and the fifth batch did not Including textiles, the 6th batch involves 3 textile tax numbers, the 7th batch involves 8 textile tax numbers, the 8th batch involves 5 textile tax numbers, plus the 8 textile tax numbers excluded in the 9th batch, 9 The batch exclusions involve a total of 39 textile tax codes. Excluded products will no longer be subject to Section 301 tariffs when exported to the United States. The exclusion period can be traced back to September 24, 2018, the date when the 200 billion list came into effect. The excluded products listed in this announcement are valid from September 24, 2018 to August 7, 2020.
According to the Futures Daily reporter, the descriptions and HS codes of the eight categories of textiles excluded in the ninth batch are as follows: First, pure cotton fabrics with a weight not exceeding 100g/m2, with quantities ranging from 43 to 68 (“cheese” “cloth”), three layers folded and curled, the width after folding and curling is less than 28cm, in line with aerospace management service standards (5208.11.4090); the second is cotton bleached, plain weave fabrics with a weight not exceeding 100g/m2, quantity from 43 to 68 (“interlining”), complying with the standards of aerospace management services (5208.21.4090); third, synthetic filament dyed woven fabrics with a weight greater than 280g/m2 but not greater than 420g/m2 (5407.92.20900); fourth, containing Sheet fabrics containing less than or equal to 85% by weight of artificial staple fibers, mixed mainly or exclusively with cotton, such as artificial staple fibers derived from wood (5516.44.0022); 5. Polyethylene terephthalate (PET) ) non-woven fabrics with a length not exceeding 160 cm by 250 cm and a weight greater than 1800 g/m2 but not greater than 3000 g/m2 (5603.94.9090) Sixth, warp-knitted fabrics made entirely of polyester fibers , bonded to a plain weave base fabric, with a width not exceeding 141 cm and a weight of more than 271 g/m2, used to decorate furniture (6001.92.0010); Seventh, knitted or crocheted fabrics made of bamboo artificial short fibers (6003.40.6000); Eighth, warp-knitted and printed fabrics made entirely of polyester with a weight not less than 290g/m2 but not more than 500g/m2, all bonded to polyester woven base fabrics, used to decorate furniture (6005.39.0080 ).
The future rise and fall of cotton prices: look at the new crown pneumonia in the short term, and the demand in the long term
Huang Shanghai, senior cotton analyst at Yangtze Futures, believes that combined with the announcement of the Tariff Commission of the State Council a few days ago, Announcement, work to exclude additional tariffs on market-based purchases of U.S. goods, including cotton, shows that trade involving cotton textile products between China and the United States is gradually normalizing. Judging from the timing of the introduction of these two policies, it is a “reciprocity of courtesy”, which means that both parties are fulfilling the first-phase agreement signed earlier, which gives us reason to believe in the sincerity of both parties in rebuilding normal trade on the basis of mutual benefit and reciprocity.
“Specifically in the cotton market, from the demand side, orders from the United States will definitely grow. Although it is difficult to return to the level before the trade war broke out, it will definitely be better than last year, which is good for the cotton market. From the supply side Look, the state will encourage the purchase of U.S. cotton. On the one hand, it is the active purchase of market entities, and on the other hand, the cotton stored in the state may directly enter the U.S. cotton. The active purchase of market entities has little impact on the market. It is just an import from Other countries turn to the stock changes in the United States; if the state-owned cotton reserves directly rotate into the US cotton, it is likely to directly replenish the state-owned cotton reserves and achieve a net rotation of state-owned cotton reserves. This will actually increase global demand, reduce supply, and have a direct impact on cotton prices. It’s good.” Huang Shanghai said that of course, the main contradiction in cotton price trends now is not Sino-US trade relations, but the new coronavirus epidemic that has begun to gradually spread abroad. After about a month, China has gradually controlled the spread of the epidemic. However, the explosive growth of confirmed cases in South Korea last weekend has cast a shadow over global epidemic control. The Chinese government has been able to basically control the epidemic in a short period of time by using its unparalleled macro-control capabilities. No other government has such great control over the economy and society. If the epidemic breaks out, the consequences will be unimaginable. Therefore, although domestic production is gradually starting to resume, we cannot take it lightly, and we still need to retain a cautious attitude towards the trend of cotton prices.
Ren Xinpu, deputy director of Yongan Futures Beijing Research Institute, told reporters that the 8 textile tax numbers involved in the product exclusion announcement under the ninth batch of US$200 billion tariff-increased goods list announced by the United States this time , basically belong to the non-mainstream varieties in China’s textile export structure to the United States. There are two pure cotton products covered by this tariff exclusion list. One is pure cotton fabrics with a weight not exceeding 100g/m2. The other is bleached cotton and plain weave fabrics with a weight not exceeding 100g/m2. The others are mostly chemical fiber products. . Judging from the structure of China’s textile exports to the United States in 2019, it mainly included US$120.29 billion in textiles, including US$1.59 billion in cotton yarn. Export fabric 600.8 billion US dollars, including US$12.46 billion for cotton. Exports of clothing were US$151.59 billion. From the first to ninth batches of products excluded from the tariff increase list, they mainly cover small varieties such as non-cotton, polyester, polyester or blends, while textiles and clothing, which account for the largest proportion, are not reflected in the exclusion list.
“It is only a response to China’s tax cuts and exclusions for U.S. goods. In the future, the environment for China’s exports of U.S. textiles and apparel still needs effective and effective actions to improve. Under the current market conditions, my country’s orders are affected by sporadic epidemics. Factors have a greater impact, and there is enough and heavy work to be done in the post-epidemic period. We must pay attention to creating an appropriate publicity and image environment, give full play to the advantages of centralized supporting facilities in my country’s industrial chain, and strive for our due market share.” Ren Xinpu said that the current The top priority is to stabilize market expectations, steadily resume production, steadily resume logistics and transportation, and not relax efforts to expand the international market while focusing on restoring domestic order demand. It is necessary to seize the advantages of the active fiscal policy implementation period, do a good job in the extension of planting policies and purchase and storage policies in the later period, and promote the revitalization of the industry by straightening out the relationships between the upstream and downstream ends of the industrial chain. He reminded all ends of the industry to recognize the supporting advantages of the industrial chain of my country’s textile industry, recognize the cyclical characteristics of industrial development, and avoid the adverse situations of “out at the bottom” and “out at the peak”.
Ningbo cotton importer Lao Zhang told reporters that as Sino-US trade relations become increasingly normal, and the market expects that my country’s imports of US agricultural products will increase in the future based on 2017, it can be considered that In the future, my country will import a relatively large amount of U.S. cotton, which will have a negative impact on domestic cotton prices and a positive impact on U.S. cotton. Domestic textile companies will face more choices.
Zhou Wenke, assistant general manager and R&D manager of Dadi Futures, said that taking a longer-term view, the United States will no longer impose 301 tariffs on products under 39 textile tax numbers. The demand for my country’s textiles is Good. Although my country’s COVID-19 epidemic prevention and control is currently showing a gradually improving trend, global epidemic prevention and control is not optimistic. In the short term, the logistics obstruction caused by the epidemic has a relatively large impact on market demand, causing the short-term trend in the market to cover up the benefits of the United States no longer imposing Section 301 tariffs on 39 categories of textiles.
Some industry professionals believe that the current domestic and foreign cotton markets need to focus on the following issues: First, the evolution and prevention and control effects of domestic and foreign epidemics. The second is the start-up status of downstream enterprises and the purchase quantity of raw materials after the epidemic gradually improves; the third is the evolution of the price difference between domestic and foreign cotton markets and yarn markets; the fourth is the expected changes in cotton planting at home and abroad in the new season, especially the progress of cotton planting in Xinjiang, my country Variety.
Xinjiang’s new cotton area is expected to decrease, and textile companies’ raw material inventories will decrease
Yesterday, the State Council Information Office held a press conference on coordinating epidemic prevention and control and economic and social development. Relevant personnel from the National Development and Reform Commission introduced at the meeting that positive progress has been made in the resumption of work and production of enterprises. Large enterprises have resumed work and production faster than small and medium-sized enterprises, and upstream industries and capital and technology-intensive enterprises have made faster progress than downstream industries and labor-intensive enterprises. The resumption rate of industrial enterprises above designated size across the country has gradually increased, with more than 90% in Zhejiang and more than 70% in Jiangsu, Shandong, Fujian, Liaoning, Guangdong, and Jiangxi. Looking at key industries, the resumption rate of steel companies was 67.4%, and the resumption rate of non-ferrous metal companies was 86.3%. In particular, companies in key areas related to the national economy and people’s livelihood are accelerating the resumption of work and production. Relevant companies are working overtime and producing at full capacity. The production capacity utilization rate of mask companies has reached 110%. The national food emergency processing capacity resumption rate has exceeded 70%. Coal mine production capacity The recovery rate has reached 76%, the number of railway loadings has returned to about 95% of the normal pre-holiday level, and civil aviation, ports, and water transportation are all operating normally.
According to the reporter’s understanding, the current preparations for spring plowing in Xinjiang have been carried out in an orderly manner from south to north. In southern Xinjiang, the production of small sheds in farmers’ courtyards and the “early spring” production of sheds in large fields have been quickly launched, so as to rush for planting and rapid growth. Vegetables, shorten the production cycle and increase market supply during the epidemic prevention and control period. At the same time, according to the latest agricultural conditions, the intended planting area of crops in the region this year is 70.6429 million acres, which is stable and slightly lower than last year. The planting structure shows a decrease in wheat, cotton, corn, vegetables, and specialty crops. “Three growth trends”, the structural layout tends to be optimized.
Judging from the current situation of the domestic textile industry, it is expected that domestic and foreign cotton prices will still face downward pressure in the short term. Due to restricted population movement in the domestic market, some textile companies have delayed resumption of work, which will have a certain impact on the export and domestic sales of textiles and clothing in the short term. Affected by concerns, it is expected that domestic cotton prices will be difficult to escape from a downward trend in the short term, and subsequent trends will depend on the control of the epidemic. In the international market, China is the world’s largest cotton consumer. Considering the response of domestic and foreign markets since the outbreak of the epidemic, the periodic demand for cotton will be affected to a certain extent. In addition, the current raw material inventory of textile enterprises has declined, textile output has declined month-on-month, yarn inventory has increased, and cloth inventory has increased slightly. </p
