Before late January, I am afraid no one would have anticipated the “black swan” of the new coronavirus. Even if an epidemic was expected, the rapid spread was shocking. With the start of the national epidemic prevention and control war, the number of confirmed cases has continued to decline, and the cure rate has increased significantly. Panic in society, various walks of life, and industries has begun to subside. In mid-to-late February, the cotton textile industry will also resume work one after another, and cotton consumption has finally seen a decline. The dawn of stopping the decline, stabilizing and even rebounding.
So what is the impact of the epidemic on the cotton industry? The author summarizes the following points:
First, the progress of cotton processing inside and outside Xinjiang has slowed down significantly around the Spring Festival, which in turn affects the warehousing, public inspection, storage and sales of lint;
Second , the cotton market has basically come to a standstill due to various reasons such as warehouse pickup, vehicle transportation and road restrictions. Except for electronic trading and reserve cotton rotation transactions, the spot market continues to be deserted;
Third, cotton textile mills, intermediate The replenishment of raw material stocks by merchants and other companies will be forced to be postponed for 10-15 days (or longer in some provinces and enterprises). Even if downstream companies resume work, they must go through application, review, disinfection and other levels;
Fourth, domestic and foreign cotton consumption expectations will be lowered in 2019/20, and domestic supply may exceed demand. Judging from feedback from some textile and cotton companies, the epidemic not only caused a significant decline in domestic cotton demand in the first half of 2020, but also Chinese weaving companies’ imports of cotton yarn and gray fabrics from India, Pakistan, Vietnam, etc. will also decline;
Fifth, for some cotton companies, they may encounter difficulties in repaying loans in March. From a time point of view, processing enterprises and traders in Xinjiang are mainly hedging in the CF2005 contract, and delivery, settlement, and payment recovery are “hoping for the plum blossom to quench their thirst”; at present, both the price of Zheng cotton and the bidding price of reserve cotton are attractive to ginners. Insufficient, cotton companies are relatively less willing to ship goods and receive payment;
In June and February-March, the progress of Xinjiang cotton transfer to the mainland for delivery and sales declined, mainly due to shipping, funds, road closures, and the epidemic Prevention and control and other restrictions. According to statistics from relevant departments, road transportation of cotton out of Xinjiang has basically stagnated since January 31.
</p
