During the Spring Festival of 2020, no one expected that the epidemic would hit so violently, and people were caught off guard. Even masks became scarce. In order to cope with this sudden epidemic disaster, the whole country has united as one and worked together to fight this battle. Unprecedented strict prevention and control measures such as city closures and work suspensions have given people hope to defeat the epidemic as soon as possible. The time for enterprises to resume work has also been shortened. Getting closer.
Will this epidemic have a certain impact on the national economy, and how big will the impact be? Relevant experts predict that if prevention and control is timely and effective, the epidemic will last short and the impact on the economy will be mainly limited to the first quarter. The national GDP growth rate is expected to be 4% in the first quarter, and the average GDP for the whole year will remain at around 5.2%. In 2020, China’s economy will still be unable to escape the shadow of downward pressure.
Against the background of macroeconomic pressure, what is the survival situation of my country’s cotton spinning industry? Just as the CPI and PPI indexes represent the hot and cold conditions of the economy, changes in cotton prices can also reflect the true situation of my country’s cotton spinning industry. Cotton prices got off to a bad start in 2020. When the 2009 contract price of Zheng cotton was about to rise to 15,000 yuan/ton, the epidemic struck like a beast, and the market was hit in a mess. As the epidemic continues to spread, market panic continues to intensify, and the main contract prices have repeatedly hit new lows. The market is so cruel and greedy. It will never provide help when it is time for it, but will only add fuel to the flames. The market was temporarily stabilized under the influence of factors such as China Reserve Cotton’s timely increase in reserve purchases.
As the saying goes, a negative line changes the three views. According to the survey, under the disturbance of the epidemic, most cotton people’s views on the market outlook have changed from optimistic to pessimistic. Even if some people are not bearish, they believe that cotton prices will continue to fluctuate, and it is indeed very difficult to rise. Therefore, in the first week after the holiday, the number of reserve cotton transactions even exceeded the total transaction volume in the previous two months. Especially as the number of listings continued to increase, it was still difficult to meet the storage demand. Of course, with the adjustment of the auction maximum price this week, the price advantage of reserve cotton has declined, but the auction volume is still considerable. It can be seen that withdrawing funds and settling down is still the best choice for companies facing uncertain risks.
The root cause of the waterloo in cotton prices before and after the Spring Festival is the epidemic, because the epidemic caused cotton spinning enterprises to stop work, procurement stagnated, and demand decreased. The longer the shutdown period, the greater the impact on textile companies, which in turn will have a greater negative impact on cotton prices. It is understood that there are more positive factors than negative factors that affect cotton prices before the holiday. As long as a “black swan” event does not occur, cotton prices should be able to stabilize at normal price levels. But Murphy’s Law tells us that the more we worry about something, the more likely it will happen.
As the date for resumption of work approaches, Hubei Province and even Wuhan City, which have been hardest hit, may continue to face difficulties. According to data from the National Bureau of Statistics, Hubei Province’s GDP reached 4.58 trillion yuan in 2019, and the national GDP reached 99.08 trillion yuan during the same period. Hubei Province’s GDP accounted for 4.6%. Hubei Province’s impact on the national economy is limited.
Looking at the textile market share, according to the latest data released by the National Bureau of Statistics, from January to December 2018, the cumulative output of China’s yarn industry was 29.76 million tons, a decrease from last year 0.2%, of which Hubei Province’s yarn output is 2.9647 million tons, ranking fifth in the country, accounting for 9.96%. Regardless of the national economic aggregate or the proportion of yarn production, Hubei’s proportion in the entire province is relatively small. As the hardest hit area by the epidemic, it has limited impact on the country.
Although the epidemic has also affected production nationwide, the extent of the impact of the epidemic in other parts of the country It is relatively weaker than Hubei. Therefore, while Hubei province continues to face difficulties, cotton spinning enterprises in other regions are actively preparing to resume work. According to a survey by a reporter from China Cotton Network, Nanyang City, Henan Province currently has a clear start date for textile enterprises as February 17.
In addition to Nanyang City, Henan Province, textile enterprises in Jiangsu Province are also expected to officially open their doors in mid-to-late February. start. After production and sales have been stagnant for a month, what is the situation of the company’s raw materials and orders? According to a purchasing staff of a company in Nanyang, the company currently has relatively sufficient raw materials. Cotton prices rose before the holiday, and downstream orders were sufficient. At that time, a month’s worth of inventory was purchased at a high price. Currently, downstream orders are very limited due to the epidemic, but we are not worried about product backlog, because the same period in previous years is the traditional peak season. In order to meet the peak season needs of downstream customers, we are actively preparing to resume work, and it is expected to officially start production on February 17.
The company said that the epidemic had not yet broken out before the holiday, and downstream orders were sufficient. The company’s production could not keep up with the speed of customer orders, because after the outbreak, production completely stagnated and cotton prices also dropped sharply. Falling, cotton prices still have room to rise in the future under the expectation of a rebound in downstream demand.
According to industry expert analysis, the impact of the epidemic on the national economy and even the cotton spinning industry may be greater than that of the SARS period, because during the SARS period, China had just joined the WTO, the demographic dividend was released, and the economy maintained rapid growth. , now there is great pressure to maintain “6”. In addition, in recent years, due to the impact of financial deleveraging, Sino-US trade friction, etc., the epidemic has made it even worse for enterprises. Therefore, industry professionals from all walks of life are neededInvestors calmly view the cotton price outlook. Of course, cotton prices are already at a relatively low level at this stage, and there will not be much room for decline in the short term. Of course, the room for growth is also limited.
The February monthly report of the United States Department of Agriculture released today believes that cotton supply and demand data this month are basically stable, but the uncertainty in the cotton market has increased significantly. The new coronavirus epidemic may reduce China’s cotton consumption, offsetting the benefits brought by the Sino-US trade agreement to a certain extent.
In the end, it is not possible to draw conclusions prematurely about how much impact the epidemic will have on the cotton spinning industry. What will be the trend of cotton prices after the epidemic is over? What new trends will emerge around cotton prices? New hype points are all topics of concern to the industry.
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