Recently, the overall domestic cotton yarn market has been weak. Except for the sales of individual yarn counts, the sales progress of pure cotton yarn is average and the price is stable. In the blended spinning field, the price of polyester-cotton yarn is stable but weak, while the price of rayon yarn is overall slightly weaker.
Judging from the inventory situation of textile companies, cotton raw materials for most companies remain at low levels. On the 24th, the person in charge of a textile company in Xuzhou, Jiangsu Province said that after bidding for a batch of state-reserved cotton in the middle of this month, he has been waiting to see the market without taking action. Currently, there are about 17 days left in cotton inventory, which is at a low level.
In addition, for enterprises in the Yellow River Basin and Yangtze River Basin, most textile enterprises have cotton raw material inventories of 17-21 days, and larger enterprises have inventories of between 30-50 days, which is 1-2 days more than before the state reserve cotton was released, but compared with previous years. Judging from the situation (except for 2016), cotton raw material stocks are low.
But, should we buy cotton? Most companies are still hesitant. There are several main reasons why I have been unable to make up my mind to purchase:
1. Order profits have been squeezed, and companies are unable to pay the Khmer price
On the 23rd, the average transaction price of State Reserve cotton was 14,774 yuan/ton, which was 15,987 yuan/ton at a discount of 3,128 yuan. Is the current price of state-owned cotton high? If compared with the Khmer price era, it is indeed not high. However, compared with the affordability of enterprises, the current price is indeed not low.
According to the editor’s investigation, the current cost pressure is still a pain in the production of textile enterprises. The person in charge of a company in Shandong gave an example. The current sales progress of conventional yarn is acceptable and orders can basically be maintained. However, taking carded 32S as an example, the current orders The price is about 23,200 yuan/ton. However, the cost is around 23,000-23,100 yuan/ton, and the company has basically no profit. If the profits and shipping discounts given by the company to downstream are included, the company will almost fall into a loss.
Therefore, most textile enterprises hope that the price of cotton will be lower, even if it drops to 300 yuan/ton or 500 yuan/ton, the life of enterprises will be easier and easier.
2. Zheng Mian is wavering, and the company’s heart is also wavering
Recently, the continuous downward trend of Zheng cotton has made the entire downstream market have a strong wait-and-see attitude.
“Zheng cotton is a weather vane and barometer. Zheng cotton has been falling continuously. No one dares to buy raw materials easily.” A market person said that as a textile company, the last thing you want is for cotton prices to fluctuate significantly, whether it is rising or falling. Businesses don’t want that. On the 23rd, Zheng Cotton’s main 1705 contract was still fluctuating around 15,300 yuan/ton. According to the view of textile enterprises, it is crucial to whether Zheng cotton can stop falling and stabilize or rise in the near future.
If Zheng Cotton can recover the lost ground of 15,500 yuan/ton, then what will be the trend in the prices of the three major cotton resources, namely State Reserve, spot and Zheng Cotton? (The editor will still pay close attention to the next trend as always!)
To sum up, this year, textile companies are not active in auctions and reserves, and they are not active in futures swaps. They are also not active in purchasing real estate cotton and Xinjiang cotton spot. The key factor is that the market is unstable. When will this situation be reversed? Now, the most direct question is: when will cotton prices stabilize?
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