According to the quotations of some cotton importing enterprises, the quotations of US cotton, Brazilian cotton, West African cotton and other products for port customs clearance in the past two days have been continuously raised with the rebound of Zheng cotton (CF2009 + basis). On June 2, Qingdao US cotton 31-3 36 (Strong 28GPT) quotation exceeded 12,850 yuan/ton; Brazilian cotton M 36 (Strong 28GPT) quotation also rose to the range of 12,450-12,500 yuan/ton; affected by the main ICE cotton futures contract opening a strong resistance level of 60 cents/pound , the quotation for June/July shipping date ME 41-5 36/37 has been raised to 65.80-66 cents/pound (the net import cost under 1% tariff is 11550-11600 yuan/ton); June/August Brazilian cotton M 1 -1/8 (Qiangli 28/29) is quoted at 67-67.30 cents/pound (net import cost under 1% tariff is 11800-11850 yuan/ton).
According to feedback from traders in Qingdao, Zhangjiagang, Ningbo and other places, since mid-May, port bonded, customs clearance, US cotton inquiry, transaction, and outbound shipments have gradually picked up, gradually increasing with Brazilian cotton, Indian cotton, West African cotton and others have widened the distance (the overall bonded + non-bonded cotton inventory in China’s main port has not fluctuated greatly, and shipments are slightly larger than warehousing).
Why did the US cotton transaction rebound? The reasons analyzed by the industry are as follows:
First, the spot US cotton at ports with medium to low quality and low premium is more concerned by buyers than in March/April. As domestic textile and clothing companies resume work and production, orders are mainly in autumn and winter, and the demand for cotton yarn with a count of 40S and below continues to rebound. On the one hand, the port ME 41-3/41-4/41-5/42-5/ The price of low-grade and low-quality cotton such as 43-5 is relatively low, and there is a lot of room for negotiation between buyers and sellers; on the other hand, there is sufficient inventory of bonded + non-bonded US cotton at the port, and there is a lot of room for textile companies and middlemen to choose and compare;
The second reason is that due to concerns about the tension between China and the United States, some textile companies and traders have engaged in “rushing procurement” operations. Sino-U.S. relations are currently facing great uncertainty; it is rumored that the Office of the United States Trade Representative has issued a notice and decided to extend the validity period of the fifth batch of products (products in the 34 billion tariff exclusion list) from June 4 on more than 80% of the list. The resumption of 25% tariffs on imported products has not yet been confirmed, but the market has already felt a chill. The industry believes that China’s countermeasures will include re-imposing tariffs on imported U.S. cotton;
The third part is that Textile and clothing order contracts in Europe, the United States, Japan and South Korea require the use of American cotton or Australian cotton as raw materials. As countries such as Europe and the United States have restarted their economies, a small number of export orders have gradually arrived since late April (orders suspended in March/April have also continued to be implemented). Therefore, the resumption rate of textile and garment enterprises in coastal areas has gradually increased, and some orders have been shipped to Australia. There are requirements for the proportion of raw materials such as cotton and U.S. cotton;
Fourthly, the recent depreciation of the RMB has been relatively large and the pressure has not diminished. There is a phenomenon of buyers placing firm orders in advance. On the evening of May 27, the offshore RMB exchange rate fell by about 500 basis points, hitting the lowest value of 7.196 since September last year. In May, the RMB exchange rate trend was mainly depreciation. Taking offshore as an example, the RMB exchange rate against the U.S. dollar has depreciated from 7.087 on May 3 to a maximum of 7.176 on the 27th, with a depreciation rate of 1.34%.
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