Flame retardant fabric_Flame retardant fabric_Cotton flame retardant fabric_Flame retardant fabric information platform Flame-retardant Fabric News Will cotton prices break upward or fluctuate downward? Let’s see what both the bulls and the bears have to say…

Will cotton prices break upward or fluctuate downward? Let’s see what both the bulls and the bears have to say…

In the first week of reserve cotton sales, a total of 50,000 tons of reserve cotton resources were listed, with a total transaction volume of 50,000 tons, and a transaction rate of…

In the first week of reserve cotton sales, a total of 50,000 tons of reserve cotton resources were listed, with a total transaction volume of 50,000 tons, and a transaction rate of 100%. In the near future, the country will issue a sliding tax quota of 750,000 tons for cotton non-state trade imports, which is expected to be distributed to cotton textile enterprises before mid-September. Judging from the current state cotton reserve auction and the issuance of sliding tax quotas, domestic cotton supply has increased. However, taking into account the price of imported cotton with sliding tax, the supply pattern is still tight. With the implementation of policies such as stockpiling and quotas, Zheng cotton prices have experienced periodic corrections, but the overall trend is still strong.

Recently, the main contract of Zheng Cotton has hit a high of 17,530 yuan/ton, and the subsequent correction has not been deep. The cotton price has strong support around 17,000 yuan/ton. At present, the bidding for cotton reserves is fierce, and the spot market sales are also hot. The raw material inventory of downstream cotton spinning enterprises is low, and the short-term supply of cotton is tight. With tight inventories this year and expectations of production cuts next year, domestic cotton prices may continue to rise, stimulated by news of a rush to harvest.

Recent trends of Zheng Cotton’s main contracts

On August 10, the main contract of Zheng Cotton closed at 17,160 yuan/ton, which was the same as yesterday’s settlement price, with support at the 17,000 position.

At present, the trend of Zheng cotton is closely related to the spot market price and the auction price of reserve cotton, and the prices of the three remain at a high level. There are big differences in the market whether cotton prices will choose to break upward or fluctuate downward in the future.

Bullish people: The possibility of a short-term deep correction in cotton prices is very small

The current upstream and downstream competition in the cotton spinning industry chain is very fierce. Bullish people believe that the possibility of a short-term deep correction in cotton prices is very small, and there is a possibility of continuing to rise.

On the one hand, the current spot price is strong. The price of lint in Xinjiang warehouses is 18,000 yuan/ton, and the price shipped to the mainland has reached about 18,500 yuan/ton. The main futures contract price fluctuates around 17,200 yuan/ton. Even if the premium and discount are added, it is still cheaper than the spot price. Therefore, the expectation that futures prices will continue to retreat significantly may be in vain. Under the condition that the spot price is higher than the futures price, as the delivery time approaches, the futures price can only move closer to the spot price.

On the other hand, the reserve cotton bidding situation is very good, with a transaction rate of 100%. According to people participating in the auction, the price of reserve cotton currently sold in the auction is several hundred yuan lower than the spot price in the market. The cotton auctioned has a cost advantage, and companies are highly motivated to bid. The current auction price of reserve cotton is basically the lowest price in the cotton market.

Recently, due to the long duration of high temperature weather in some areas of southern Xinjiang, droughts of varying degrees have occurred in some plots. If field management measures such as drought resistance are in place in the later period, cotton output is expected to remain stable, otherwise the yield will be lower than previous years. Before the new flowers come on the market, cotton prices will remain strong and volatile.

Downstream people: It is difficult for cotton prices to rise

People in the textile downstream believe that it is difficult for cotton prices to rise. Even if there is a short-term upward breakthrough, the downward trend will not change in the future. The main reason is that the current downstream cotton yarn production and sales are not optimistic, and high-priced cotton has seriously squeezed the production profits of cotton spinning enterprises. For companies that purchase and produce at the same time, some cotton yarn varieties are already at a loss, and their enthusiasm for production has dropped significantly, and their enthusiasm for starting up is low.

Judging from the survey, the current quotations for “double 28” (or single 29, main grade 31) Xinjiang machine-picked cotton in Henan, Jiangsu, Shandong and other inland warehouses are concentrated at 18,150-18,300 yuan/ton, and Guangdong, Jiangsu, Zhejiang and other coastal areas In the light textile market, C32S mid-range woven yarn is quoted at about 24,500-25,000 yuan/ton. The price difference between cotton and cotton yarn is less than 7,000 yuan/ton (or even less than 6,500 yuan/ton). Cotton spinning mills are almost 100% in the red, so raw material costs are reduced. Increasing cotton yarn quotations has become the key to the survival of cotton spinning mills. Although some textile companies have increased their cotton yarn quotations by 300-500 yuan/ton since early July, the losses of cotton yarns of 40S and below are still prominent. Therefore, domestic small and medium-sized cotton spinning mills are reluctant to sell cotton yarns and at the same time reduce the startup rate or even reduce production shutdowns to achieve relief. The purpose is to reduce operating pressure and reduce the risk of losses.

Based on the current domestic cotton spot prices, reserve cotton wheel transaction prices and port imported cotton resource quotations, the spot profit rate of cotton yarn spinning 40S and below is likely to be negative. Textile companies may be in an embarrassing situation of losing money when replenishing cotton stocks, or losing money even if they do not replenish stocks. . Therefore, it is expected that relevant departments will implement measures such as significantly increasing the daily auction volume of reserved cotton, reducing the weight of single bundles of cotton, and issuing 750,000 tons of sliding tariff quotas as soon as possible to achieve the goals of reducing cotton prices, ensuring supply, and curbing speculation. Opportunities to replenish stocks at low prices.

At present, the upstream cotton futures price is strong, while the rising prices of cotton yarn and gray cloth are difficult to effectively transmit to the downstream. If cotton prices continue to rise in the future, the company’s shutdown rate may increase. In their view, there is no way for cotton prices to rise without the support of consumption. In addition, the price of additional cotton with sliding tax quotas is significantly lower than the spot market price, which will also have a greater impact on the subsequent market.

The traditional peak season of the textile industry, the “Golden Nine and Silver Ten”, is about to come. The downstream industry is full of expectations for the continued recovery of the domestic demand market and the upgrading of consumption. Especially since July, pro-consumption policies have been intensively introduced in various fields, and the intensity of promoting consumption has been further increased. The confidence of residents and enterprises has continued to recover. Production and consumption are gradually entering a virtuous cycle, and consumption momentum is expected to increase. According to Henan�Some small and medium-sized cotton spinning enterprises in Jiangsu, Shandong and other places have reported that since early August, the willingness of weaving factories and middlemen in coastal areas to inquire about ring spinning, compact spinning, and sero spinning has rebounded slightly. Cloth mills and middlemen in Guangdong and other places have increased inquiries for medium and high-count cotton yarns. Therefore, the pessimism and bearish sentiment of textile companies has gradually eased, and the willingness to accept orders has rebounded from September to November.

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Author: clsrich