Insufficient downstream orders, pressure is transmitted to the raw material end

Recently, some weaving/fabric companies in Guangdong, Jiangsu and Zhejiang have reported that new orders for cotton gray fabrics have decreased since April, and some specifications…

Recently, some weaving/fabric companies in Guangdong, Jiangsu and Zhejiang have reported that new orders for cotton gray fabrics have decreased since April, and some specifications have been overstocked. This is mainly due to domestic demand orders for home textiles, home furnishings, labor insurance, shirts, etc., which are gradually coming to an end. The influence of the epidemic (consumer terminals mainly replenish orders), the low order placement rate of enterprises in May/June, and the rising quotations of 40S and above combed yarn also make weaving factories have no intention of hoarding raw materials such as cotton yarn.

Judging from the survey, although the operation rate of large and medium-sized cloth factories in Guangdong, Fujian, Zhejiang and other places can still be maintained at 70%-80% (a few companies even reach about 90%), the differentiation is becoming more and more obvious. , export orders cannot meet production capacity, and we have to adopt various methods to deal with it, such as appropriately reducing the operating rate, adjusting product structure, and increasing the output of blended gray fabrics.

A textile company in Suzhou, Jiangsu Province said that the recent production and sales of 40S-60S cotton yarn on the market are significantly better than 32S and below low-count ring spinning and OE yarn (60S and JC60S cotton yarn spinning companies have tight inventories, and the quotations have been increased significantly) , therefore the company almost gave up all orders for C32S and below, and only accepted orders for 40S and above cotton yarns. At the same time, it increased the production of T/C, T/R, R/C and other blended yarns, mainly considering the expected domestic demand orders in the autumn and winter of 2023. Issue in advance. Judging from the quotations of some Aksu ginning plants and traders, the quotations of 3136/3137 (strong 40-43CN/TEX) long-staple cotton in Xinjiang’s warehouse on April 10-11 were concentrated at 23,200-23,500 yuan/ton, which is also relatively high. There was an increase of more than 500 yuan/ton in mid-March.

Industry analysis shows that as it becomes more difficult for fabric and weaving companies to maintain high operating rates, the pressure is expected to gradually be transmitted to the midstream and upstream sectors such as cotton yarn and cotton yarn. The probability of Zheng Cotton’s main contract recovering 15,000 yuan/ton in the short term will decrease, but in 2023 the world will , the decline in cotton planting area in China’s Xinjiang and the weather speculation in cotton-producing areas, coupled with the support of the continuation of monetary easing policy in the first half of 2023 and the comprehensive cost of Xinjiang’s warehouses, etc., the magnitude of the CF2309 contract correction will not be large, short-term attention Whether strong pressure levels such as 14,500 yuan/ton and 14,000 yuan/ton can form a bottom push, it may be wise for cotton processing companies to seize spot sales and implement high-indicator and high-rise water lint hedging as soon as possible.

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Author: clsrich