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Xinjiang cotton ban, domestic and foreign price differences are high, how much profit is there for traceability orders?

The reasons for the surge in ICE cotton futures since late July (the main December contract rose from 82.54 cents/pound to 119.59 cents/pound, an increase of 37.05 cents/pound in m…

The reasons for the surge in ICE cotton futures since late July (the main December contract rose from 82.54 cents/pound to 119.59 cents/pound, an increase of 37.05 cents/pound in more than half a month, an increase of 44.89%) , there have been many discussions by various parties, nothing more than the high temperature and drought in Texas, the main cotton-producing area of ​​the United States, has caused a significant increase in the abandonment rate or even a record high. Therefore, the USDA has significantly reduced the US cotton production in 2022/23 by nearly 3 million bales; the United States Inflationary pressure has eased, and there is a high probability of a 50 basis point interest rate hike in September, which has triggered a series of positive effects such as the fall of the U.S. dollar index and the continued rebound of Chicago corn and soybean futures due to drought in major producing areas such as the United States and Brazil. The author believes that there are still Affected by the escalation of the Xinjiang cotton import ban by the United States and the European Union, U.S. cotton exports to Southeast Asia, Turkey and other countries have benefited. Under policy “protection”, the consumer market for Xinjiang cotton and Xinjiang cotton products is being seized by U.S. cotton Although U.S. cotton exports in 2022/23 may be subject to continued resistance and countermeasures from Chinese buyers, the “withdrawal of Xinjiang cotton and increase in U.S. cotton” operations by countries including India, Bangladesh, Vietnam, and Pakistan will make up for the decline in China’s imports.

According to statistics from the U.S. Department of Commerce, U.S. apparel imports continued to increase in June this year, with import volume and import value increasing by 19% and 40% respectively year-on-year. From January to June this year, the U.S. clothing import volume and import value increased by 24% and 40% respectively year-on-year, and the unit price increased by 13.1%. In June, China’s share of U.S. apparel imports continued to decline. In that month, the United States’ import volume and import value of Chinese clothing increased by 13% and 33% respectively year-on-year, while its import volume and import value from other countries increased by 33% and 43% respectively. Vietnam, Bangladesh, Cambodia and India all purchased goods from the United States. Benefit from transfer of apparel purchase orders. Some foreign trade companies and textile and clothing enterprises estimate that in the first half of 2022, the EU’s import performance of my country’s textile and clothing is not much different from that of the United States, and its market share in the EU has declined. However, countries including Vietnam, India, Bangladesh and other countries have a negative impact on the EU’s textile and clothing imports. Exports have increased significantly and their market share continues to rise. According to industry analysis, the decline in China’s textile and apparel market share in the United States and the European Union is not only due to the continuous outbreak of the domestic epidemic in the first half of 2022, the unrelaxed epidemic prevention and control, the textile and apparel industry in Southeast Asian countries taking advantage of their own advantages to rush for orders, and the sharp fluctuations in the RMB exchange rate. In addition to related factors, the “Xinjiang cotton import ban” has become an unavoidable and unavoidable topic. It is the key to the sharp year-on-year decline in orders received by Chinese cotton textile companies and cotton garment companies since the second quarter of 2022, and the plunge in cotton consumption. .

On June 21, the U.S. Xinjiang-related bill “Uyghur Forced Labor Prevention Act” came into effect. Under the guise of combating “forced labor,” the bill comprehensively bans the import of products from Xinjiang, China, unless the company has “evidence” to prove that the product is not made by so-called “forced labor.” The U.S. Customs will strengthen inspections of cotton products imported from China. Regardless of the trade terms (LDP/FOB/CIF, etc.), the customs can directly seize the goods. Due to disagreements at the top levels and the risk of being attacked by Republicans for being “soft on China,” the Biden administration will still create obstacles to Chinese imports. Under the US government’s ban, the impact on my country’s Xinjiang cotton industry and cotton spinning industry cannot be underestimated. From the current point of view, the negative effects and suppression of Xinjiang’s cotton import ban are becoming more and more prominent. China’s cotton textile and clothing industries have encountered unprecedented unfairness and Unfair treatment, despite “killing one thousand enemies and damaging oneself eight hundred,” the Biden administration still insists on braving the disapproval of the world. Naturally, its purpose is not the so-called “Uyghur Forced Labor Prevention Law”, but also the Xinjiang cotton industry, but It is the Chinese cotton textile industry that is highly competitive in the world and achieves the political goal of producing high-end products in Japan and South Korea and low-end products in Southeast Asia such as India.

1. The damage and impact of the Xinjiang cotton ban on China’s cotton textile industry are still in a state of fermentation. Tests and suppression are still to come. Chinese companies need to be fully prepared. In the Sino-US cotton war, the United States used human rights as an excuse. In fact, it wanted to pull China off the throne of the global textile leader and attack China’s absolute dominance of the global textile industry. The United States first blacklisted several international apparel companies, forcing them not to use products supplied by Xinjiang. Later, the United States stated that it would ban the import of some or all products made from cotton from China’s Xinjiang region until June 21, 2022. The Xinjiang-related bill “Uyghur Forced Labor Prevention Law” came into effect. Why did the United States choose to target Xinjiang cotton? Because China not only ranks second in cotton production in the world (lower than India), but also ranks first in cotton consumption for many years, making it difficult for other countries to shake. Due to the concentrated climate and production areas, Xinjiang cotton has the best color, length, foreign fibers and strength compared to cotton from other domestic production areas. Xinjiang’s cotton output accounts for 84.9% of China’s total cotton output. Currently, there are more than 14,000 cotton-related companies in Xinjiang, accounting for 10.28% of the country’s total, of which there are more than 8,700 cotton planting-related companies, accounting for 11.45% of the country’s total. Therefore, attacking Xinjiang’s cotton industry is an attack on China’s cotton textile industry, which China is proud of and ranks first. Because the United States has called for the textile industry to return to the United States, a large number of foreign textile companies have invested in the United States, and their factory locations have been concentrated in the southeastern United States. If the textile industry and manufacturing industry are to return smoothly, suppressing or even destroying China’s textile industry is a prerequisite.

So AmericaThe threat is currently not great.

Due to geopolitical tensions and China’s zero-elimination policy, shortages of raw materials are affecting the global supply chain, and Vietnam is also affected. The Vietnam Textile and Garment Association said textile factories are still affected by supply chain disruptions caused by China’s border controls and soaring costs caused by the Russia-Ukraine war. China has long been Vietnam’s main exporter of fabrics and clothing accessories; 50-55% of Vietnamese textile factories’ raw materials and textile accessories come from China. The “Prevention of Forced Uyghur Labor Law” was passed on June 21, 2022, prohibiting companies from importing goods, including cotton, from China’s Xinjiang region to the United States, further increasing the input costs of Vietnamese companies, and for Vietnam’s textile and clothing supply chain, such as “To add insult to injury.”

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Author: clsrich