According to feedback from some cotton textile companies in Jiangsu, Zhejiang, Shandong, Henan and other places, due to the continuous daily limit increase of ICE cotton futures on August 12 and 15 and the increasing demand for traceability orders, some cotton trading companies at the port have adopted closures and temporary suspensions in the past two days. There is no external quotation operation, and the sentiment of holding the goods and selling is strong. A cotton merchant in Qingdao said that because the rebound strength and amplitude of Zheng cotton cannot keep up with the pace of ICE, and the inversion of domestic and foreign cotton continues to expand, it is almost impossible to transact foreign cotton cargo and bonded cotton spot (traders’ foreign cotton basis is strong, and there is no room for negotiation) ); while the RMB quoted customs clearance cotton has some shipments (quoted CF2301 + basis), mainly due to rigid purchases from cotton textile companies that have received traceability orders. However, due to the lack of medium and long-term orders and the lack of large orders, the goods are still received in small quantities and in multiple batches. Mainly, some contracts are executed in multiple installments (take one batch to pay for one batch of goods).
Judging from the survey, so far, the tradable cotton stocks in China’s main ports have continued to decline compared with July (bonded cotton + non-bonded cotton), mainly due to the excessive quantity of 2021/22 US cotton arriving, delivered, and put into storage in August. The peak period has been reached; in addition, the shipping schedule of Australian cotton in 2022 is generally postponed to October/December and Brazilian cotton has not yet been shipped in 2022. Therefore, in July/August, the port cotton is in a state of “less incoming warehouses and more outgoing warehouses”.
A cotton company in Jiangsu reported that due to the sharp rise in ICE prices in the past two trading days, the direct cost of importing US cotton/Brazilian cotton under the 1% tariff not only “inverted” the RMB quotation of customs clearance foreign cotton, but also quickly widened to 600-800. Yuan/ton, and the price difference with the 2021/22 Xinjiang machine-picked cotton in mainland warehouses is more than 4,000 yuan/ton (surface calculation); coupled with the impact of RMB depreciation and other factors, cotton imports with 1% tariff and sliding quasi-tariff Cotton spinning mills with quotas have very little enthusiasm to proactively purchase foreign cotton shipments and clear customs clearance of bonded cotton.