If Cotton Prices Go Up And Support Is Insufficient, They Will Be 2 Below.

RMB appreciation expectations strong domestic textile industry development prospects are not optimistic.

At present, the domestic textile industry has an export advantage, mainly due to domestic labor costs and the slow appreciation of the renminbi, but these two advantages are gradually fading away.

On the one hand, loose monetary policy has led to price inflation and labor cost growth. Labor intensive enterprises will face the pressure of raising labor costs. Later textile industry will feel the pressure brought by the increase of labor costs.

On the other hand, after the economic crisis, the speed of domestic and international economic development is relatively wide. The pressure of RMB appreciation is increasing. It will weaken the price advantage of domestic textile exports to a certain extent.

It is understood that RMB appreciation of 5% will increase the cost of the textile and garment industry by 0.8%, while the average net profit margin of the current domestic textile and garment industry is only 3% - 5%, and the garment industry with a higher dependence on exports will be more damaged.

In addition, the appreciation of RMB will stimulate the import of cotton in China, and the tight supply of cotton market will be eased. The purchase of foreign cotton by textile enterprises will be more positive.

It can be seen that under the strong background of RMB appreciation expectation, the export of textile industry will gradually narrow down.

Under the pressure of the profit space of textile enterprises to shrink gradually, even if the supply of cotton market is tight in the short term, the increase of cotton price is still more difficult.

It is understood that as of now, the total domestic cotton business inventory is 1 million 900 thousand tons, of which the mainland cotton city commercial inventory is 1 million 10 thousand tons, Xinjiang cotton business inventory (not out of Xinjiang) 890 thousand tons.

Compared with commercial inventories in the same period in the past year, the current stock has increased slightly. In addition, there will still be a small number of selling and importing cotton to the port in the late national cotton store. If we calculate the consumption rate of 700 thousand tons per month in domestic cotton market, the stock of cotton city will be enough to support the new cotton market.

Therefore, although the spot supply is tight, it is not entirely without cotton supply.

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On the whole, Zheng cotton's contract in recent months is stronger, mainly depending on the existence of a tight supply and demand pattern.