Cotton Futures Fell Sharply, Chemical Fiber Enterprises Panic Selling

Some time ago, influenced by many factors, the market prices of China's main chemical fiber products rose rapidly, rising about 1000 yuan per ton per day. However, after November 12, 2010, Cotton futures There has been a sharp decline in the prices of many varieties of chemical fibers have also dropped sharply. In this case, China Chemical Fiber Industry Association issued a warning: chemical fiber enterprises should not panic, do not panic selling and other irrational competition. If necessary, enterprises can stabilize the market and restore the balance between supply and demand by appropriately increasing product inventories and lowering operating rates.

Demand drives a good market.

Before November 12, 2010, China chemical fiber The market price of the main products is rising rapidly. Is the rise of this price affected by the sharp rise in cotton prices, or driven by the rising price of crude oil raw materials or the demand of downstream markets? Zheng Zhiyi, the honorary president of the China Chemical Fiber Industry Association, and Xiaoping, President of the Association, analysed this.

Zheng Zhiyi introduced that the chemical fiber market was very hot some time ago. Since the beginning of September, the prices of major chemical fiber varieties have increased rapidly. Among them, the fastest rising is polyester staple fiber, as of November 10th, has doubled, viscose staple fiber also rose 12000 yuan / ton, or up to 67%. Prices of other varieties also rose to varying degrees, but the increase was much less than that of viscose staple and polyester staple fibers.

The price increase in this round (from the beginning of September to November 10th) is very similar to that in 2008 2~7 months. Chemical fiber products, raw materials and chemical excipients are also rising at the same time. The surface causes of the rise are basically the same, mainly due to demand pull, and domestic and foreign demand for textiles has increased rapidly, especially domestic sales growth. Prices of various raw materials have been adjusted in 2009, and in 2010, they are facing greater rebound pressure.

Xiaoping added that 2010 is the tenth cycle of the chemical fiber industry, which is the overall judgement of the chemical fiber Association's operation this year. So far, this prediction is correct, no matter from the market supply and demand change, enterprise management, or from the industry data and operation quality and so on can explain this point, and the traditional sense of the two market of spring and autumn seasonal rebound still exists, performance is also not obvious.

　　 Cotton price Significant impact on chemical fiber needs attention

In response to this rally, Zheng Zhiyi put forward two deep reasons, or two different reasons for the rise in 2~7 months in 2008, and reminded enterprises to attract high attention and vigilance. There are two main reasons for these two reasons.

First, the price rise is dominated by staple fibers, especially polyester staple fibres. The main reason for the rise of staple fiber is that cotton prices have seen a rapid rise in 15 years, which has more than doubled from the beginning of November 10th to the beginning of the year. However, the amount of chemical fiber directly related to cotton spinning accounts for only 40% of the total chemical fiber. Cotton prices can play such a role. This is worth the attention of the industry and enterprises.

Two, the price rise of this chemical fiber is driven by market demand. The relationship between chemical fiber (mainly staple fiber) and cotton is a substitution relationship of market demand. The rise of cotton price has caused rapid increase in demand for chemical fiber and caused rapid price rise.

Zheng Zhiyi explained that cotton prices have seriously deviated from the fundamentals of supply and demand, and this bubble is largely manufactured. Although the rising price of cotton is beneficial to the chemical fiber industry, it is a double profit. On the one hand, it will push up the price of textiles in a moderate range. On the other hand, it will increase the demand for chemical fiber products, but the market still has enormous risks.

In the past, cotton inflation has happened once in 1995, which is due to the accumulation effect of severe inflation. Another reason is that the relevant statistics of domestic cotton are not true, resulting in a wrong judgement of the market, especially stocks.

This time, supply and demand change is the basic reason for the rise in cotton prices. According to the International Cotton Advisory Committee (ICAC) reported in October 1st this year, international cotton prices have risen almost since April 2009, and the price increase has been particularly high since August this year. The CotlookA index hit 115.60 cents / pound in September 29, 2010, an increase of 80% over the same period last year, the highest price since May 23, 1995. By November 9th, it had climbed rapidly to 166 cents / pound. {page_break}

A large amount of capital speculation is an important factor in driving the surge in cotton prices. Due to the loose funds this year, there has been a large influx of funds into Zhengzhou's cotton futures market recently. For example, in September 21st, the 1105 main contract volume reached 1588808 hands, a record high. In November 9th, the 1105 main contract volume reached 1694108 hands, a record high, and the turnover was 437 billion 900 million yuan. According to the daily turnover, the actual turnover involved 8 million 471 thousand tons of cotton, accounting for 79.9% of the total domestic cotton consumption in 2009. It is 263.7 times the average daily processing volume of the domestic industry (330 days), and has seriously deviated from the basic function of the financial leverage of the futures market.

According to the monthly market report of the Zhengzhou Mercantile Exchange, cotton futures rose strongly in the month of October, and the fluctuation range of the main contract CF105 was 22000~27980 yuan / ton, the biggest gain was 5980 yuan / ton, and at the end of the month, it was closed at 27245 yuan / ton, up 5605 yuan / ton, or 25.9% higher than the end of last month. The total turnover of the month was 26 million 477 thousand hands, an increase of 31.78 times compared with that of the previous month, with an average turnover of 1 million 557 thousand hands. However, the total delivery volume in 1~10 months was only 30452 hands, a substantial increase of 2.45 times compared to the same period, and the actual turnover was 152260 tons, accounting for 1.57% of the actual cotton consumption in the same period.

At the same time, in November 9th, the US ICE's cotton rose 5 cents or a daily limit of 1.5123 dollars per pound in December, at a low of 1.4727 US dollars. Preliminary data show that the 1945GMT cotton turnover is 33958 hands, higher than the 29171 hand 30 day moving average 15% higher. This is the 8 consecutive trading day of ICE cotton futures. Cotton is the best performing CRB commodity index. It has risen nearly 95% from the beginning of November 9th to the end of the year.

This shows that there are a lot of hot money around the world for speculation in the cotton futures market. Before the financial crisis, the bulk of raw materials other than cotton had seen a sharp rise. In the past two years, all countries in the world have intensified their supervision over the speculation of oil and other derivatives, and the idle funds have turned to cotton and other agricultural and sideline products.

Xiaoping said that in the main varieties of chemical fiber, polyester staple fiber, viscose staple fiber and cotton have a strong substitution relationship, the three prices have a certain linkage trend, that is, the rise of cotton prices will increase the price of viscose staple fiber and polyester staple fiber, and vice versa. This is mainly due to the rise of cotton prices, which will lead to the increase of production costs of downstream spinning and weaving enterprises. Enterprises will turn to chemical fiber staple fibers with some price advantages, mainly polyester staple fiber and viscose staple fiber, thus driving the growth of short fiber market demand, and then driving their prices up. Moreover, judging from the actual development of the industry in recent years, the technical progress of polyester staple fiber and viscose staple fiber industry is obvious, which is manifested in the obvious improvement of product quality, the increase of differentiation and functional varieties. Many varieties are not only replacing cotton, but are able to better meet the diversified needs of downstream industry market.