Insufficient Orders For Spinning Enterprises Restrict Cotton Prices To Continue Weak

Driven by the fall of the US cotton market during the new year's day, the price of the 1505 contract period of the main cotton brand in China fell directly in the first trading day after the holiday, and the price returned to the vicinity of 13000 yuan / ton two weeks ago.

For the late cotton price trend, the author believes that at present, China's textile industry continues to run at a low speed, and the recovery process is relatively slow.

Under the constraint of insufficient orders, cotton prices will continue to be weak in the short term.

High storage is still bruising.

In recent years, the cotton farmers' enthusiasm for cotton planting has been generally frustrated by the decline in cotton prices.

(13090, 0, 0%) production has been declining for three years.

According to the estimates of supply and demand released by the US Department of agriculture in December 2014, the estimated output of cotton in the world was 25 million 905 thousand tons in 2014/2015, a decrease of 286 thousand tons compared with the previous year.

Global cotton consumption has improved slightly from 791 thousand tons to 24 million 516 thousand tons in the previous year.

The decline of production and the increase of demand make the supply and demand of the global cotton market face a favorable direction.

The surplus gap has narrowed, but the overall situation is still oversupply, with an excess of 1 million 389 thousand tons.

However, the final inventory of global cotton in 2014/2015 reached 23 million 531 thousand tons, which has been increasing for 5 years and has reached a record high since 1960.

However, if China's inventory data are excluded, the trend of end inventory and inventory consumption ratio is not so obvious.

That is to say, the trend of global cotton will also look at the "wink" of China's cotton stocks.

According to the US Department of agriculture, the output of cotton in China this year was 6 million 532 thousand tons, which was reduced by 599 thousand tons compared with the previous year. Consumption of 8 million 56 thousand tons, an increase of 544 thousand tons from the previous year, and 1 million 524 thousand tons of cotton imports, a sharp reduction of 1 million 551 thousand tons compared with the previous year.

Based on the above production and sales data, the supply and demand of cotton in China is just in balance this year.

It is noteworthy that China's 13 million 642 thousand tons of final inventory, though 11 thousand tons lower than the previous year, is still at a record high.

At the same time, China's inventory consumption ratio of up to 169.3% is reduced by 12.4 percentage points compared with the previous year, although it has been adjusted by the decrease in inventory and increase in consumption.

However, this year's inventory reduction, though modest, is also the first step in the long term inventory digestion.

Slow recovery of textile industry

According to statistics, in November 2014, above scale

Industrial added value increased by 7.5% over the same period last year, 1.2 percentage points faster than in October.

Again, in 2014 (January -11), the textile industry added value of the same period of the year trend has been maintained at a low level since the beginning of the year. However, from the trend of industrial value added in the past 3 months, there is a trend of recovery and rebound.

Statistics show that in September 2014, enterprises above Designated Size (unit)

The retail sales of needle and textile products were 18 billion 980 million yuan, up 3.59% from the same period last year, a slight increase compared with the 1.5% growth in the same period last year. In 1-9 months, the total retail sales of clothing and needles and textiles in Enterprises above designated size were 167 billion 980 million yuan, up 3.3% over the same period last year, a slight increase of 0.16 percentage points over the same period last year.

According to the latest data from the General Administration of customs, in November 2014, China exported about 24 billion 345 million US dollars in textile and clothing, a decrease of 0.47% compared with the same period last year, and a decrease of 8.27% in the ring ratio.

Exports of textile yarns, fabrics and products were 9 billion 546 million US dollars, an increase of 0.89% over the same period last year, an increase of 15.78 percentage points from the same period last year, a decrease of 2.06% in the ring ratio and an increase of 12.5 percentage points over the same period last year.

Export clothing and accessories were 14 billion 798 million dollars, down 1.32% from the same period last year. The decrease was 17.91 percentage points higher than that of the same period last year, and the reduction was 11.87%.

In 2014 (January -11), China's textile and apparel exports totaled US $272 billion 817 million, an increase of US $14 billion 743 million over the same period last year, an increase of 5.71% over the same period last year, an increase of 6.06 percentage points from the same period last year.

According to the survey data, as of the end of November 2014, textile enterprises in the warehouse cotton inventory of 501 thousand tons, an increase of 18 thousand and 600 tons from last month.

A slight increase in industrial inventories is mainly due to the increased procurement of Xinjiang cotton by some textile enterprises, so as to complete more procurement of New Territories cotton by the end of December and obtain more cotton quotas.

But looking at historical data, the textile industry's industrial inventories in 2014 have been consistently low.

According to the survey data of operating rate in November, the average operating rate of textile enterprises above designated size is 81%, which is lower than that of 89% in the same period of the previous year.

The operating rate in 2014 was two months apart from the beginning of the year, but the rest months were lower than the same period last year.

The reason is that nearly 50% of textile enterprises say it is because of insufficient orders.

Fine tune of cotton import policy

Since January 1, 2015, China has adjusted import and export tariffs, and has continued to carry out sliding duties on certain quantities of cotton imported from the tariff quota.

The adjustment of import policy actually loosened the import threshold of textile enterprises without tariff import quota, and under the circumstances that the difference between domestic and foreign cotton prices was further narrowed, it is expected that the cotton will fall to a certain extent or will arouse the enthusiasm of domestic textile enterprises to import.

To sum up, I believe that the domestic cotton prices will continue to market in the later stage, and the policy impact will gradually weaken.

However, in the context of the expected low speed textile industry, cotton prices are expected to continue to be weak.