Comprehensive Evaluation Of Cotton Supply Segment Quotes

Domestic cotton stocks are high, and the road to inventory is tortuous. Under such a background, it is estimated that in the year of 2016/17, the import of cotton policy will not be relaxed, and the 1% tariff quota of 894 thousand tons will still be the main target. The import volume is expected to not exceed 1 million tons. In 2016, the cotton planting area in China was estimated to be 42 million 270 thousand mu, with a reduction of 10%. From a regional perspective, the cotton planting area in Xinjiang is 30 million 350 thousand mu, a decrease of 6%, and the cotton planting area in the mainland is 11 million 920 thousand mu, which is reduced by 18%. Cotton production in 16/17 is expected to be around 4 million 500 thousand tons. Due to frequent rainstorms in the mainland, there is still room for reduction in domestic output.

Inventory, since the beginning of 16, domestic industrial and commercial inventories have declined rapidly. Due to the lack of confidence in the market at the beginning of the year, both commercial and industrial stocks remained low. According to the latest data, business inventories were 851 thousand and 700 tons at the end of June, and 14.3% in the annulus. Among them, Xinjiang cotton is 330 thousand and 600 tons in Xinjiang, 447 thousand and 100 tons in the mainland warehouse and 74 thousand tons in the bonded zone. Industrial inventories were 664 thousand tons, an increase of 15.5% compared to the same period, a decrease of 7.1% over the same period last year. The average stock of cotton can be used for about 33.6 days, an increase of 4.5 days, a decrease of 0.9 days compared with that of the previous year.

According to the latest data from the General Administration of customs, in June 2016, China exported about 24 billion 14 million US dollars in textile and clothing, a decrease of 5.27% over the same period last year. Among them, export yarn, fabrics and products were 9 billion 118 million US dollars, down 3.7% compared with the same period last year, and clothing and accessories 14 billion 896 million US dollars, down 6.21% compared with the same period last year. In 1-6 months of 2016, China's total exports of textiles and clothing were about 125 billion 30 million US dollars, down 2.63% from the same period last year. Among them, export yarn, fabrics and products were 42 billion 443 million US dollars, down 0.91% compared with the same period last year, and clothing and accessories 72 billion 588 million US dollars, down 3.83% compared with the same period last year.

In July, with the strong demand from the downstream textile enterprises to increase the quantity of inputs, the output of reserve cotton increased compared with that in June. But the government has not been able to fully fulfill the promise of 3-5 tons per day, which is basically maintained at about 3 tons a week in the first half of a week, but then the volume of output will drop. Almost daily turnover was maintained at 100% in that month, and the average price of the transaction jumped to 13000 yuan / ton from the beginning of the month to 15500 yuan / ton. At the end of the month, the relevant news said that the cotton reserve will be extended to September 30th, increasing the delivery time for one month, and the market atmosphere will change immediately, and the average price will drop to 14500 yuan / ton line.

We have speculated on the situation of dumping in the latter part of this year. If the turnover in August was restored to 600 thousand tons, the supply would be 2 million 220 thousand tons in four months. This is the largest supply of cotton reserves this year, and the minimum supply will be raised to 2 million 20 thousand tons. The dumping and storage will extend to the end of September, which will increase the supply of 40-60 tons per month or 242-282 tons in 2016. Embodied in the balance sheet, we will give it in the final summary.

downstream Cotton spinning industry The recovery began in March and was flat in April, but it continued to fall in 5 and June. In June 2016, the purchasing managers index (PMI) of China's cotton textile industry was 47%, down 8.7 percentage points from last month, and fell to below 50% withered line. In June, five sub indexes of cotton textile industry PMI showed a downward trend, of which the new orders index and production index fell by more than 10 percentage points. It can be seen that the cotton spinning industry has been in the off-season, and the production and marketing situation has declined, and the subsequent motivation is insufficient. But we believe that there will be some improvement in the latter part of the future. First, the price of raw materials will decline, and the price advantage will be more obvious than that of the external yarn. Two, we will enter the traditional peak season of gold nine silver ten in a month, so the new orders, production volume and start-up rate are expected to rise.

In July, the price of downstream yarn went up sharply, and the price index of 32 domestic Combed Yarns increased rapidly to 23030 yuan / ton in recent years, rising 3200 yuan / ton, and 40 branches. Combed yarn Line price index 25570 yuan / ton, up 2125 yuan / ton. In terms of profits, due to the recent rise in yarn prices and the increase in yarn profits, the low count yarn has changed from loss to small profit. We calculate the profit threshold based on the current yarn price, and the raw material cotton price is 16000 yuan / ton. Imported cotton yarn, imported in 2016 Cotton yarn The fall is in line with our forecast at the beginning of the year. In 2016, 1-6 tons of imported cotton yarn 962 thousand and 900 tons, a decrease of 18.68% compared with the same period last year. 2015/16 (2015.9-2016.6) imported 1 million 700 thousand and 800 tons of cotton yarn, a decrease of 10.54% compared with the same period last year.

The decline of imports of cotton yarn mainly comes from India. India yarn has always occupied the leading position in the domestic import yarn market. However, we mentioned in the foregoing that India's domestic cotton prices have soared due to domestic drought, resulting in the rise of yarn prices in India and the gradual decline of the price advantage. The recent price has exceeded domestic yarn. The fall of India yarn market share is a great benefit to domestic yarn, and the share of domestic yarn market will increase accordingly. The total import volume of foreign yarn has shrunk (not just India yarn), but also to the domestic cotton consumption. The specific volume is estimated at around 50 thousand tons per month. In terms of pure cotton fabric, there are not many bright spots in this year, and prices are more stable. Orders are relatively general. Some large factories are still operating at a level of above 80%, but long-term orders are relatively scarce and profits are generally high.