Zheng Cotton After The Bottom Of The Warmer Expectations! But Being Restrained By Fundamentals, Is It Difficult To Improve Before The Spring Festival?

Since the beginning of this year, Zheng cotton has been shaking down under the dual pressure of shrinking demand and concentrated supply of new cotton.

Near the Spring Festival, the downstream enterprises began to take a vacation, and the operating rate kept low; the uncertainty of Sino US trade was still in place, and the spot market was slack, and the new cotton sales progress was slow.

Data statistics show that in mid and late 2018 9, the yarn and grey fabric operating rate gradually decreased, while inventory slowly climbed.

The purchasing managers' index of cotton textile industry reflects the same problem.

In November 2018, the cotton textile industry PMI was 41.74, the lowest in nearly 33 months, the index has declined for 4 consecutive months.

Among them, the starting rate index is slightly better than the summer, but it is still at a low level since March 2017, and the yarn inventory index is at its highest level in nearly 15 months.

Near the Spring Festival, the purchasing power of cotton enterprises is not high, and the cotton inventory index is only 38.28, the lowest in nearly 49 months.

According to the National Bureau of statistics, domestic cotton output increased by 440 thousand tons in 2018.

According to the relevant data, by the end of August 2018, domestic cotton business inventories increased by 620 thousand tons year-on-year, and in September, the output of cotton reserves decreased by 180 thousand tons compared with that of the previous year. In the early years of the year, the supply of circulating cotton increased by 440 thousand tons compared with the same period last year.

As a result, cotton supply increased by 880 thousand tons over the same period last year.

In terms of consumption, because of Sino US trade friction, the market expects lower demand for cotton downstream.

Under the combined action of multiple factors, the sales progress of new cotton has further slowed down.

As of January 4th, the national cotton sales rate was 26.2%, down 6.8 percentage points year-on-year, and the decline has been expanding for eighth consecutive weeks.

Zhengmian warehouse receipt began to increase in November 2018 after a brief fall in the beginning of the year.

As of January 4th, Zheng cotton warehouse receipt was 15080, the highest value since the launch of cotton futures, which is nearly two times higher than that in 2008.

Spot sales are slow, and there is much uncertainty in the future. In addition to the convenience of Xinjiang library, the registration of cotton warehouse receipts is undoubtedly a good way to protect and sell.

After 2016 to 2018, the stock of cotton in the national reservoir is about 2 million 700 thousand tons.

At the same time, due to the existence of domestic supply gap, the increase of cotton imports is unavoidable.

In June 2018, 800 thousand tons of import quotas had been issued; at the end of 2018, the Ministry of Finance announced that it would appropriately reduce the sliding tax rate of cotton imports.

On the one hand, the stock of the state reserves has dropped to the safety line, and on the other hand, the import volume has increased. In terms of reserves or demand, reserve cotton is no longer equipped with a large number of conditions.

There has been no news on the announcement of the reserve cotton rotation issued in November.

Near the Spring Festival, most textile mills leave early, and the downstream enterprises mainly focus on small orders. Although cotton enterprises have demand for stockpiling, they are less motivated by lower demand and less motivated to buy.

The central bank's approval and the office of the United States trade representative approved the first round of applications for exemption from import tariffs to boost cotton prices. Zheng cotton was expected to get warmer after the bottom, but was constrained by fundamentals and could hardly pick up before the Spring Festival.