The Stage Of Inventory Going Is Coming. Zheng Cotton Is Ready To Go Up.

Since the new year's day, domestic cotton prices have been oscillating between districts, while international cotton prices have continued upward.

I believe that with the gradual reduction of the domestic spot market pressure, Zheng cotton is ready to go up.

Cotton spot market step by step

Since the beginning of new year, the spot price of cotton has been strengthened as a whole. The 3128B index has risen from 15376 yuan / ton to 15628 yuan / ton, up 252 yuan per ton. In the aspect of outer cotton, the price of FC Index M has risen to 81.21 cents / pound from 81.21 years ago, rising 6.24 cents / pound.

At present, domestic market demand is heating up.

I learned from the relevant enterprises that the production and sales of the enterprises are in normal state. After that, the sales situation of the enterprises has improved, orders have been continuously, and the yarn products basically have no stock.

Most of the raw material stocks are maintained for 1 to 2 months. Although some enterprises are not large, cotton stocks are kept for 3 months, mainly to ensure cotton blending needs.

In terms of external cotton, a lot of imported cotton was used in the first few months as a result of a large amount of sliding allowance quotas last year.

At the same time, there is a great deal of expectation for China to buy Cotton in the United States, and cotton prices in India are even stronger due to the tight supply of cotton.

The arrival stage of social inventory is coming.

After the total stock of the State Reserve dropped from 11 million tons in 2015 to the current 2 million 700 thousand tons, the State Reserve and inventory has ended, and the State Reserve will no longer be the net supplier of the market.

However, in the process of national storage and inventory, social inventories are increasing. The social inventory at the end of February 2016 is 2 million 388 thousand tons. At the end of February this year, the social stock was 5 million 375 thousand tons, totaling an increase of 2 million 987 thousand tons.

However, since January, social inventory has also entered the stage of elimination.

After reaching a high level in December last year, the current social inventory has dropped 450 thousand tons.

According to the author estimates, by the end of September this year, social inventory will drop to around 1 million 600 thousand tons, a decrease of 1 million tons compared with last year.

This means that in the past few years, after the end of the period of stockpile withdrawal and social inventory increase, it has entered the stage of social inventory.

The macro environment is improving gradually.

Macroeconomic benefits are frequent, and downstream demand is expected to continue to recover.

First of all, the value added tax reduction has been implemented since April 1st.

In the cotton textile industry, the value added tax of cotton yarn is reduced by 3%, and the value-added tax of cotton is reduced by 1%.

After calculating and reducing the value added tax, the cost of the enterprise will be reduced by at least 100 yuan / ton, which is very important for the thin profit textile industry.

Secondly, in March 2019, PMI was 50.5%, up 1.3 percentage points from last month. After 3 months, it finally returned to the critical point.

Demand was further improved, the new order index was 51.6%, an increase of 1 percentage points, and for 2 consecutive months at the critical point.

Finally, the Sino US trade talks will be good. Vice Premier Liu He will be invited to visit the United States in early April to hold the ninth round of high-level Sino US economic and trade consultations in Washington.

The macro environment is conducive to market recovery, and the peak season for textile industry will come.

In short, although the impact of huge social inventory, cotton futures in the past few months have been running at the bottom, but the current social inventory goes to the stage of elimination, coupled with the continued macroeconomic trend, the downstream demand has been restored, and the probability of Zheng cotton going strong in the late stage.