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800 Thousand Tons Of Cotton Import Slip Tax Quota Before The National Cotton Spinning Policy Landing, Do You See The Market Trend?

2019/4/23 13:36:00 12531

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In April 12th, the NDRC issued

Bulletin on matters relating to application of import quotas for preferential tariff rates outside cotton tariff quotas in 2019

。

The cotton import quota is 800 thousand tons, all of which are non state trading quotas. The application time is April 15, 2019 ~29.

With the issuance of "official propaganda", the hot debate and speculation on cotton quota issuance in the past two months have finally landed on the hammer.

Then, the 800 thousand ton cotton import quotas "come to the bottom" mean that cotton enterprises in China will sign up for cotton imports in large scale?

What does the issuance of quota mean for cotton enterprises?

And how big ripples will be the cotton market?

"Timely rain" for imported cotton enterprises

From the content point of view, the notice on the issuance of quasi tax quotas for cotton imports in 2019 is basically consistent with the notice on the application of import tariff quotas for the preferential tariff rates for cotton tariff quotas in 2018 (No. seventh 2018):

The amount of cotton import quasi tax quotas is 800 thousand tons, all of which are non state trading quotas.

The applicant must be a spinning and weaving equipment (own) 50 thousand or more cotton spinning enterprises.

800 thousand ton quota allocation does not distinguish between general trade and processing trade;

Imported goods with imported quasi tax quotas shall be processed and operated by the enterprise and shall not be resale.

The difference is the timing of the policy. Last year was June, when the quota issuance policy was released earlier this year.

In this regard, industry experts believe that

The issuance of quota increase policy has sent "timely rain" to textile enterprises using imported cotton. In the short term, it has solved the urgent need of cotton enterprises.

At present, domestic textile and garment export enterprises mainly focus on high-end market in the world. Customers are strict with raw materials. Importing high-quality cotton can meet the quality requirements of procurement.

In recent years, export orders for Pima cotton, Australian fine staple cotton and Egyptian cotton have been increasing year by year.

Experts believe that timely issuance of cotton quasi tax quotas will help enterprises stabilize overseas high-end strategic customers and seize the overseas high-end market.

The issuance of quotas is also conducive to reducing the cost of cotton production. At present, the cost of raw materials occupies a relatively large proportion in production costs, and imported cotton has obvious advantages over domestic cotton prices.

Purchasing foreign cotton from textile enterprises is conducive to achieving fair competition between national textile mills in Southeast Asia.

Wu Faxin, chief strategist of Shanghai Yarlung Technology Co., Ltd.

It is very wise to use quotas to adjust the gap of raw material supply in the domestic textile industry, so that foreign high cost materials can be used by domestic enterprises.

The issuance of cotton import quota will make the difference between domestic and foreign cotton smaller and smaller.

In addition, experts believe that

The long-term stability of cotton policy helps to maintain the sustainable development of the textile and garment industry.

Through many years of development, China's textile and garment industry has formed a competitive advantage through the upstream and downstream industries chain, and has met the rapid response and quality requirements of international procurement with a strong adaptability.

More and more excellent textile and garment enterprises have completed the development process of the whole industry chain production enterprises (from cotton spinning, dyeing, finishing to finished products) through continuous pformation and upgrading, and maintained certain profit margins in the open and competitive market.

Under the globalized resource allocation environment, the effective resource allocation of raw materials such as cotton will help stabilize the domestic production and operation of cotton spinning enterprises and expand reproduction. In the long run, it will help to enhance the global competitiveness of China's high-end textile and clothing products.

It is still difficult to decide whether to import cotton in large quantities.

At present, the import quota of 800 thousand tons of cotton imports has fallen to the ground, but there are still uncertainties.

First, the issuance of quasi tax quotas in 2019 will start at the end of May or early June.

According to the announcement, the authorized agencies will submit the application materials to the national development and Reform Commission before May 10, 2019, and copy it to the Ministry of Commerce.

The two is the 2019 slide tariff quotas will remain valid until the end of December or the end of March 2020.

Then, with the import quota of 800 thousand tons of Cotton falling to the ground, will the cotton enterprises in China speculate on the signing of the imported cotton will become a reality?

In this regard, industry analysts believe that

The press conference has stimulated textile enterprises to import cotton to some extent, but it is difficult to sign a blowout situation.

The reasons are as follows:

everything

Trade negotiations between China and the United States will continue in 4 and May. Despite all the good releases, we will not know anything before signing the agreement.

The NDRC decided when to issue 800 thousand tons of cotton import quotas or to wait for the outcome of Sino US negotiations.

Two is

Under the sliding tax, the competitiveness of the outer cotton industry has declined, and the spinning enterprises will be able to pick up goods with three goods.

Three is

When the tariff quota is postponed to 6 and July, the focus of cotton enterprises' attention and signing will turn to cotton produced in 2019/2020.

From the perspective of market supply, India cotton and Mexico cotton can be selected except for American cotton. (Australia cotton has basically been sold out, and Brazil cotton has low quality and poor spinnability in later stage).

Four is

The supply of cotton in China is relatively adequate, and whether cotton reserves are still out of stock in 2019.

According to the survey data of China Cotton Association logistics branch, the total cotton business inventory in the end of March was about 4 million 164 thousand tons, down 401 thousand and 200 tons from last month, still in a high position.

Five is

The benefit of the issuance of the quasi tax quota has been digested in the market ahead of time.

Continued upward trend of external cotton support Zheng cotton

In 2018, when the cotton import quota was issued at the time when cotton prices rose, the announcement of the policy played a cooling role in cotton market.

On the day when the NDRC issued a notice of issuing 800 thousand tons of cotton import quotas, both the Zhengzhou cotton price and the cotton price in the international market showed a sharp upward trend.

In this regard, the industry believes that

On the surface, imports will increase in the future, and the contradiction between production and consumption will be further eased. However, in view of the actual situation, there is no news about the policy of cotton reserve rotation, but the tax quota will be reported ahead of time and the market will be worried about the low inventory of state-owned cotton stocks, which will continue to support the rising trend of Zheng cotton.

Experts believe that

At present, the impact of the national cotton reserves on the market will be weakened in the coming period, and the domestic cotton market will be driven mainly by the external cotton market.

From the USDA4 monthly outlook report, we can see that although Turkey's cotton consumption has slowed down due to its own economic situation, global consumption is still showing a steady growth trend. With the reduction of cotton production in India, the United States and Pakistan in 2018/2019, the international cotton market continues to go to the stock market trend, forming a strong support for domestic and foreign cotton markets.

From the perspective of industrial chain, a veteran trader said:

"Because the acquisition cost of new cotton is relatively high, considering the cost, the market is quite expensive.

But in the short term, the price of yarn is not easy, some cotton mills are at the edge of losses, the stock of cotton mill is increasing, and the order of grey cloth is insufficient. The pressure of the whole cotton industry chain deriving from upstream to upstream is increasing.

"Generally speaking, the price of cotton and cotton yarn is going against the current trend, but the consumption side is gradually falling into a passive position, and cotton prices can not continue to rise under the condition of not going up with the downstream.

Market analysts believe that:

"The trend of late cotton prices depends on price change fundamentals to stimulate speculative stock demand and lead the industrial chain to rise, or to damage factory profits, thereby switching production and reducing start-up rates to prevent cotton price rising.

On the basis of fundamentals, cotton prices are on the move.