The Decline Of Raw Materials Has Narrowed Down To The Downstream Cotton Yarn Market.

Yarn to "golden three silver four red May" argument, this year not only did not appear "red May", the off-season also arrived ahead of schedule. As of May 30th, the domestic C32S average price was closed at 22015 yuan / ton, down 377 yuan / ton compared with last week, and a sharp decrease of 843 yuan / ton compared with the same period last month. At present, the inventory of textile enterprises is rising rapidly, and the small and medium-sized textile enterprises are having a very hard time. The capital flow is tight, and the spinning enterprises want to take the price to compete. The increase in cotton yarn inventory has made it difficult for some textile factories to cash in cash and even find it difficult to make money to buy lint. A small number of small factories have been shut down, and many workers have been adjusted to reduce production time.

From the perspective of upstream cotton, since May, the three line of cotton spot and reserve cotton in Zhengzhou and 2018/19 has also dropped sharply, and the substantial reduction of raw materials is gradually being carried out to downstream yarn and grey cloth. At present, most textile enterprises inventory increased by more than 50% compared with the same period last year, individual enterprises inventories increased 10-15 days over the same period last year, some even more than 40 days. A large number of finished products inventory will inevitably lead to textile enterprises not to rush to increase raw material inventory, most of the textile enterprises will buy goods with the purchase and take the goods according to their own requirements (some agencies use low to "foot"), but because of the continuous rising of finished products such as gauze and the difficult deadlock of Sino US trade negotiations, the export situation in 6-8 months is not optimistic, so although the raw material of cotton has dropped to the expected date, and according to the 2018/19 year, New cotton and reserve cotton price are calculated, spinning profits are significantly higher than that in 3/4 months, and spinning enterprises are still "sitting on the wall" and will not enter the market temporarily.

As shown above, it is clear that the domestic cotton price decline has begun to slow down this week, but the decline in cotton prices has not yet been fully transmitted to the lower reaches. If the price of cotton raw materials was used 20 days ago, the profit and loss of today will even be lost. Coupled with the sharp increase in yarn inventories and the dismal sales volume of cotton, it is reasonable to expect the price of cotton yarn in the near future to continue to stabilize or drop.

The price of foreign yarn has slowed down this week. As of May 30th, the spot price of FCY Index C32S was 22337 yuan / ton, down 127 yuan / ton compared with last week. It is worth mentioning that this year, Pakistan's domestic demand has continued to improve, coupled with a shortage of domestic cotton supply and a rapid decline in domestic inventories this year. Cotton mills now need imported cotton. As the price of domestic yarn sold in Pakistan is higher than that in export China, some of the Pakistani yarn factories have reduced exports to the outside world, resulting in a decline in China's April yarn imports. In the past two weeks, with the rebound of cotton prices in India, the price of cotton yarn has stopped, and the profits of India textile enterprises have dropped again.

Futures, cotton yarn also stabilized with cotton this week. 28, 29 and 30, the closing price of CY001's main contract is 22030, 22060, 21680 yuan / ton respectively. Although the main trading volume fell from the highest 80 thousand hands last week to the current 30 thousand hands, but investors do not seem to intend to withdraw from the market completely. As of May 30th, cotton yarn holdings rose to 24378 hands, the highest in history, and precipitation funds are still maintained. One point three Billion yuan.