Cotton Yarn Weekly: Raw Materials Down, Market Pressure Again

With the easing of Sino US trade war in mid 6 months, cotton yarn went a little better, and goods were accelerated, and stocks gradually declined. However, it did not last long. In July, just after the first week, most of the textile enterprises reacted with insufficient stamina. And from the perspective of the whole industry chain, the order of the downstream weaving factories did not show obvious growth. Most of them were mainly scattered and small orders, and the inventory decline was not obvious. Therefore, after the early stage of replenishment in early July, the cotton yarn market was once again fading. As of July 18th, the domestic C32S average price was closed at 21345 yuan / ton, up 43 yuan / ton compared with last week, but it still maintained a downward trend compared with the same period last month.

Cotton yarn inventory, due to downstream replenishment after G20, cotton yarn market improved, but not enough continuity. Downstream is more likely to make speculative replenishment. The direct result is the accelerated decline of the finished product inventory of the spinning enterprises. However, when Zheng cotton fell again in July 9th, the sale of the market was in a muddled way, and the passive purchasing status was resumed. The spinning enterprises went to stock and then stopped suddenly. At present, it is still at a high level of nearly three years, reaching 22 days. On the other hand, textile enterprises are still in a state of general reduction in production. However, as the cost of cotton raw materials has declined, the immediate profit of cotton mills has improved, and the peak season is coming. From another point of view, if it is still not yet resumed, then the objective is to "go to capacity".

From the perspective of raw material cotton, the trend of domestic and foreign cotton market since July has been "strange". The market sentiment is always drawn by an invisible big hand, not only the amplitude of oscillation is wide, but also more and more uncertain. At the end of the G20 summit in Osaka, the CF1909 main contract from 14300 straight 14000, 13500, 13000 and other integer juncture, the intensity and magnitude of the fierce, let people feel afraid. In line with the principle of "buying up but not buying down", downstream cotton yarn is dragged down and prices continue to bear pressure.

However, the inventory of the downstream fabric market is not obvious. As of July 18th, the inventory index of textile mill returned to 32 days, much higher than that of the same period in history. It shows that the effect of the cotton mill's de stocking is not obvious. The early replenishment is actually due to the cautious purchasing in the market from early May to the middle of 6, and the low stock of raw materials. After the trade between China and the United States eased, some factories took the opportunity to replenishment, while a few did a wave of speculation at the same time.

As for the import yarn, as of July 18th, the spot price of FCY Index C32S was 21641 yuan / ton, down 47 yuan / ton compared with last week. Thanks to the strong support of MSP, the price of printed cotton is still high in the world, resulting in high cost of printing yarn and no competitive edge in India. Because of this, after the G20 recovery, the downstream speculative replenishment led traders to place orders to Vietnam, and Vietnam's sales improved significantly and prices rebounded. Thanks to its policy advantages, Pakistan has maintained stable export volume to China. The price of the external market is also the first to hit bottom, but the domestic economic performance of Pakistan is not good.

After market outlook, although production and sales are expected to recover, prices are still expected to be under pressure, mainly due to shrinking and uncertain consumption, falling prices and rising prices. The downward trend of cotton and cotton yarn prices is hard to reverse. There is no substantial improvement in downstream orders, and the stock of yarn and cloth is still large. On the macro level, Sino US relations continue to be challenged, and trade issues such as Japan and South Korea continue to affect the healthy operation of China and the global economy. Under the pressure of economy, the overall commodity sector is unoptimistic.