Viscose Staple Fiber: Good News Comes From Two Quarters, And Cautiously In Optimism.

Trade relations release positive signals

On the morning of September 5th, China and the United States agreed to hold the thirteenth round of high-level Sino US economic and trade consultations in Washington, D.C. in early October.

In September 12th, the US president announced on the social platform that when the 70th anniversary Daqing of China was founded, it postponed the original plan of raising the 5% tariff to the US $250 billion bill for the sake of goodwill, and changed it to October 15th. There are also reports that China is considering resumption of US farm product purchases.

In September 18th, the office of the United States Agency for trade also released the excluded products in the list of 34 billion, 16 billion and 200 billion levy.

Most of the textile intermediate products are included in the list of 200 billion. The 200 billion exclusion list involves three textile products, namely 100% polyester fiber microfiber fabric (54071000), 65% polyester and 35% cotton woven fabric (55131100), polyester or viscose fabric coated with polyurethane (59032025). The largest proportion of China's exports of textiles and clothing to the United States concentrated in the 300 billion list, but the tariff rate of US $300 billion has been determined from the original 10% to 15%, and implemented in two batches (September 1, 2019 and December 15th).

Although this kind of news has little direct impact on textile and clothing recently, its more significance seems to reflect the positive signals that the bilateral trade relations have gradually released, making the market have higher expectations for the October bilateral meeting.

Monetary easing policy

In September 7th, the people's Bank of China decided to reduce the deposit reserve ratio of financial institutions by 0.5 percentage points in September 16, 2019.

In September 19th, the US Federal Reserve cut interest rates by 25 basis points, and at the same time lowered the excess reserve ratio by 30 basis points. The next focus of the market was on the trend of interest rates in China.

The next day, China's LPR 1 year varieties will be trimmed 5 basis points, and the 5 year period will remain unchanged.

A series of monetary policy adjustments seem to be transmitting liquidity to the market. But on the 16 day after the central bank lowered the reserve ratio, the market looked forward to MLF not only did not have all the sequels, but the interest rate remained unchanged at 3.3%, making the market monetary easing expectations less than expected. And Powell said that there is no need for substantial easing at present. The possibility of us restarting QE is not large. Next, we will solve the volatility of market liquidity imbalance and instability through frequent open market operations. Therefore, this resolution has been reduced to hawks by the market, and China's LPR adjustment is slightly lower than market expectations.

Next, whether it is commodity futures or spot markets, it all seems to depend on whether there will be any key progress in October. From a series of phenomena before the Mid Autumn Festival, the possibility of progress is relatively large, but the future variables are also great. Basically speaking, viscose staple fiber is still in a relatively weak demand and ample stock. Regardless of the development of information, we should have a cautious mindset to focus on the progress of events.