Confidence Is More Expensive Than Gold: How Do We View The Current Cold Market Situation?

Recently, the market in Hebei, Tianjin, Shandong and other places is a strange phenomenon: the cotton textile industry chain recovery and recovery is nearly 100%, why is the market still hard to start buying and selling?

In March 18th, a trader in Gaoyang, Hebei revealed that the raw material inventory of local textile mills could only last 5-7 days, and cotton prices had dropped to the bottom of the valley. Therefore, on the other hand, the price of cotton and Chinese cabbage is not selling, but it is a low inventory of textile mills.

Such an embarrassing situation is only seen in recent years. Reasons for analysis:

1, the textile enterprises' annual orders have been exhausted, and new monopole is scarce after the year. After the textile enterprises resumed work in February 10th, the yarn and grey fabric were ushered in a "little spring". But only for about 20 days, the market dropped significantly in March. The reason is that the factories are delayed due to the outbreak of the epidemic. After the resumption of work, it is necessary to expedite the progress and make orders before the year, thus forming a small climax of purchase and sale.

It is also the cause of the epidemic. After the consumption of orders nearly a few years ago, there were very few new orders, and many textile factories were in an awkward situation of "just resuming work or stopping production".

Therefore, enterprises unable to get new orders will be unable to purchase raw materials.

2, where is the "bottom" of cotton this year? Since March 9th, Zheng cotton has been on the two low limit and is now in the low position below 12000 yuan / ton. In 2019, during the Sino US trade war, the United States cotton stood at 60 cents, and Zheng cotton stood at the front line of 12000 yuan / ton.

In terms of cost, the cost of Xinjiang's machine picked cotton is 12200-12500 yuan / ton. In other words, Zheng cotton fell to 12000 yuan / ton has already fallen below the cost. Fall to the floor. Is it still the basement? How many layers are there under the basement?

At present, the epidemic has been effectively controlled in China, but it is in a global pandemic. With the three melting of US stocks and the drop of crude oil to US $30 per barrel, will cotton continue to fall below 11000 yuan / ton or even 10000 yuan / ton? We can not foresee this problem. Many textile mills are facing a "vicious" downward trend.

3, from the perspective of demand, this year will be substantially reduced. The demand for cotton and cotton textiles and clothing is very flexible. At present, the "golden three silver four" has become a mirror. In the second half of the year, if the epidemic improves, demand will then recover.

However, due to the epidemic situation in Japan, South Korea, Italy, France, Britain and the United States, the measures such as sealing the city and sealing the country have been fully prevented and controlled. According to the pessimists' expectations, the epidemic of foreign countries is likely to last until the second half of the year, so the consumption of the United States, Europe, Japan and South Korea will be further discounted.

Many market participants expect this year's epidemic to affect about 2 million 600 thousand tons of consumption. The sharp reduction of consumption will inevitably lead to a larger scale reshuffle and elimination of the industrial chain.

Against this background, many enterprises with poor sense of self will prefer to sit at the bridge and watch the current.

4, the large adjustment of yarn and grey fabric has quietly started. According to the introduction of some textile factories and weaving factories, the price of yarn has been reduced by 300-400 yuan / ton recently, and the individual drop is bigger. Not only will the February increase be equalled, but the individual price has dropped 100-200 yuan / ton. For example, the price of combed yarn 21S and 32S is 19000 yuan / ton, 20000 yuan / ton, compared with the previous week fell nearly 400 yuan / ton. And grey cloth mostly fell 0.1-0.2 yuan / meter, individual drop is bigger.

A trader revealed that in February, silk spinning and Asia spring spinning were booming, but the market was cooling down recently, especially in many orders being cancelled or reduced.

To sum up, under such a market environment with a lack of confidence, it is well understood that the market is cold and cheerless. Confidence is more expensive than gold. At present, the key is to rebuild confidence and win the war without smoke, and usher in the real recovery of the market.