The Market Of Yarn Is Falling And The Cotton Spinning Industry Chain Is Gambling.

Upstream costs collapsed, downstream withdrawals continued, yarn market suffered freezing point, and prices continued to fall. As of April 2nd, the domestic C32S average price was 19453 yuan / ton, compared with the same period last month.

As of April 2nd, China's yarn load index was 53.5%, the lowest in the past 3 years, and has continued to decline. And inventory has been more than 25 days, up 40% over the same period last year. Due to the fall of the upstream cotton, the profits of the spinning enterprises are still considerable (with the price of raw materials 20 days ago), but because the downstream is not buying cotton yarn, the cotton yarn in the factory is not ready at all, especially in recent days. Higher profits, no sales, is a drain. In view of the increase in cotton yarn stock, some cotton mills began to limit production, and a few cotton mills were producing at normal tempo. Their idea was to bet on the market. That is to say, cotton yarn could not be sold without stock, and gamble for three months to see the control situation of new crown pneumonia. If the epidemic situation is controlled within three months, the sales of cotton yarn will return to normal. Maybe the price can go up. This is a bet. If the epidemic situation is still not controlled for three months, it will stop production.

Raw materials of cotton, although the impact of the epidemic on the downstream demand fell sharply, resulting in cotton spot futures close to 10000 yuan mark, but in March 26th, the national development and Reform Commission and the Ministry of Finance jointly issued the "perfect cotton price policy in Xinjiang" announcement, announced that cotton target price was flat at 18600 yuan per ton, which is undoubtedly to cotton farmers a shot in the arm. It is thought that if this subsidy policy is not introduced, the willingness to plant cotton will surely decline this year. The introduction of this policy is conducive to safeguarding the interests of cotton farmers, and also expresses the strategic decision of the country's long-term stable agriculture. Especially in the current outbreak, many countries have blocked the export of agricultural and sideline products. Therefore, the self-sufficiency of agricultural products is related to the national food security and has enough strategic significance.

Compared with cotton yarn, grey stock can be tolerable. Due to the outbreak of many epidemic situations in the world, the order of many textile factories has been reduced or cancelled. In view of this situation, there is a special phenomenon at present. According to the weaving factory, there are already domestic customers who want to buy the foreign trade orders which have been completed by the fabric suppliers at low price. From the perspective of clothing manufacturers, this is indeed a desirable way. The fabric quality of foreign orders is generally higher than domestic orders, and the testing standard is also strictly up to standard. If used for domestic orders, the production will have very good results. The cancelled order is actually inventory, and the price of the re sale is the fracture price. The clothing manufacturer starts with cheap prices. It is killing two birds with one stone. At the same time, it helps long-term fabric suppliers to deal with inventory and promote cooperation between the two sides. But from the perspective of fabric suppliers, the cancellation of foreign trade orders will be transferred to domestic customers at a low price. This is a last resort. A boss said that if the cancelled order was sold to domestic customers at a low price, it could be said that the loss was very large, not only without profit, but also hard to recover. The cancelled order fabric can be placed in the warehouse without affecting the two sale. Even if the market is in a low state, the cloth boss loses the processing, the grey cloth falls 0.2-0.4 yuan / meter, only is the profit drops, does not lose. The finished fabrics will be sold on spot and sold at normal prices, and will still be profitable. At present, many weaving factories maintain a fluke mentality, hoping to wait for the end of the epidemic and receive the news that customers will continue to produce. Therefore, in the short time, most of them take no action.

As for the import yarn, as of April 2nd, the spot price of FCY Index C32S was 19983 yuan / ton, which fell below the 20 thousand mark, down 240 yuan / ton compared with last week. The global impact of the epidemic has intensified. Many countries have taken measures to fight against the epidemic. At the same time, the import and export of yarn is also a major blow. The ports in India, Pakistan, Vietnam and other countries are closed, and India, Pakistan and other countries have stopped offering quotations. Foreign orders have been cancelled and imports of yarn have been cut down. The import yarn has also dropped significantly in the 1-2 months after the market. Among them, compared to the shipping date of 5/6 months, there are still some factories and traders in Vietnam and Pakistan yarn, who are concerned about and ask for quotations. India cotton yarns are rarely asked and become "hot potato". Due to the large stock of yarn in India, Pakistan and Indonesia, the hope of short-term shipments and withdrawal of funds has basically failed. It is worth noticing that traders in half a month showed that the phenomenon of default or even breach of contract in the downstream weaving factories and garment factories was increasing. Some importing enterprises were in a state of worry due to large stockpiles in January, low contract fees and even bad credit accounts. Some customers suddenly cancelled the 50% purchase contract, while the other 50% contracts were not postponed, but the date of delivery and payment could not be determined. Yarn traders are in a dilemma.

Futures, Zhengzhou cotton yarn futures contract price in March 24th bottomed 16960 yuan / ton after stable recovery, the highest price in March 31st reached 18380 yuan / ton, 6 trading days rose 1420 points. It is worth noticing that after a week of continuous decline in from March 18th to 24th, traders seem to have lost confidence in the post market. The 05 main contract of cotton yarn has been dropping all the time since then, and the funds have been gradually withdrawn. As of April 3rd, there are only 1186 remaining positions.

To sum up, whether it is spinning or weaving factories, the current mentality is rather tired inventory and no discount sales. Because most countries in the world have closed the country, everyone is betting whether the global epidemic will be effectively controlled in the next few months. We will not wait for the blowout and the whole industry chain to stop production.