Decline In Yarn Prices, Profits Gradually Restored

In late April, the epidemic situation in foreign countries is still developing, and the yarn market is still weak. The overall price of pure cotton yarn is still downward trend, but the decline is obviously slower than that in March. As of April 23rd, the domestic C32S average price closed at 19130 yuan / ton, a decrease of 88 yuan / ton compared with last week. Compared to the decline of nearly 1000 yuan in March, the average C32S price in China has dropped by only 392 yuan / ton since April.

The slowdown in cotton yarn prices is partly due to a rebound in cotton prices in April. But in terms of starting up, there are already some textile enterprises that have reduced production due to inventory rise and other reasons, but the phenomenon of reduction in production is not common. The overall inventory growth of textile enterprises has declined. As of April 23rd, China's yarn load index was 50.4%, down 1.2 percentage points from last week. However, the stock of spinning enterprises increased to about 29 days. Because foreign trade orders are basically cancelled, many foreign trade enterprises are turning to domestic sales, and domestic orders appear to be in hot demand. Some enterprises say that textile enterprises are willing to cut prices sharply in order to rush orders. Even so, most spinning enterprises say it is very difficult. Grab orders, raw materials purchase is also bought with orders, dare not hoard goods. Some enterprises with large stocks of raw materials said that the losses were serious. The cotton mills and downstream businesses mainly focused on clearing inventory and selling goods. The shipping mentality was strong. There were no new orders in the downstream. The mills did not dare to purchase raw materials, labor, plant, raw materials and other expenses, and the enterprises were eager to ship back the funds. They sold again and again, and the market price war intensified. The vicious circle of the market. Some textile mills simply reduce production, shift or vacation.

From the perspective of spinning profit, although the theoretical profit and loss of pure cotton yarn is good at both the spot and the 20 day, the price of cotton is much higher than that of raw cotton, and the actual profit is far from enough. If the price of raw material before the fall of cotton is calculated, most of the spinning enterprises are not profitable or even a lot of losses. After April, the price decline of pure cotton yarn has slowed down, and the cotton prices will gradually be restored as the cotton prices in the early stage are gradually digested.

Imported yarn is currently affected by epidemic situation abroad. Production in India, Vietnam, Pakistan and other countries has been greatly affected. The Southeast Asian spinning enterprises, which were once closed by the measures such as "sealing the country", have been gradually resumed recently, though far from normal. As of April 23rd, the spot price of FCY Index C32S was 19884 yuan / ton, down 54 yuan / ton compared with the same period last week. This week, the price of cotton yarn in Pakistan dropped sharply, business activities began to recover slowly, but the demand for yarn remained unchanged after the lifting of the national ban, and domestic and export prices continued to bear pressure. As for India, most of the cotton seeding dates are in 5-7 months, and for now, the hope of India's new crown outbreak in mid May or even mid June is almost zero, which will inevitably affect cotton planting. In addition, Thailand, Vietnam and other places due to drought, locust disaster and other events, the output declined sharply, and India's domestic epidemic led to an increase in unemployment rate and domestic demand for grain. The increasing number of farmers in India chose to "reduce cotton and increase grain", which will cause heavy losses to cotton and cotton exports in the long term.

To sum up, although the market is not satisfactory, but with the improvement of the epidemic situation, the domestic economy is slowly recovering. Most enterprises still choose to persist in their efforts and unwilling to give up easily. Southeast Asian countries have maintained low opening rate, and the international trend of gradual lifting of the ban in May will see China's orders improve. Of course, the specific situation depends on the control of the epidemic situation abroad. As a textile person, we must always prepare for the worst and the best hope.