Brief Analysis Of Cotton Yarn Market In April

In April, the negative impact of the epidemic continued, the yarn market became more and more deserted, the demand for textile and clothing declined sharply, the spinning process was carried out, and the stock of cotton yarn continued to accumulate. The spinning enterprises were facing the test of survival. With the recent sharp fluctuations in cotton prices to come to an end, spinning profit margin is expected to repair, the difficulty lies in the decline in orders.

Cotton yarn prices continue to decline, the cost of yarn decreased. Affected by the global epidemic, textile and clothing consumption is stagnant and cotton yarn prices are falling. The price of domestic cotton yarn has accelerated down in late March, breaking down the price of Vietnamese cotton yarn. According to the national cotton market monitoring system data, as of April 24th, the yarn index CNCottonC32S of the national cotton market monitoring system was 19165 yuan / ton, down 6.7% compared with the beginning of March. The average price of India and Vietnam 32 cotton yarn combed yarn ports was 19827 yuan / ton (including 300 port mixed transportation fees), down 3.7% compared with the beginning of March. At present, the price of domestic cotton yarn is lower than the average price of India and Vietnam cotton yarn 660 yuan / ton.

Figure 12019 since the year Price chart of cotton yarn outside

The international cotton yarn market is two weak. Affected by the epidemic, the textile and apparel orders in Europe and the United States have sharply reduced, and Vietnamese cotton yarn is facing heavy difficulties in signing contracts and reducing prices. The Vietnam Ministry of industry and trade shows that in April and May, Vietnam's textile and footwear orders will drop by about 70% compared with the same period last year. Vietnam's largest state-owned garment enterprise, Vietnam National Textile and Garment Group, considers that 50 thousand employees will stop working and stop paying salaries, and that cotton yarn will come out in India in 1-2 months. The volume of exports decreased by 64% compared with the same period last year (Figure 2), of which China decreased by 8%. After the closure of India in March, the sale of cotton yarn was almost stagnant. Although some textile factories can resume production now, there are reports that the blockade of some heavily damaged areas in India will be extended again in June. The follow-up situation will depend on the India government's blockade plan; Pakistan announced the national blockade extended to May 9th, a few yarn. The factory began to resume work, and downstream demand did not recover.

Fig. 2 monthly cumulative export volume of cotton yarn in India in recent two years

Domestic port import yarn stock more in less. According to customs statistics, 1-2 months in 2020, China imported 280 thousand tons of cotton yarn, a decrease of 1.4% compared to the same period last year. In 2020, about 1-3 tons of cotton yarn imported from China in 2020, a decrease of 0.6% over the same period last year. Because the order for foreign cotton mills is usually 2-3 months ahead of schedule, orders from foreign exporters and middlemen are usually 1-2 months. Actually, there are not many external orders in the actual month of 2-3 months, mainly in the order of 12/1 months. In March, the yarn arrival rate did not decrease significantly, and the price of yarn outside Hong Kong was at a disadvantage.

China's cotton imports since 32018

Domestic textile mills accumulate cotton yarn stock and enterprises compete to reduce prices. Under the epidemic situation, textile and garment foreign trade orders have been cancelled, domestic sales have shrunk, coupled with the pressure of export to domestic sales, enterprises are competing for price cuts, competing for limited orders, or even lowering prices. According to wind data, sales of pure cotton yarn decreased by 27.69% in the 1-3 months compared with the same period in February, although sales decline is better than that in February, but it is still in a negative growth trend. According to the national cotton market monitoring system data, in early April, cotton yarn inventory increased by 24.5% over the same period last year, significantly higher than the same period in previous years. At present, the stoppage of enterprises means that they are facing the crisis of closure and the continuous rising of inventory of finished products. If the order is still not improved in May, the stock of cotton yarn will continue to accumulate, and many enterprises may choose to stop production and reduce production.

Fig. 4 change of yarn stock passages in textile enterprises in recent three

Fig. 5 the cumulative change of cotton yarn sales in China in the past three years

Spinning profit is expected to be repaired, and the main difficulty is the order problem. According to the national cotton market monitoring system data, as of April 26th, the price difference of domestic yarn and cotton was 7730 yuan / ton (CNCotton C32S-CNCotton B), which is basically the same as the average price difference in the past three years. Theoretically speaking, the spinning profit level is at a normal level, but most enterprises have pre high price cotton flower inventory, and the actual average profit is far below the normal level or even a loss. At present, the price of cotton yarn has slowed down, and cotton prices have been slightly consolidated. The sharp change in market prices has come to an end. Spinning profit is expected to be repaired in theory. At present, the main problem of spinning enterprises is the lack of orders. It is not hard to foresee that in the early days of market recovery, the textile industry will face unprecedented pressure and huge challenges due to the slow start of downstream demand, the high inventory at the present stage, and the cancellation of a large number of foreign trade orders.

The price trend of cotton and cotton yarn in China since 62019