Cotton Yarn Weekly: Epidemic Does Not See "Inflection Point" Trump Again "Stir" After Market

Cotton yarn Market during the holiday light trading, a small number of goods mainly, the price is weak. At present, the order of spinning enterprises is relatively low, and the overall start-up level is not high, but the stock is still rising. Market for most of the first half of the market is empty, if the market continues to slump, subsequent textile enterprises low price phenomenon or increase. As of May 7th, the domestic C32S average price closed at 18808 yuan / ton, a decrease of 107 yuan / ton compared with last week.

Upstream cotton, the first day after May 1, due to a long holiday period, the ICE US disk continued to decline, plus the "donkey" Trump again played a tax increase card, Zheng cotton contracts are "low and low." And the fall of Zheng cotton prices also let many home textile enterprises have the opportunity to buy cotton at a low price. According to the survey, at present, the price of textile enterprises is relatively low on the real estate cotton, far from the price of the cotton mill. Many ginning mills continue to adhere to the strategy of reluctant sale, and the downstream textile enterprises have to choose to use the domestic cotton futures prices down to purchase futures warehouse cotton supplementary materials inventory. However, even so, the overall performance of the cotton yarn market is still cautious and the mentality is hard to lift. As of May 7th, China's yarn load index was 47.7%, down 1 percentage points from last week. However, on the other hand, since the resumption of toll roads nationwide at 0:00 on May 6th, the transport costs of textile enterprises will also rise, and the increase in cost will play a certain role in supporting the yarn price.

As for the downstream weaving mills, the export orders have never been decentralized, and the accumulation of domestic sales orders in the local factories during the holiday season has resulted in a sharp increase of 5.4 percentage points. But from nearly 3 years of data, this year's May 1 holiday load index is obviously low, less than 50%. Due to the lack of incremental orders, weaving mills' willingness to replenishment will gradually fall back and maintain with the purchase. The finished product inventory has reached the end of last year, mainly due to the lack of orders in the recent textile mills, and the production of conventional varieties to keep workers, but at the same time, sales were blocked. Even if the price dropped, the inventory effect was not satisfactory. As a result, inventory pressure is increasing. But with the reduction of production capacity and control of production capacity, the accumulating speed of textile mills has slowed down.

Imported yarn, from 1 to April 2020, domestic and foreign C32S cotton yarn prices showed a downward trend, but the domestic cotton yarn prices fell significantly more than the outer yarn. As of May 7th, the spot price of FCY Index C32S discount was 19537 yuan / ton, compared with the same period last week dropped 216 yuan / ton. In April, the domestic C32S average price fell by 607 yuan / ton, or 3.11%, which was more than 2 times the decline of foreign yarn. In terms of starting up, the main countries start up roughly as follows: India 23%, Vietnam 30%, Pakistan 25%. Judging from the absolute start-up rate, the spinning industry in various countries is still depressed, and more than half of the cotton mills in various countries are shutting down, and most of the enterprises still in production are unable to operate at full capacity, and the global spinning industry is depressed.

In the epidemic situation, as of 14:00 in May 8th, 3917006 cases were diagnosed globally, and the number of new cases increased by 80 thousand cases per day. The impact of the epidemic on the global economy has exceeded many people's expectations. On May 7th, Neiman Marcus, the US luxury retailer, filed for bankruptcy. It became the first large department store in the United States to apply for bankruptcy under the new crown pneumonia epidemic. It was also the second retail company to apply for bankruptcy in the United States within a week of May 7th. Niemann is the second retailer to apply for bankruptcy in the US. J Crew, the famous clothing retail brand, filed for bankruptcy in May 4th.

On the other hand, it is also a "bomb" that is currently covered by the epidemic but is likely to have a significant impact on China's textile exports. It will also take effect soon. That is the US Mexico agreement, or USMCA. The agreement was signed in January 29, 2020 and will take effect in July 1st this year. The agreement has nothing to do with China on the surface, but some people in the industry pointed out that the agreement is the same as Obama's TPP. China is the leading actor in the absence. On the one hand, the agreement restricted the free trade agreement between Member States and non market economy countries. This means that if Mexico enterprises invested in Mexico are reinvested in the United States and have disputes with the US government, Mexico enterprises with Chinese investment can not invoke the international investment arbitration under the US Mexico trade agreement to prosecute the US government. On the other hand, it is also the most influential aspect. USMCA has raised certain requirements for the origin of textile products, and has proposed a similar "starting from yarn" requirement in TPP agreement. Canada and Mexico will gradually reduce the quantity of yarn and fabric imported from China in order to enjoy preferential tax rates exported to the United States. The three countries have accelerated the regional economic integration and the circulation of the industrial chain. In the long run, they have hindered the textile trade between China, Mexico, China and Canada and China and the United States. In fact, under the influence of Sino US trade war and epidemic situation, China's textile and apparel market share declined gradually, especially in the first quarter of this year, while the proportion of ASEAN, India and Bangladesh increased gradually, especially the proportion of ASEAN increased to 19% in March, and China dropped to 22.4%.

With the mitigation of the new crown disease, 4 European countries have ushered in the lifting of the "going time". Theoretically speaking, European countries have gradually "unsealed", and the limited recovery of trade, transportation and exchanges has played a very important role in China's textile enterprises, such as orders, delivery and so on. The situation of export oriented enterprises and foreign trade companies in coastal areas such as Jiangsu, Zhejiang, Guangdong and Shandong will obviously improve. Coupled with the incitements and even brutal interference of the Trump administration of the United States, it is still hard to judge whether European countries can "advance and retreat with China" and "breathe together". In addition, India, Vietnam, Bangladesh and other enterprises seize the market and "cross the sword". The export situation of textile and clothing is unlikely to recover in 5 and June.