Serious Overstock Of Finished Products In Textile Enterprises Leads To Weak End Consumption

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From the perspective of the first quarter of 2022 in China, the cotton industry inventory basically maintained a low operating situation, and was far lower than the data level in 2021. According to the data of Mysteel agricultural products, as of the end of February, the inventory of cotton industry was 750000 tons, a decrease of 2.60% on a month on month basis and a decrease of 13.99% on a year-on-year basis.

Due to the poor orders of textile mills and the loss of immediate profits of yarn, in order to reduce the pressure of capital, most manufacturers maintain the rhythm of follow-up purchase, and their purchase intention is low. It is understood that the inventory days of large-scale textile mills are about 60 days on average, while those of small and medium-sized textile mills are less than 30 days, which makes the purchasing capacity of textile enterprises insufficient.

In terms of inventory of textile enterprises, the inventory of finished products of downstream mills is overstocked, and gradually enters the stage of accumulation. According to the survey data of Mysteel agricultural products, as of April 15, yarn inventory of textile enterprises in major regions of China was 29.5 days, 0.9 days higher than last week, with a month on month increase of 3.15% and a year-on-year increase of 113.77%.

Due to the weak orders in the peak season and the weak follow-up of new orders, some cotton mills have started down and stopped production. The production and sales situation of cotton spinning market is not optimistic. As for the fabric factory, it is understood that at present, the starting rate of Zhangcha market cloth factory in Foshan City is about 20%, and that in Jiangsu and Zhejiang Province is less than 30%. The stock of finished products is overstocked, orders are gradually reduced and terminal consumption is weak. Due to the further deterioration of the terminal market environment, the risk of weakening the cotton textile market has also been intensified. The cotton mills are unable to bear the pressure of high-cost raw material prices, and the upward trend of cotton prices is hindered.

On the whole, domestic cotton commercial inventory pressure is prominent, supply side environment is still relatively loose, downstream demand is weak, raw material procurement demand is weak, cotton digestion rhythm is slow, and the market is still in the stock removal stage. Downstream yarn mill finished goods inventory accumulation, peak season orders are not obvious, the market is weak, short-term domestic cotton market fundamentals continue to be under pressure. In the future, we still need to pay attention to the northern hemisphere cotton planting weather, macro news and downstream order changes.