[Business Strategy] How To Avoid Risks For Textile And Clothing Enterprises In The United States With Equivalent Tariffs

The US tariff parity is about to take effect. The contracted volume of US cotton exports continues to decrease. The contracted ones are stepping up shipment to avoid the risk of escalating trade friction. The domestic consumption promotion policy continued to advance, the market consumption was resilient, and the domestic cotton price was supported.

The spot price of cotton is firm, the textile mill just needs to purchase and replenish the stock, the yarn delivery is relatively stable, and the domestic cotton price maintains consolidation. On the international market, the expected decline of cotton planting area in the United States supported the cotton price. Before the release of the latest cotton planting area, some speculative short positions were covered, and the price of peripheral grains and crude oil rose. The international cotton price recovered slightly after the decline, but the average price was still lower than the previous week.

The United States is about to implement reciprocal tariffs, and enterprises have evaded risks. The time for the United States to implement equivalent tariffs is approaching, and market attention is gradually increasing. Relevant reports say that "India, Japan, South Korea, etc. are planning or have begun to negotiate with the United States on equivalent tariffs". Bloomberg commented that "whatever the outcome, it will bring more uncertainty to the global economy". If the tariff policy is implemented as scheduled, it will bring pressure to the financial market.

In the cotton market, the contracted volume of American cotton exports is still declining, and the cancellation of contracts in China is still continuing; The shipment volume has further increased, and the main destination is Southeast Asia. The above situation is closely related to the escalation of Sino US trade friction and the risk of Southeast Asian countries avoiding reciprocal tariffs. As of the week of March 20, the contracted export volume of American cotton was 24000 tons, down 18.2% month on month, and the shipment volume was 92000 tons, up 10.2% month on month.

From the perspective of new cotton planting, the progress of Pakistan is slow due to the impact of low temperature weather at the initial stage of planting, and is expected to accelerate in early April. As the rainfall in February in the main cotton producing areas increases the supply of irrigation water, the market expects that Pakistan's cotton output is expected to increase. Sowing has started in southern Texas of the United States, and will be gradually carried out in other regions. The market focuses on the adjustment of the intended area of the United States released on March 31.

On the whole, the situation of the long short game in the international market is complex and changeable. Market defense is the main task, and the international cotton price is carefully adjusted.

The consumption promotion policy continues to advance, and the demand of the textile market is resilient. Recently, various regions have successively introduced detailed rules and supporting measures to promote consumption. Since March, Zhejiang Province has proposed the goal of striving to increase the total retail sales of social consumer goods by more than 5% by 2025; Shanghai has put forward many measures, such as "increasing efforts to promote consumption", "strengthening urban linkage, expanding the content of consumer coupons and the coverage of merchants, and coordinating the orderly issuance of special consumer coupons".

In terms of the textile market, the grey fabric market is running smoothly. Although the orders in the spinning market have not improved significantly, under the strong promotion of domestic consumption promotion policies, enterprises are cautious and optimistic about future orders. In terms of cotton market, as the temperature in Xinjiang continues to rise, some cotton farmers in southern Xinjiang have been trial planting successively. However, due to the low temperature in the western part of southern Xinjiang and other parts, large-scale planting has not yet started, and it is expected to focus on sowing in the first ten days of April; Cotton planting in northern Xinjiang will begin in April.

From the perspective of spot sales of cotton, downstream enterprises continued to supplement the warehouse when needed and buy when needed. The market transactions continued to be weak and stable in general, and the cotton industrial and commercial inventory continued to decline this year. To sum up, the textile market consumption is resilient, providing support for the domestic cotton price. In addition, cotton planting will meet the peak, and the probability of weather disturbance will increase.