According to feedback from cotton yarn traders in Guangdong, Jiangsu, Zhejiang, Fujian and other places, affected by factors such as the continuous sharp decline of ICE cotton futures since the end of August, the continued depreciation of the RMB, and the lower-than-expected number of new export traceability orders to Europe and the United States in August/September, downstream weaving companies, Inquiries/purchases for bonded cotton yarn and Yuanyue cotton yarn shipments from ports in Vietnam, Pakistan, India, Indonesia and other origins by middlemen have rapidly decreased or even come to a semi-stagnant state. In particular, Indian cotton yarn needs to be advanced about 2 months due to its relatively low cost performance. After placing an order (paying the contract deposit in full), the Chinese buyer removed it from the shopping cart.
A textile import and export company in Hangzhou said that in the past week or so, in addition to the unexpectedly poor performance of imported OE yarns (mainly from Vietnam, Thailand, Indonesia and other origins, some traders even tried to increase their quotations), C20S-40S ring spinning and 50S and The shipments of the above carded/combed yarns produced in India/Vietnam have been relatively light.
With the impact of ICE futures plummeting and the price fluctuation of domestic cotton yarn in China, most traders have adopted the method of sealing shipments/port bonded cotton yarn and suspending external quotations. The wait-and-see atmosphere is relatively strong; a few traders have considered that so far, Qingdao, Shanghai, Ningbo, The bonded + non-bonded cotton yarn inventory in Guangzhou and other ports is relatively low and there is a strong expectation of the return of orders during the “Golden September and Silver Ten” European and American “Double Festivals”. Cotton yarn quotations in US dollars and RMB have not been significantly reduced, and the price difference between domestic and foreign cotton yarn has further expanded.
According to the analysis of a yarn mill in Gujarat, India, domestic S-6, J34/MCU and other spot stocks have stabilized sideways under the support of new cotton prices in 2022/23, while the operating rate of yarn mills in southern India has only remained at 40 %-50% has resulted in insufficient cotton yarn supply capacity, and the deadline for duty-free cotton imports is until October 31, 2022. Therefore, even if ICE cotton futures plunge sharply, there is not much room for a correction in Indian cotton yarn FOB/CNF quotations; Pakistan, The cost pressure faced by yarn mills in countries such as Vietnam is also very prominent. It is expected that the intensity and extent of cotton yarn price reduction will lag significantly behind cotton futures and China’s domestic cotton yarn.
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