It is understood that as the main ICE cotton futures contract returns to the 95-100 cents/pound range, the Zheng cotton CF2209 contract has recently closed at a strong resistance level of 15,000 yuan/ton. Some small and medium-sized cotton in Shandong, Henan, Hebei, Jiangsu and other places Textile companies are rapidly picking up their enthusiasm for destocking, and it is not uncommon to dump goods to withdraw funds.
At the same time, cotton yarn traders in the light textile markets of Guangdong, Jiangsu and Zhejiang have also simultaneously launched liquidation operations to increase profit margins and increase bargaining space. Some middlemen are even anxious to sell goods at low prices. Due to the large gap in quotations of cotton yarn in the current domestic market, which is relatively chaotic, fabric factories with hard needs mostly shop around and negotiate prices one by one.
A Nanjing textile import and export company stated that the domestic cotton yarn market can currently be summarized as follows: OE yarn sales are better than ring spinning yarns, and carded yarn sales are better than high-count combed yarns; imported cotton yarn quotations and shipments are crowded Pressure on Xinjiang cotton yarn, imported Vietnamese yarn has attracted the attention of cloth factories and middlemen, pushing Indian cotton yarn/Pakistani yarn out of the streets.
As for factories and traders to step up inventory destocking in the near future, industry insiders believe that on the one hand, cotton spinning mills and cotton yarn traders generally judge that the main contract of Zheng cotton in August may be adjusted back to below 14,000 yuan/ton again. In addition, Xinjiang cotton has entered the countdown to the market, domestic cotton Textile companies are weak in receiving orders and the trend of reducing production and suspension has not improved. As well as the impact of the escalation of the Xinjiang cotton ban in the United States and the European Union, the bearish sentiment on cotton yarn is relatively strong; on the other hand, the central bank’s credit policy has been fully relaxed from April to May. Shifting towards targeted easing and robust easing, credit lines for some cotton textile mills and traders have been tightened, resulting in tight cash flow. In the context of the Federal Reserve’s continued aggressive interest rate hikes and the European Central Bank’s follow-up interest rate hikes, it will be more difficult for the People’s Bank of China to cut reserve requirements and interest rates in the second half of 2022. It is likely to continue to maintain a stable and loose orientation, and the total amount will be through credit Policy efforts, structural tools are the focus, and the cotton and cotton textile industry chains may be affected to a certain extent. In addition, since mid-July, the spot price of cotton has fallen sharply again. The spinning profits of some cotton spinning mills that buy as they are used and purchase orders have been significantly restored, and the enthusiasm for shipments has rebounded.
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