On July 8, the China Cotton Reserve Information Center issued an announcement that it would start the first batch of central reserve cotton rotation in 2022. According to the cotton reserve rotation announcement, the start time of reserve cotton rotation is July 13, 2022, and the end time will be determined in a timely manner according to the market situation, rotation situation, etc.; the total quantity is 300,000-500,000 tons, and the daily listed quantity is in principle Balanced arrangements and dynamic adjustments; the method is open bidding transactions through the national cotton trading market; the trading objects are limited to cotton target price reform processing enterprises determined by the Xinjiang Uygur Autonomous Region and Xinjiang Production and Construction Corps in 2021/2022.
In terms of price, the maximum price of the bidding round (delivery price) is dynamically determined based on the domestic cotton spot price on the previous working day, and the start/stop price is set. The domestic cotton spot price on the current working day is lower than 18,600 yuan/ton (inclusive) Start the rotation when the price is higher than 18,600 yuan/ton, and stop the rotation when the price is higher than 18,600 yuan/ton.
On the day when cotton reserves were rolled in, cotton prices plummeted 6.75%
Today, China Cotton Reserve will start the rotation of the first batch of central reserve cotton in 2022, with a planned intake of 5,000 tons and a maximum price of 17,550 yuan/ton.
As the market’s worries about economic recession continue to increase, the outlook for global cotton consumption is not optimistic. The domestic purchase and storage quantity issued last Friday was only 300,000-500,000 tons, and the price limit was 18,600 for downward auctions. The maximum benefit was far less than expected, making Market confidence collapsed, and Zheng Cotton fell rapidly. As of today’s close, CF2209 was reported at 15,065 yuan, down 6.75%.
Shenyin Wanguo Futures believes that there is still a large amount of Xinjiang cotton for sale in China, the losses of ginners have further expanded, downstream demand continues to be weak, and my country’s foreign trade export situation has become more severe after the Xinjiang cotton ban is tightened. Overall, the current market sentiment is pessimistic after all the good news, and cotton prices may still have room to fall.
The market is deserted and construction starts are reduced
Since the epidemic in Shanghai this year, orders on the market have begun to decrease. However, there are so many textile companies in Jiangsu and Zhejiang, but the number of orders has dropped significantly, causing some textile bosses who could not receive orders to directly fall into desperate situations. If the startup rate is high and no one buys it, then it is better to lower the startup rate. According to data monitoring from Silkdu.com, this week the weaving startup rate in Jiangsu and Zhejiang has been reduced by 1% to about 65%.
With the traditional off-season and the upcoming high-temperature season, Boss Bu is increasingly willing to reduce production and take holidays. Currently, there are more companies that eat porridge than meat-eating companies on the market. Most companies only maintain some loose orders and small orders. “Originally, we have maintained 70% operating capacity, but now our factory is still working five days a week and two days off.” This is the sigh from a boss who has no orders in hand. If we continue to produce blindly, inventories will become higher and higher, and more and more working capital will be occupied. In this case, reducing work hours and taking holidays have become the first choice of many bosses.
Orders are missing and “hot orders” are hard to come by!
Last year’s “explosion” phenomenon did not continue this year.
“This year is indeed very weak. It is even more difficult than 2020. Orders are at least 40% lower than last year.” Yue Jin (pseudonym), the person in charge of a small textile company in Wujiang, a textile powerhouse in Jiangsu Province, told China Business News that the situation of surrounding small and medium-sized enterprises is similar. At the beginning of the year, we experienced rising raw material prices and poor product prices, which eroded profits. Now, orders are bleak.
Meng Zhuo, manager of Anhui Garment Import and Export Co., Ltd., said that due to the backflow of orders, the production of garment factories last year was tight and “there were endless orders.” But this year, most factories had basically no orders by September. Last year, at this time, there were no orders. It can be scheduled until at least November, and there will continue to be singles in the future. This year, it will enter the “idle” state almost two or three months earlier than in previous years.
Orders continue to shift, with the full-year shift expected to be US$16 billion
The relevant business person in charge of the China Chamber of Commerce for Import and Export of Textiles told China Business News that as orders have moved overseas, the number and schedule of orders on hand have been reduced.
According to estimates from the China Chamber of Commerce for Import and Export of Textiles, my country’s textile and clothing order transfer scale was about US$6 billion in the first half of the year. Cotton textile orders were mainly transferred to India, and clothing orders were mainly transferred to Bangladesh, Vietnam, India, Indonesia, Cambodia and other countries.
The person in charge said that it is expected that in the second half of the year, the transfer of textile and apparel orders in my country may accelerate, with the transfer scale being around US$10 billion. Among them, the order transfer of cotton textiles is about 2 billion US dollars, and the scale of clothing transfer is about 8 billion US dollars.
However, the outflow of orders is only one of the reasons for the bleak textile and apparel market.
When overcapacity caused by oversupply meets the shrinking global market, both ends are squeezed, and the challenges become more prominent after the tide recedes.
Meet the challenges
In the State Council policy meeting on June 8At the regular briefing, Wang Shouwen, Vice Minister of Commerce and Deputy Representative for International Trade Negotiations, proposed that in order to help foreign trade companies grab orders and expand the market, the current measures are to optimize and innovate online exhibition models and to create country-specific exhibitions. exhibitions, professional exhibitions and special exhibitions to help companies obtain more foreign trade orders.
For small, medium and micro enterprises, they are encouraged to negotiate with foreign customers online within the country and ship their products overseas for offline product exhibitions. Strengthen the interaction and mutual promotion between the online Canton Fair and cross-border e-commerce platforms to facilitate business transactions.
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