It is understood that although the Zheng Cotton CF2209 contract price has continued to consolidate in the range of 20,000-20,500 yuan/ton since late May, and the domestic cotton spot basis quotation and fixed price have also fallen in response, cotton textile mills and traders have not concentrated on purchasing. , most buyers still follow the principle of “purchase as needed, buy as you use”. Xinjiang cotton sales continue to accelerate in 2021/22, but the recovery is obviously lower than the expectations of cotton processing companies.
At present, basis difference has become a common method for buyers and sellers. However, it is worth noting that the expected points of cotton companies’ placing orders and hedging have been lowered recently, and cotton companies are in a strong mood to pursue short positions. Under the premise that Zheng Cotton has dropped nearly 2,000 points in the past month and spinning profits have rebounded significantly, why are cotton spinning companies still unwilling to focus on purchasing raw materials in large quantities? Industry analysis mainly includes the following points:
First, export and domestic demand orders were insufficient from May to July. So far, domestic autumn and winter orders and international Christmas and Easter orders in 2022 have been significantly lower than expected. In particular, the order-taking situation for high value-added high-count cotton yarn is not ideal. Textile companies are worried about the large accumulation of raw materials and finished products, which will occupy working capital. .
The second reason is the US government’s concerns about the escalating enforcement of the Xinjiang cotton ban. U.S. Customs confirmed that it will implement an import ban on goods from China’s Xinjiang region starting on June 21. According to industry analysis, importers need to provide clear and convincing evidence, making it more difficult to obtain.
Third, the current capital flow of cotton spinning enterprises is generally tight and the pressure is high. On the one hand, the terminal payment period for weaving, fabrics, clothing, etc. has been continuously lengthened since 2022, and the phenomenon of credit, account period, and acceptance payment for cotton yarn is very common; on the other hand, some small and medium-sized cotton textile enterprises have always had financing difficulties, and cotton Most raw material purchases require 100% cash payment, resulting in companies being able to purchase only small quantities.
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