Recently, the cotton spinning industry seems to be experiencing a cold wave. The production and sales of finished products are not as good as in previous years. Not only are inventories increasing, but profits are also very limited. It can be seen that as futures prices continue to rebound slightly, industry fundamentals and Zheng Cotton’s market trend have diverged.
According to a person from a textile company in Jiangsu, industrial customers are currently generally pessimistic about the market outlook. Yarn profits are low and production and sales are in trouble. The company’s current raw material inventory remains at more than 2 months, and product inventory continues to increase. Downstream fabric factories and other factories have large inventories. As the new year approaches, companies are actively destocking and are cautious about purchasing yarn raw materials.
According to the personnel of the company, the purchase of new cotton spinning yarn at this stage is a loss. Because it uses the cotton purchased at a low price before, the company’s production and sales costs are just the same. As the inventory decreases, once new cotton is completely used in the future, the settlement will be based on the current yarn price. Will cause losses. In order to reduce inventory risks, companies have reduced their operating rates, and monthly yarn output has dropped by about 30%. As the Double Festival approaches, companies plan to extend their holidays on New Year’s Day and Spring Festival to cope with production and marketing difficulties.
Regarding the future trend of cotton prices, the person said that downstream production and sales continue to slow down before the Spring Festival, and the industry does not support the continued rebound of cotton prices. First, the new year is approaching and funds are tight; second, a large number of resources are concentrated in ginning enterprises. If the price continues to be raised, it will give cotton ginning companies a hedging opportunity, especially since the sales volume of new cotton this year is less than 1 million tons, and the social inventory is very large, so funds will not risk entering the market. As for whether there will be changes in the future, it depends on the extent of inventory consumption.
According to professionals, under the condition that cotton yarn production and sales prices are upside down and sales are temporarily hindered, the cotton spinning industry is relatively pessimistic. On the contrary, the trend of Zheng cotton is not consistent with it. In fact, it is normal for the fundamentals to temporarily deviate from the trend of Zheng cotton. After all, futures prices are affected by There are many influencing factors, and fundamentals are only one factor that affects prices.
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