There is a clear gap between the market situation after the National Day this year and last year. Especially in November, the market continues to weaken. The pressure on cotton yarn prices continues to increase, and the price decline accelerates. The price decline is mainly due to the continued weakness of downstream demand, resulting in pure cotton yarn. The accumulation of inventory by textile companies and the low-price destocking by traders have gradually formed negative feedback on the market. As of November 26, 2021, CY C32S pure cotton yarn closed at 29,100 yuan/ton, down 110 yuan/ton from last week.
In terms of cotton, Zheng Cotton has been in a sideways trend in the past month. It dare not break through on the upside and it is difficult to fall down. The spot price fell slightly this week. As of November 26, the CC3128 cotton index closed at 22,641 yuan/ton, down 69 yuan/ton from the same period last week. However, downstream textile companies remained unmoved in the face of falling cotton prices. Although price-point purchases by textile companies increased slightly during the decline of Zheng cotton on November 23 and November 25, the overall mentality of purchasing goods was still maintained. Mainly because the current spot profit of cotton yarn is still at a loss of more than 1,500 yuan/ton, and downstream orders continue to be deserted. As far as the current cotton raw material inventory of textile companies is concerned, the differentiation is serious. The inventory of usable reserve cotton is relatively sufficient, and the inventory of some textile companies that cannot use the reserve cotton has dropped to about 20 days. At the same time, because the reserve cotton warehouse is located in the mainland, it is easier for mainland textile companies to auction and stockpile than Xinjiang textile companies. Xinjiang Textile Faced with high cotton prices, companies have relatively tighter raw material reserves. No matter what kind of inventory status textile companies are in, facing the already high cotton price, textile companies are worried about the rapid depreciation of inventory raw materials after large purchases. The combination of factors such as losses, poor shipments, and the gradual disappearance of bullish expectations has made it difficult for textile companies to replenish their inventory in large quantities. Some textile companies are considering that if orders do not improve, the New Year holiday may be advanced.
From the perspective of pure cotton yarn inventory, since August, the cotton yarn inventory of spinning companies has gradually accumulated. Although the market was weak in October, due to the limited start-up of electric spinning companies, the inventory accumulation was not much. In November, especially in the second half of the month, pure cotton yarn spinning Enterprise inventories continue to accumulate, and are already at a relatively high level compared with the same period in previous years, but have not yet reached a high point. The pressure on textile enterprises has increased, but not yet. As for traders, most traders are currently destocking, and there are not a few traders who sell goods at low prices. Traders’ stocks have been destocked, but they are still at a relatively high level. It can be said that in the face of the current weak terminal demand, pure cotton yarn is obviously oversupplied, which is an important reason for the decline in pure cotton yarn prices. As of last weekend, the cotton yarn inventory of textile companies has been reported for about 25 days, and the inventory of yarn mills in some areas has reached more than a month. At present, textile companies are mainly destocking. Now the price of cotton yarn is similar to that of cotton, and it is in a dilemma. On the one hand, cotton cost support makes it difficult for cotton yarn prices to fall significantly in a short period of time; on the other hand, there is a lack of downstream orders and downstream acceptance is still very weak. The price is still at a historical high, so it is difficult to increase significantly. Downstream customers mostly inquire about prices and orders, but actual transactions are rare. All actual orders can be negotiated, and most transactions include profit concessions. Most merchants in the market believe that the market situation may continue to fluctuate for a period of time, and there will not be much market movement in the short term. In the future, we need to see whether summer orders can continue to be placed in batches and whether downstream orders have improved. At this stage, some traders in the market have purchased a small amount of medium and high count combed yarn to prepare for the market outlook. Yarn traders said that they dare not prepare large quantities of goods because of the great uncertainty in the market.
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