After experiencing a surge in early October, the floral yarn market finally showed signs of weakness in late October. As of October 29, 2021, CY C32S pure cotton yarn closed at 29,300 yuan/ton, an increase of 7.52% from 27,250 yuan at the beginning of the month.
Since October, the cotton spinning spot market and futures market have emerged from a completely different situation. In terms of futures, Zheng cotton has been rising all the way, reaching a maximum of 22,960 yuan/ton, a record high in the past ten years; while cotton yarn has reached a maximum of 30,510 yuan/ton, a new high since its listing. However, the cotton spinning market has been tepid during the traditional peak season of “Golden Nine and Silver Ten”, which is far behind market expectations. Even since futures continued to rise, the trend has gradually faded. The spot price of flower yarn also increased by more than 2,000 yuan following the futures, but the market transactions did not follow the trend of “buying up, not buying down”. Firstly, downstream weaving mills are highly resistant to the surge in raw materials. Secondly, many places still implement the “dual control” policy. The operating rates of textile companies and weaving mills are low and demand is difficult to improve. Therefore, they mostly purchase on demand. Some textile companies reported that they had not received new orders for a long time, and some even did not receive orders for 20 days at most. It is understood that the current yarn price is still profitable based on the price of cotton raw materials 20 days before the spinning cycle, but based on the current market, it is basically at a loss. The cotton raw material inventory of textile enterprises is still at the highest level in the past four years, about 35 days.
The current pure cotton yarn market is still relatively bleak, and textile companies’ finished product inventories have gradually accumulated to 2018 highs. As of October 29, the average daily inventory of finished cotton yarn in textile companies was around 22.5 days. At the end of October, large-scale factories have basically completed their early orders, and their inventory is around 15 days. Small and medium-sized yarn mills generally have around 20 days of inventory, and some yarn mills even have 30 days of inventory. In the final analysis, there is a problem with downstream demand. After entering the golden month of September, orders from weaving mills have only remained around 11-12 days, which is far worse than in 2020 during the epidemic and 2019 during the trade war. At the same time, the finished product inventory of downstream cotton weaving mills has also reached a high level during the same period in previous years. It is understood that textile companies and cloth factories cannot express optimism about the market outlook. At the same time, orders from weaving mills showed the characteristics of the off-season from July to August. Part of the reason for the current low number of orders is the forward movement of orders caused by the global supply and demand mismatch and logistics barriers caused by the epidemic. With overseas markets such as India and Vietnam When traditional textile processing bases resume production, a wave of potential demand will also be diverted away. </p
