As the market price of Zheng Cotton CF2201 contract continues to fall, since the end of August, inquiries and shipments of domestic bonded high-quality US cotton and Brazilian cotton have been much more active than in July/August. Customs clearance foreign cotton pending orders, basis differentials and other transactions have been completed Significantly heating up (priced at CF2201 + basis), bonded cotton stocks and non-bonded cotton stocks in major ports in China have shown a “double decline” situation, and the pressure on storage capacity in ports such as Qingdao has gradually eased.
In the past half month, cotton traders have been increasingly accepting of sliding tax import quotas. Bonded cotton no longer only quotes the RMB price under the 1% tariff (the buyer himself Customs clearance with 1% quota), but either 1% tariff or sliding quasi-tariff quota. In addition, as the 700,000 tons of sliding-duty cotton import quotas have been gradually released and the main ICE contract has dropped to 92.01 cents/pound, not only the ON-CALL point price contract transactions have increased, but also cotton spinning mills have increased their demand for medium- and high-quality bonded cotton, 8/12 Attention to monthly shipments has also increased significantly, and contract purchasing efforts have been increased. Industry insiders believe that the sharp increase in Xinjiang cotton purchases in 2021/22 will cause the cost of lint to skyrocket. The sliding quasi-tariff in 2021 is valid until December 31 and cannot be extended. Therefore, the focus on foreign cotton has continued to rise recently.
A cotton trading company in Huangdao said that the recent sales order is “first US dollar bonded cotton, and then clear foreign US cotton and Brazilian cotton”, but regardless of the US dollar quotation or the foreign currency quotation, The cotton basis difference has not been adjusted, traders’ discounts and profit margins are not large, and their willingness to sell goods and clear warehouses is low.
According to analysis, due to the fact that the shipping schedules of US cotton, Indian cotton, and West African cotton in the northern hemisphere are concentrated after December (new cotton in 2021/22), plus the US cotton shipments since July Due to factors such as slow port logistics and blocked shipments, port cotton stocks are expected to continue to decline from September to December, and the storage capacity “alert” will be fully lifted. </p
