Global financial risks are coming, and the commodity market is under pressure. Recently, the banking industry in the United States and Europe has experienced “thunders” one after another. Although the current situation has been alleviated to some extent, the panic in the global financial market has not been completely eliminated. International cotton prices have fallen to a relatively low level. If the banking crisis in the United States and Europe further expands, international cotton prices may continue to be under pressure. The expectations of “gold, three, silver and four” in the domestic cotton textile industry chain have not been fulfilled, and domestic cotton prices are expected to remain low in the near future.
$13.45 million worth of Chinese textiles, apparel and footwear products seized by U.S. Customs and Border Protection
On March 14, 2023 local time, the U.S. Customs and Border Protection (CBP) released law enforcement data on the detention and release of relevant goods under the so-called “Uyghur Forced Labor Prevention Act” (UFLPA). Data show that since UFLPA took effect in June 2022, CBP has detained 3,237 shipments under the act, with a total value of up to $961 million. Among them, electronic products ranked first, accounting for 50.3% of the total number of detained batches and 87.5% of the total amount. Textiles, clothing and footwear ranked second, accounting for 19.5% of the total number of detained batches and 3.1% of the total amount. .
The total value of the seized textile, clothing and footwear products was US$29.55 million, with a total of 631 batches. At present, CBP has released 136 batches, and another 261 batches have been refused release. The remaining batches have not yet made a decision on whether to release them.
The $29.55 million in seized textile, clothing and footwear goods were mainly imported from China and Vietnam. Among them: US$13.45 million was imported from China, accounting for 45.5%; 89 batches were released, 164 batches were refused release, and 92 batches are still under review.
The outbreak of risk events in overseas banks
On the international front, the liquidity crisis in U.S. and European banks triggered turmoil in the global financial market. Risk aversion in the market was strong, and U.S. stock markets and commodity prices fell rapidly. Affected by macro factors such as the outbreak and spread of overseas bank risk events and the plunge in crude oil, U.S. cotton prices fell sharply. Although the weekly export data released by USDA that week turned better, it failed to stabilize prices.
The cotton textile industry chain is still in deep trouble
At present, the foreign trade situation of the textile and apparel industry remains weak. Although the U.S. apparel fabric market is about to usher in a switch from active destocking to passive destocking at the retail end – retailer sales increased by 2.52% month-on-month and 6.28% year-on-year in January, the overall inventory is still high, and wholesaler inventory in January A year-on-year increase of 36.16%. Sanctions on Xinjiang cotton products caused the market share of China’s exported cotton products in the United States to drop to 21.47% in January, lagging behind last year’s average of 21.99%. According to statistics from the General Administration of Customs of China, in US dollar terms, China’s textile and apparel exports fell by 18.5% year-on-year from January to February 2023.
The deterioration of the foreign trade situation has greatly curbed the recovery of the overall industrial chain. As a result, despite good domestic sales data (from January to February, social retail sales of textile and clothing increased by 5.4% year-on-year, which is greater than the growth rate of total social retail sales), the cotton textile industry chain remains unchanged. Deeply trapped in involution.
Data from the National Bureau of Statistics show that from January to February, the total retail sales of consumer goods was 7,706.7 billion yuan, a year-on-year increase of 3.5%. Among them, the sales of basic daily necessities grew rapidly, and the retail sales of clothing, shoes, hats, needles, and textiles in units above designated size increased by 5.4%.
With the arrival of the peak season of gold, silver and silver from March to April, the first quarter quarterly report of the leading listed textile and apparel companies will be disclosed. If the profit recovery of the textile industry is less than expected, the profit transmission problem of the industry chain will be exposed.
Under the influence of macro factors, market expectations are pessimistic, and overseas orders may be affected. Downstream textile mill inventories have gradually rebounded from previous lows, and peak season demand has not been fully released. Domestic textile companies will face the dual situation of weaker-than-expected recovery in domestic textile and apparel consumption and a still weak foreign trade situation.
In terms of cotton, the main contract of Zheng cotton showed a downward trend last week. At present, the operating rate of downstream textile enterprises remains at a high level, and the current order situation is acceptable, but the market is more cautious in taking goods. Enterprises report that orders can generally be maintained until April, the continuity of new orders is insufficient, and there are not many long-term and large export orders. Factory order cycles are generally shortened, follow-up orders are not sustainable, and export demand remains weak. Overall, there is a surplus of domestic cotton supply, limited recovery in demand during the peak season, and resistance to upward cotton prices. Although textile companies have a certain demand for raw material replenishment due to low inventories, most of them mainly purchase small quantities for rigid needs. The macro environment has led to increased market concerns about demand, and cotton prices may remain weak in the short term.
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