From mid-July to early August 2022, the market’s concerns about the macro economy temporarily weakened, domestic and foreign futures prices rebounded steadily, domestic import companies’ enthusiasm for customs clearance increased significantly, and the number of bonded cotton inventories dropped significantly. According to data compiled by the National Cotton Market Monitoring System, as of mid-August, the uncleared foreign cotton inventory at the port was around 137,800 tons, a month-on-month decrease of nearly 100,000 tons.
1. Cotton prices rebounded quickly, but downstream recovery was slow.
In the past month, global macroeconomic pressure has eased, and commodity futures have rapidly stabilized and rebounded. At the same time, market concerns about global supply in the new year triggered a new round of speculation. ICE cotton futures rebounded sharply, and domestic Zheng cotton futures followed suit. Due to the outstanding situation of external strength and internal weakness, the current spot price difference between domestic and foreign cotton is more than 6,000 yuan, and has a tendency to continue to expand.
At present, although the gauze production and sales rate of domestic textile enterprises has rebounded slightly, the overall signs of recovery are not obvious. The recovery of domestic and foreign downstream textile markets is still slow, and the trend of declining orders has not significantly improved. With consumption struggling to keep up, the sudden surge in cotton prices has also made it more difficult for downstream products to raise prices.
2. Intensified customs clearance and inventory dropped significantly
Although the above situation is not conducive to the recovery of the cotton market, under the influence of the stabilization and recovery of the international cotton market and the Xinjiang cotton ban, domestic import companies have increased their purchases of foreign cotton, and their customs clearance efforts have increased. In the past month, the number of bonded cotton stocks in major ports has generally declined, with the decline in Qingdao Port being larger. According to data from the National Cotton Market Monitoring System, as of mid-August, the statistics of uncleared foreign cotton bonded stocks at major ports are as follows:
Qingdao Port has 98,000 tons, compared with 187,700 tons in the same period last month, including 29,400 tons of Brazilian cotton, 8,300 tons of Indian cotton, 33,500 tons of US cotton, 3,500 tons of Australian cotton, 1,000 tons of Central Asian cotton, and 18,300 tons of West African cotton. tons, Mexico, Sudan, Israel, Egypt, Greece, etc. total about 4,000 tons.
Zhangjiagang produced 34,800 tons, compared with 39,700 tons last month, mainly American cotton, Brazilian cotton, Indian cotton and African cotton.
Nantong Port 0.5 million tons, 0.6 million tons last month, mainly American cotton, Brazilian cotton, Indian cotton and African cotton.
3. Later outlook
At present, global macroeconomic risks have temporarily eased. Global supply concerns in the new year have triggered market speculation. Foreign cotton prices have a further upward trend. However, due to weak downstream consumption, it remains to be seen whether domestic import enterprises can continue to purchase foreign cotton. There will be greater resistance if prices continue to rise. At the same time, there is still some time before the new cotton from the northern hemisphere is launched, and it is difficult to increase the number of foreign cotton arriving at the port. In the short term, the number of bonded cotton stocks at the port may continue to decline.
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