Since the end of June, Zheng Cotton’s main CF2209 contract has been falling. However, what is somewhat surprising is that the inquiry/purchasing intensity of domestic cotton textile companies and middlemen has not increased significantly with the sharp decline in cotton futures. In 2021/22, The sales and contract signing progress of Xinjiang cotton have not increased rapidly, and basis price and pending orders are still the main modes. A cotton trader in Xiangyang, Hubei Province, said that instead of a significant increase in purchases by downstream customers, there has been a decline. The sentiment of contraction and wait-and-see is strong, and cotton-consuming companies have increased their operations of “chasing shorts and selling stocks.”
Some small and medium-sized cotton mills have judged that new cotton in 2022/23 will be on the market in more than two months. However, the current cotton sales progress in 2021/22 has dropped significantly year-on-year. Xinjiang cotton supply is very sufficient, coupled with the Federal Reserve’s repeated aggressive interest rate hikes to control inflation. , the central bank’s room for loose monetary policy is relatively limited, and the transfer of my country’s cotton textile and apparel export orders may continue to accelerate in the second half of 2022.
According to estimates from the China Chamber of Commerce for Import and Export of Textile Products, in the first half of the year, my country’s textile and apparel order transfer scale was about 6 billion US dollars, of which the cotton textile order transfer scale was about 1 billion US dollars, and the clothing transfer scale was about 5 billion US dollars; and the textile and apparel order transfer scale is expected to be about 5 billion US dollars in the second half of the year. The transfer of orders may be accelerating, with the scale of the transfer being around US$10 billion, of which the transfer of orders for cotton textiles is around US$2 billion, and the scale of transfer of clothing orders is around US$8 billion.
On the whole, with the sharp decline of Zheng cotton, the profit situation of cotton yarn and gray fabrics of cotton textile enterprises has improved compared with May/June (especially some small and medium-sized manufacturers that buy raw materials as they are used and purchase on demand), but cotton gauze Continuous accumulation of inventory, tight working capital, and serious shortage of orders have forced companies to take measures such as limiting production, suspending production, and even taking short-term holidays. A weaving company in Zhejiang said that its current hope is that domestic demand orders for the autumn and winter of 2022 and Christmas and Easter orders from Western countries can be received as soon as possible. The company can insist on not reducing production, layoffs, or shutting down. July/August/September will be the big year. This is a critical period for the survival of some cotton textile and clothing companies.
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