According to feedback from cotton trading companies in Zhangjiagang, Qingdao and other places, since June, the focus of domestic cotton textile companies and middlemen’s inquiry/purchasing/customs clearance is still the 2020/21 and 2021/22 US cotton (according to customs statistics, in May 2022 U.S. cotton imports accounted for 79% of the country’s total cotton imports that month, far behind Brazilian cotton, Indian cotton, West African cotton, etc.), and at the same time, attention is paid to the 2022/23 U.S. cotton shipment schedule in December/January/February. There has been an increase in sales and signings (including some ON-CALL price orders).
As ICE’s main December contract once again fell below 120 cents/lb and 118 cents/lb, the basis difference with the main contract in recent months continued to expand to 25-27 cents/lb; coupled with the domestic and foreign cotton prices in the past month The price difference inversion has increased, and Chinese buyers are increasingly less interested in bonded cotton and prompt shipment. Some foreign businessmen and cotton enterprises have gradually increased their transfer operations to Vietnam, Indonesia, India, Pakistan, etc., but they are still mainly American cotton/Indian cotton/Brazilian cotton with medium and low quality indicators of M 1-1/8 and below.
Industry analysis shows that the main reasons for the high proportion of U.S. cotton imports from May to June are as follows:
First, since February 2022, port congestion on the West Coast of the United States has been significantly alleviated. U.S. cotton shipments, arrivals, and warehousing have continued to increase. There is a large selection of bonded and in-transit U.S. cotton resources, and some contracts have been postponed in the first quarter of 2022. Restart implementation; second, although the quotation of U.S. cotton is 3-4 cents/pound higher than the same indicator of Brazilian cotton, U.S. cotton is new cotton in 2021/22, and the downgrade is not obvious, and the spinning rate is advantageous; third This is because the U.S.’s escalation of the ban on Xinjiang cotton imports from June 21st and the EU legislation banning Xinjiang products from entering have caused concerns. Export-oriented companies, OEMs, etc. just need to purchase U.S. cotton. In addition, U.S. cotton traceability is more convenient and fast, and goods are detained and local Importers are less likely to be severely penalized.
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