Last week (June 6-10), the market operation was basically stable. The price of Zheng cotton continued to fluctuate slightly in the range of 20,200-20,600 yuan/ton. After a sharp decline in the early stage, the market continued to fall and lacked momentum. However, in terms of terminal consumption, Under weak conditions, it is difficult for cotton prices to rebound significantly.
Last week, the market continued to be strong externally and weak internally. The external strength was mainly driven by textile mill price points and weather factors supported the new year’s contract. At the same time, US cotton exports also maintained a positive trend. The USDA’s June global production demand forecast is neutral and will have little impact on the market. In the short term, the market’s focus is still on supply risks and not enough on consumption, so prices remain strong.
The performance of Zheng Cotton is obviously weak, running around the lower edge of the moving average, and the continuous rise of ICE has limited impact on it. The main reason is that the fundamentals of the domestic cotton spinning industry are poor, not only the cotton sales progress is slow, but also the downstream consumption is weak. As of June 9, the cumulative sales of lint cotton nationwide were 3.407 million tons, a year-on-year decrease of 2.435 million tons, of which Xinjiang sales were 2.934 million tons, a year-on-year decrease of 2.233 million tons. The slow sales of cotton have led to increased pressure on upstream ginning companies to repay loans. Some companies have begun price reduction promotions, and the market cotton price has declined slightly month-on-month.
Last week, the pressure faced by the downstream cotton spinning industry has not been significantly relieved. Orders have decreased, consumption has shrunk, and companies have continued to destock. Textile companies believe that the decline in cotton futures prices has reduced spinning costs and the competitiveness of gauze has rebounded. However, export and domestic sales orders have recovered slowly and operations are still difficult. Due to the tight cash flow and insufficient orders of weaving enterprises, they can only purchase on demand, which makes it more difficult to sell cotton yarn.
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