On January 24, as domestic textile companies went on holiday one after another, buying and selling activities in the cotton market gradually stopped. This year’s corporate holidays are generally earlier than last year. The main reason is that cotton prices are at a high level and risks have increased. In order to reduce inventory risks, companies arrange holidays in advance.
The person in charge of a textile company in Henan said that since last year, the cotton spinning industry has experienced rapid development, with sufficient product orders, high profits, and workshops operating at full capacity. As cotton prices continue to rise, orders and profits have dropped significantly, and the risks faced by companies have continued to increase. According to the current price comparison between cotton and cotton yarn, cotton yarn production is at a loss, and enterprises have low enthusiasm for production, so they choose to take holidays in advance.
In 2022, in order to reduce risks as much as possible, the company plans to maintain low inventories on both the raw material and production ends, and will be more cautious in production and sales to prevent losses. In response to the trend of cotton prices, some downstream textile enterprises believe that in the short term, under the support of foreign cotton and cotton yarn prices, domestic floral yarn prices will remain strong. However, as prices continue to rise, the acceptance and digestion capabilities of the downstream industry will be significantly weakened, which will inevitably affect the Long-term demand, cotton prices do not have the basis for a long-term sharp rise in the future.
It is reported that after companies successively suspended work and took holidays, cotton buying and selling activities have significantly slowed down, while cotton spot prices remain strong. Futures prices fluctuated slightly, and the fluctuation range narrowed significantly. As the Spring Festival approaches, the entire industry has entered a holiday state, and the futures market has temporarily lost its direction. The start-up time of enterprises after the holiday should be similar to that in previous years. As for the operating rate, it will be determined based on orders and profits. Now the price of cotton yarn has increased by 1,500 yuan/ton, but the increase is still not as high as that of cotton and has not met the expectations of textile companies.
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