Since mid-December 2021, domestic and foreign cotton prices have stabilized and recovered rapidly after a sharp correction in the early stage. At the same time, with the arrival of the New Year, the cotton textile market has gradually entered a holiday state recently, and the demand for restocking has been relatively weak. At the same time, various varieties of foreign cotton have gradually arrived in Hong Kong, and bonded cotton stocks have generally remained stable. According to data compiled by the National Cotton Market Monitoring System, as of January 17, the foreign cotton inventory at the port that has not been cleared through customs was around 141,500 tons, a slight increase from the same period last month.
1. Cotton prices at home and abroad have rebounded significantly, and the price difference has remained stable.
In the past month, Zheng cotton and ICE futures have both rebounded significantly after a sharp correction in the early stage. ICE cotton futures have risen rapidly driven by factors such as the fall of the US dollar, rising oil prices, and improving fundamental data, with a cumulative increase of 13%. Cotton futures rose by 10%. During the same period, spot prices at home and abroad also rose simultaneously. Foreign cotton continued to be lower than domestic cotton, and the price difference remained stable. From mid-December 2021 to mid-January 2022, the price difference between the CNCotton B index and the CNCotton M index was basically stable at around 1,500 yuan/ton.
2. Foreign cotton gradually arrives at the port, and port inventory increases slightly
As external prices have continued to rise in the past month, the quotations of foreign cotton at China’s main port have subsequently rebounded sharply. As the Spring Festival holiday approaches, the demand for replenishment by textile enterprises is weak. The cotton import quota for 2022 has not yet been released, so spot transactions at the port remain unchanged. Light. Specifically, inventories in Jiangsu Zhangjiagang and Nantong decreased, while inventories in Qingdao Port increased. This was mainly due to the obvious increase in the number of U.S. cotton and West African cotton arriving at the port. According to feedback from major port traders, as of mid-January, the total foreign cotton inventory at the port may have dropped to 230,000-250,000 tons, of which about 140,000 tons of bonded cotton that has not cleared customs. In the medium to long term, as the processing, inspection and shipment of new US cotton flowers accelerate, the number of arrivals at the port will increase rapidly in the future, while high foreign cotton prices will continue to suppress sales, so port inventories are more likely to continue to rebound.
According to data from the National Cotton Market Monitoring System, as of January 17, the foreign cotton bonded inventory statistics at major ports are as follows:
Qingdao Port has 95,500 tons, compared with 77,500 tons in the same period last month, including 21,000 tons of Brazilian cotton, 7,500 tons of Indian cotton, 35,000 tons of US cotton, 1,500 tons of Australian cotton, 1,500 tons of Central Asian cotton, and 25,000 tons of West African cotton. tons, Mexico, Sudan, Israel, Egypt, Greece, etc. total about 4,000 tons.
Zhangjiagang 34,000 tons, 39,000 tons last month, mainly US cotton, Brazilian cotton, Indian cotton and African cotton
Nantong Port 12,000 tons, 20,000 tons last month, mainly American cotton, Brazilian cotton, Indian cotton and African cotton
Wuhan Port data is not available yet
Yueyang Port data is not available yet
3. Stock replenishment before the holiday was slow and costs increased after the holiday.
The Spring Festival holiday is getting closer and closer. At present, textile companies are gradually entering a holiday state. There is insufficient efforts in purchasing raw materials and replenishing inventories. They still focus on buying as they are used and setting production based on sales. The purchase of cotton and other raw materials will be postponed to around mid-February. According to the National Cotton Market Monitoring System report, 50% of companies were preparing to purchase cotton in early January, a decrease of 19.6 percentage points from the average level in the same period from 2016 to 2020. After the Spring Festival, as the low-price reserve cotton raw materials are gradually exhausted, the procurement of textile enterprises after the holiday will transition to high-priced raw materials, and the cost of cotton yarn production will gradually rise. This may cause the yarn price to further rise after the Spring Festival. By then, textile mills Acceptance of high-priced raw materials is expected to increase.
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