According to feedback from cotton trading companies in Jiangsu, Henan and other places, affected by the gradual seasonal replenishment of Zheng Mian, Wulianyin and cotton spinning mills since June 15 (some companies’ raw material replenishment has been delayed for more than a week), Xinjiang cotton “Point price” and pending order transactions are relatively active. In particular, the resources of 3128/3129, Qiangli 27CN/TEX and above in the mainland warehouse in 2020/21 are more concerned by textile enterprises, while the sales performance of fixed price and basis quotation is somewhat cold.
As for the reasons why Xinjiang cotton from inland warehouses is more favored by buyers, the industry summarizes the following three points: First, the domestic trade market is currently in the off-season, coupled with the gradual improvement of the epidemic situation in Southeast Asian countries, which has caused Orders for cotton textiles and clothing from Europe and the United States are returning. Therefore, although the procurement of raw materials for small and medium-sized cotton spinning mills has been “activated”, it is still based on the “buy as you use, order sales, small quantity and multiple batches” model, which is not suitable for purchasing directly from Xinjiang. The supervision warehouse picks up goods; secondly, the current price difference of Xinjiang cotton of the same quality at warehouses inside and outside Xinjiang is only 250-350 yuan/ton, which is significantly lower than that in March/April. Therefore, cotton spinning mills are not very enthusiastic about actively purchasing and shipping in Xinjiang; thirdly, small and medium-sized textile mills are not very enthusiastic Enterprises are worried that shipments from Xinjiang’s regulatory warehouse will occupy a certain amount of working capital (Xinjiang cotton transportation subsidies out of Xinjiang are generally issued at the end of the year or early in the second half of the year). Under the premise that the central bank continues to tighten liquidity, cotton spinning mills “cash is king”. Ideas prevail. According to statistics from relevant departments, not only has the road shipment volume of Xinjiang cotton continued to decline since mid-June, but the transportation price has also peaked and fallen.
A cotton company in Jiangsu stated that as of late June, the company had approximately 2,200 tons of Xinjiang cotton in its domestic warehouse and 3,500 tons of Xinjiang cotton in its internal warehouse for sale. Since it is 100% hedging, With the main force of Zheng Cotton falling, the company’s Xinjiang cotton basis has increased by 100-150 yuan/ton as a whole, and the profits from arbitrage operations have increased slightly. The company believes that the 700,000-ton sliding tax cotton import quota is about to be issued and the lack of medium and long-term orders for small and medium-sized cotton textile mills is an important reason that restricts the company’s raw material replenishment. Whether Zheng cotton has stopped falling and rebounded or cotton spot inquiries and transactions have picked up significantly There is still a need to “trade time for space.” </p
