Since mid-April, with the return of orders from some European, American, India, Pakistan and other countries and the replenishment of orders for domestic autumn and winter bedding, home textiles, etc., the inquiry and demand rebound for C21S-C40S and other countries has been significantly higher than that of OE yarn, high-end yarn, etc. Therefore, some cotton spinning enterprises have promptly adjusted their product structure to “reduce the two ends and increase the middle” – reducing the output of C21S and above and C50S and above, and increasing the production of 32S and 40S conventional yarns.
In a survey of cotton spinning enterprises in Shandong, Henan, Jiangsu and other places, we learned that although Zheng cotton contracts fell sharply on May 13-14, the main force CF2109 continued to break multiple integers. The quotations of cotton yarns at the gateway and external markets have weakened and fallen, but the quotations of domestic cotton yarns have mostly stabilized (the quotations of cotton yarns in cotton mills have generally increased by 400-600 yuan/ton since May Day), and textile companies and traders are in a high mood to support prices.
Textile companies raise prices in response to the decline in raw materials such as cotton and polyester staple fiber
1. Since the beginning of May, cotton yarn sales and shipments have been ideal, and the upstream and downstream industrial chains are operating more smoothly than in March-April. There is support from end consumer demand, and textile companies have performed “calm and relaxed”;
2. Up to now, most textile enterprises’ cotton yarn and gray fabric inventories are still at a low level (still some distance away from the “warning line”). The accumulation of inventory in the early stage has been greatly alleviated. With relatively abundant capital flow and risks of raw materials and finished products, Under the premise that it is controllable, the wait-and-see atmosphere among textile companies is strong;
3. Textile companies cannot adjust yarn prices frequently, otherwise they will encounter difficulties in receiving and arranging orders. Since May Day, a large number of domestic textile companies have experienced two rounds of yarn price increases, ranging from 100-200 yuan/ton and 300-500 yuan/ton respectively. The upward momentum is strong; once the yarn price is lowered again in just half a month, Early orders will face the risk of being unable to execute or being forced to reduce prices or sign new contracts;
Fourth, textile enterprises generally believe that the bottom of Zheng cotton’s 15,500 yuan/ton has been basically established, and the market situation is affected by the domestic epidemic situation and peripheral bulk commodities. There are some overreactions under negative pressure such as the pullback. The short-term CF2109 contract will still return to consolidate around 16,000 yuan/ton, so “watch more and move less”;
5. As Southeast Asian countries such as India and Pakistan extend their blockades , the impact on the production and order-taking of textile and garment enterprises is increasing, and a large number of orders from Europe, the United States, Japan, South Korea and other countries that were “waiting and watching” in the early stage will accelerate back to China.
Imported yarn shipments are still slow and buyers are reluctant to enter the market
From the traders’ quotations, 5 From March 15th to 17th, the “inversion” range of imported yarn and domestic yarn in C32S was about 500-600 yuan/ton (without taking into account the difference in gross weight and net weight settlement, the actual price difference may be 200-300 yuan/ton or even the same). A light textile import and export company in Shaoxing said that the quotations of domestic and foreign cotton yarns are “upside down” and the quality indicators of high-count combed yarns of 40S and above in India, Vietnam, and Central Asia (mainly Uzbekistan) are not very stable. In the light textile market, inquiries and sales of imported combed yarn are slow, and the mood of both buyers and sellers is not high.
Why are Chinese weaving, fabric and clothing companies not enthusiastic about signing contracts to purchase imported yarn?
Second, sea freight continues to soar and containers and cargo spaces are “hard to find”. On the one hand, the increase in the cost of imported yarn has completely offset the benefits of RMB appreciation. On the other hand, it is difficult to fulfill the contract period. Determined (the key depends on the epidemic);
Third, yarn mills in India, Pakistan, Indonesia and other countries need to place orders for shipments 1.5-2 months in advance and the proportion of contract deposits will be increased ( Some brands and large-scale textile companies require a deposit ratio of 30-50% or even the full amount). Due to the large variables such as the epidemic, exchange rates, and textile and clothing export situations, domestic yarn companies are very cautious in signing contracts for distant shipments.
Downstream weaving and printing and dyeing start-up status
According to data, the market For conventional yarns C32S and TC32S, the profit per ton of yarn spinning can be maintained at more than 1,000 yuan. The profit per ton of gray cloth C32*32 130*70 63″ and T/C65/35 32*32 130*70 63″ is only 300-500, the profit of gray fabric is only 1/3 of the profit of yarn. The profit per ton of high-count 60S yarn has declined compared with February and March, but it can still maintain a profit level of 3,000+ during the period. The profit of JC60*60 90*88 64″ ton of fabric is close to 2,000, which is close to the yarn profit of 2/ 3 level.
As of May 13, the weaving (cotton spinning) operation rate reached 57.47%, a month-on-month increase of 4.28 percentage points, a year-on-year increase of 8.81 percentage points, but still 28 percentage points lower than the same period in 2019. Although Some coastal weaving mills have received reprint orders that originally belonged to India, and there has been an increase in CVC knitted fabrics in the southern market, but the overall proportion is small. It is unrealistic to expect to change the situation of weak domestic sales.
As of May 13, the average operating rate of Shengze printing and dyeing enterprises was 66.25%, with the operating rate falling by 4.25 percentage points month-on-month and 2.25 percentage points year-on-year. Currently, most dyeing factories are operating at around 70%, and printing dyeing factories are affected by issues such as brand colors. Restricted operating hours are as low as around 50%, with only home textile dyeing factories operating at close to 80% due to insufficient labor. Affected by the renewed changes in overseas epidemics, demand for exports of anti-epidemic textiles still exists, but demand for home furnishings, home textiles, and clothing has increased. Demand has declined significantly in the off-season. Orders in the previous quarter have basically been completed. Market order stocking and foreign trade autumn clothing staking, which were originally planned to start in the middle and late this month, have only been issued sporadically. In addition to the strong support in the early stage of home textile orders, inquiries and orders have also been delayed. Affected by the off-season, volume began to shrink, and the overall market for textile and apparel products lacked support for follow-up orders. Most of the orders received by dyeing factories were scattered small orders and brand tail orders.For large quantity replenishment orders, the waiting time is only 1-2 days, and some dyeing factories can ship out the goods on the same day. Under the double suppression of weak demand in the off-season, it is expected that the start-up of dyeing factories in Shengze area will still show a downward trend. In the later period, we still need to pay attention to the changes in new domestic and foreign trade orders.
Taken together, the pattern of profits in the textile industry tilting towards the terminal has been restricted, and the transfer of profits to gray fabrics has been restricted. Yarn companies are holding orders and processing fees are particularly rich. It is expected that by mid-June There is no need to worry. However, the shortage of orders and low profits of weaving enterprises will become more prominent in the off-season. From July to August, the industry may enter a period of accumulated inventory to resist pressure. </p
