Hidden dangers broke out after the rapid rise in yarn, and the back-end industries that were slowly resuming work were particularly resistant. Some textile companies, sensing that the storm was about to come, experienced their first drop on March 5. By mid-term, middlemen continued to decline. Price shipments caused some companies that led the decline to accumulate a decline of about 1,500 yuan/ton. The high-level meeting between China and the United States on March 18 continued to create a smell of gunpowder, and then the “Xinjiang cotton boycott incident” continued to ferment. Following HM, overseas brands such as Nike and Adidas were exposed one after another for having previously released news about cutting Xinjiang cotton, accelerating the opening of the Yarn callback window.
1. Raw cotton and yarn correction
After the Lantern Festival, the follow-up of downstream industries slowed down , the softening cotton market will accelerate the yarn callback, which is divided into 4 stages. In March, cotton’s cumulative correction was 1,500 yuan/ton, C32S’s correction was 1,600 yuan/ton, JC32S’s correction was 1,700 yuan/ton, and JC60S’s correction was 2,000 yuan/ton. (Unit: Yuan/ton)
The first stage, wait-and-see period: (2.26-3.5) Weaving factories resume work one after another, cotton turns downward, and yarn The online rally has come to an end;
The second stage, the protection period: (3.6-3.15) textile mills resist high prices, mainstream factories raise prices, and middlemen ship goods at low prices. Textile companies offer price concessions to attract orders;
The third stage, trial period: (3.16-3.23) Textile companies promote sales during yarn exhibitions, the meeting between Chinese and American high-level officials is negative, and prices fall;
The fourth stage, callback period: (3.24-present) “Boycott of Xinjiang cotton incident” fermented, triggering market panic, and yarn prices continued to decline;
2. Comprehensive cotton distribution costs of textile enterprises (gradually rising)
Based on the continued rise in yarn, many textile companies have arranged orders until March before the holiday, and restock raw materials for 2 months or more. The comprehensive cotton distribution cost is less than 15,000 yuan/ton; after the holiday After returning home, textile companies replenished goods in a step-by-step manner, mostly focusing on rigid needs. In mid-to-late March, the sharp fall in Zheng cotton drove some companies to buy goods at the bottom, and cotton reserves rose rapidly. At this time, the comprehensive cotton distribution cost had risen to 15,500-16,000 yuan/ton.
3. Actual profit margins of textile companies (slightly shrinking)
If the processing fee for carded ring spindle 32S is based on the breakeven price of 5,500 yuan/ton, the processing fee has become more and more considerable since September last year. Benefiting from the continuous increase in yarn raw materials, the profit of spinning enterprises per ton of yarn is as high as more than 2,000 yuan/ton. In March, the yarn correction and the raw material correction were basically at the same range, so the range of high processing fees for yarn companies was maintained.
4. How long can the industry’s high operating capacity be sustained? (Transfer to thin branch, slowly increase to treasury)
Judging from the current period, most textile companies’ orders can still last 15-25 days , some orders last until May-June. From this point of view, there are risks in the long-term start of industry operations. However, considering that social inventories are at a low level, and some companies are considering switching to high-count yarn production, reducing output has ensured high-level operations. Therefore, it is expected that industry inventories will increase significantly in mid-to-late May or even after June.
5. Risk control in weaving factories
*Slower payment recovery and less foodies. Whether the processing fee can be maintained and the acceptance level of downstream;
* The Xinjiang cotton ban is also a commonplace. As early as last year, companies were transforming and channels were established;
* Driven by profits, production capacity is expanding, employment is decreasing and aging, and the industry’s peak operating hours are limited;</p
