Sino US Trade Negotiations Restart Textile Market Short-Term Good Yarn Price Shocks Rise

The biggest event this week is no more than the G20 conference. The United States has promised not to levy taxes on the remaining $about 300000000000 of Chinese exports. As soon as the news came out, the market atmosphere immediately changed, and the cotton prices fell all the way. As of July 4th, the domestic C32S average price was 21440 yuan / ton, up 195 yuan / ton compared with last week.

Entering July also means entering the traditional off-season, but fortunately, the price reduction and inventory reduction and the reduction of production have been effective since June. According to the feedback from enterprises in Ji Lu and Jiangsu and Zhejiang provinces, the inventory of small and medium-sized textile mills is less than 1 months, and for 2 months, a small number of textile enterprises maintain routine production in order to avoid the loss of workers. At present, the downstream demand is weak, procurement cautious watch, and spinning enterprises try to control inventory, and with the sharp rise of Zheng cotton and the improvement of the goods, the price of pure cotton yarn has also risen to varying degrees. The price of air spinning and 50 or more varieties is basically stable. The price increases are mainly centered on conventional varieties, and the textile enterprises are reluctant to sell at low prices. According to today's survey, the quotation of textile enterprises has risen, and there are steady and favorable reductions. Overall, the focus of the transaction has shifted upward, and the rising textile enterprises are mainly around 200 yuan / ton.

Judging from raw cotton, since the resumption of China US trade negotiations over the weekend, although the futures market has not been opened, the market's tone for cotton, especially Zheng cotton, is basically bullish, and it is a sharp rise. Under such expectations, the purchasing enthusiasm of downstream Cotton Traders and weaving mills all increased, and the cotton yarn turnover and enquiries were obviously improved. Such a phenomenon has already appeared on the weekend. On Monday, after the opening of the Zheng cotton plant, the sharp increase of the cotton yarn approached the limit, and even strengthened the hearts of some people buying goods. The reserve cotton kept the 100% turnover this week. But compared to the price of raw materials before, textile enterprises still have a serious loss of cotton yarn at present. Even according to the calculation of 14500-14600 yuan / ton of the "double 28" Xinjiang machine picked up cotton warehouse in the early July, there is little profit for spinning C32S yarn. If the cotton and cotton textiles are used together with the new cotton, the profit of spinning C32S and C40S yarns is acceptable, but it is still a problem whether they can ship and return in time.

However, the downstream fabric market is not as lucky as yarn. At present, the textile mill has not received a large number of new orders. Since June, the inventory level has brought great pressure to the weaving mills. As of July 4th, the inventory index of the weaving mill is 31.5 days, much higher than that of the same period in history. Under such pressure, just as the trade war between China and the United States is easing, the weaving mill will give priority to the inventory and withdrawal of funds. Therefore, it is expected that the phenomenon of price dropping will increase in July. Even if there is no operation of goods dropping, there will still be a discount or a discount in the traditional factories in July.

Import yarn, according to traders feedback, import yarn is gradually warming up. In addition to India's unchanged price, Pakistan's siro spinning C10S, Pakistan C20S, C32S and Vietnam rapier C32S have risen to varying degrees, and demand is also showing signs of recovery. As of July 4th, the spot price of FCY Index C32S was 21731 yuan / ton, down 111 yuan / ton last week, and the price difference between domestic and foreign yarn narrowed further. The quantity of imported yarn at port is about 140 thousand tons.

To sum up, the textile industry is going through a difficult Valley and faces many challenges. Internal, the earlier inventory is heavier, resulting in greater financial pressure. Many textile companies are still cutting down production due to unanswered profits, while the downstream market does not have large-scale orders. Cotton yarn procurement is still more cautious. Outside, the "Osaka" meeting between the leaders of China and the United States results in a "neutral" preference, although the macro risk has been reduced in the short term, but the trade war has not been fully discussed. And all the procedures of the US tax collection have been completed. According to Trump's personality, taxation may fall at any time. The resumption of trade consultation between China and the United States has only returned to the origin of the trade war. The differences between the two sides have not been resolved, and there may still be some new frictions during the truce and may even end the truce ahead of time. Therefore, it is suggested that textile enterprises can appropriately increase raw material stocks, but heavy assets investment still needs to be done. But in principle, the pure cotton yarn market can only go up smoothly only after the textile enterprises first solve their own contradictions.