Composite Fabric,bonded fabric,Lamination Fabric Lamination Fabric News How much impact will the rotation of cotton reserves have on the cotton spinning industry?

How much impact will the rotation of cotton reserves have on the cotton spinning industry?



[168TEX News] Recently, the “headline” of the cotton industry chain is naturally that the cotton reserves in 2016 are about to be released. Since official information has not been announced, rumors …

[168TEX News] Recently, the “headline” of the cotton industry chain is naturally that the cotton reserves in 2016 are about to be released. Since official information has not been announced, rumors are emerging one after another, and each one sounds more authoritative than the last.
The futures and spot markets fluctuated violently around rumors of cotton reserves being released. During the Spring Festival, the ICE futures market “dived”, and major contracts such as Zheng cotton and electronic matching fell in response, causing cotton companies to panic. On March 7, the closing price of Zheng Cotton’s main contract CF1609 was 10,540 yuan/ton, a sharp increase of 340 yuan/ton. We still remember that the settlement price of Zheng Cotton’s main contract on March 1 was 9,995 yuan/ton, and the settlement price of ICE’s main contract on March 2, which “slumped” with it, also hit a recent low of 55.93 cents/pound. Some cotton textile mills and traders have threatened that cotton prices will exceed 10,000 yuan/ton. However, while the industry was in an uproar, the main contracts of Zheng Mian and ICE were on the rise. Recently, the settlement price of Zheng Cotton’s main contract has returned to the level in late February, and the settlement price of ICE’s main contract has returned to above 57 cents/pound. The prices of Zheng cotton and ICE have gone up and down, but in the futures and spot markets, what attracts everyone’s attention the most is the news about the rotation of reserve cotton.

So what is everyone concerned about about rotation storage?
It is understood that most market participants believe that the rotation will be in the near future, and there are even rumors that “good news” may come this week. The three aspects that everyone is most concerned about when it comes to the rotation of reserve cotton are time, quantity, and price.
Time: The reserve selling will start in early April, not mid-March as predicted by various institutions and media. From a time point of view, this year’s reserve cotton will be rotated out earlier than in 2015. This not only meets the requirements of “destocking”, but also solves the problem of structural shortage of high-grade cotton in 2015/16.
Quantity: There are different opinions on the quantity rumors, and everyone has their own opinions. Some people think that the sales will be 1 million tons, the same as in July 2015, others think that it will be between 1.5 and 2 million tons, and some people think that the quantity is undetermined and open to sales… But no matter which view, the overall view is that Rhythmic destocking can fill the cotton gap of textile enterprises, enhance the confidence of cotton spinning enterprises, and thus stabilize the cotton spinning market.
Price: What cotton spinners are most concerned about is naturally the outgoing price. According to relevant sources, the outgoing price may drop significantly, which is also the main reason for the recent sharp fluctuations in Zheng cotton. The pricing for storage sales will be based on the weighted average of the imported cotton price index released by CotlookA and the China Cotton Association, plus tariffs and value-added tax. Calculated based on the current index, it will be approximately 11,400-11,500 yuan/ton.

If the above news is true, what impact will it have on the cotton yarn market?
Benefits: It will help reduce the import of outer yarns, especially some low-price outer yarns. On the one hand, the rotation of cotton reserves has restored the production of small and medium-sized yarn mills and reduced their dependence on imported cotton yarn; on the other hand, it has also promoted the further integration of domestic and foreign cotton and cotton yarn prices, which is conducive to the low prices of spinning companies spinning C21S-C40S cotton yarn. , timely replenish raw materials.
Basic: It is not conducive to the import of foreign cotton, especially customs clearance of low-quality cotton. From the perspective of the quality of state cotton reserves, although it will have little impact on Australian cotton imports in 2015/16 and limited impact on US cotton imports, it will not affect its fundamentals. However, it will have an impact on Brazilian cotton, West African cotton, and Indian cotton entering the Chinese market. larger. And theoretically speaking, once the Chinese market’s foreign cotton imports decline sharply, the decline in ICE and the lowering of the national reserve cotton auction floor price may form a “resonance”, with domestic and foreign cotton both falling in the same direction and gradually moving closer.
The reserve cotton is out, and the price pressure is not obvious. The floor price of the State Reserve cotton auction is not low, and the impact on spot prices is likely to be lower than expected. But the problem is that the sudden abundance of cotton social resources has increased the purchasing options for cotton textile mills and traders, significantly slowing down the sales progress of Xinjiang cotton and real estate cotton. Financial fees, loan repayments, insurance and warehousing management fees will become overwhelming. The last “straw” for cotton spinning enterprises

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Author: clsrich

 
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