Since May 16, Zheng Cotton and ICE have co-operated in a roller coaster market. The futures have dropped by 1200-1300 points, and the floor price of reserve cotton in June has dropped by 326 yuan/ton. This is in sharp contrast to the domestic 2016/17 since late May. The annual quotations and transaction prices of high-quality and high-grade Xinjiang cotton are only slightly loose. Some cotton companies that are strapped for funds and eager to settle down have room for negotiation at 50-100 yuan/ton. The price of cotton with low breaking strength, high horse value, and short length Lint quotations have dropped by 300-400 yuan/ton.
Overall, both ginners and traders are not very enthusiastic about cutting prices and increasing volume of high-quality cotton. So what are the reasons for the resistance of high-spinnability lint cotton?
1. The average transaction price of Xinjiang cotton from reserve cotton remains stable, and traders are bidding fiercely. According to statistics from China Cotton Network, from March 6 to June 6, the transaction rate of reserved Xinjiang cotton remained above 99%, and the average transaction price was more than 15,200 yuan/ton (not discussing differences in grade and quality), which remained basically stable. Even if there are changes in the domestic and foreign markets and the reserve price of cotton reserves is lowered, the confidence of textile companies and traders is still sufficient. Xinjiang cotton reserves have always been the focus of auctions and bidding.
2. In 2016/17, the supply of cotton in Xinjiang began to be tight in some areas and has the tendency to spread. Judging from the survey, as of early June, the machine-picked cotton of cotton processing enterprises in northern Xinjiang has basically been sold out; while the few high-quality hand-picked cotton resources in southern Xinjiang have basically been locked up by traders, and some ginners have a small amount of low-quality lint left. ; However, “Double 28/Double 29/Double 30” lint cotton stocks in warehouses in Henan, Shandong, Jiangsu and Zhejiang have dropped significantly, and supply pressure has increased. Some textile companies have to take the initiative to lower cotton procurement standards, from “Double 28” to 3128/2128 , 3129/2129 (fracture specific strength 27cN/tex and above); since late May, the quantity of lint transported by road from Xinjiang has increased to about 20,000 tons, which is also due to the gap in the supply of raw materials from the mainland.
3. Textile enterprises’ demand for high-quality cotton continues to grow. According to the USDA monthly report, my country’s cotton consumption in 2016/17 is expected to be about 7.2 million tons. However, although the grade and quality of Xinjiang cotton have improved significantly this year, the rotation of cotton reserves is in order, and foreign cotton imports have increased significantly year-on-year, but the high The demand and consumption of high-quality cotton are still strong. Cotton yarn with count C32S and below has become the leading product of most spinning companies. For most cotton spinning companies, spinning high-count yarn, high-count combed yarn, new fiber yarn, and high-count blended yarn is the key to gaining profits and maintaining production. key.
4. Foreign cotton imports are restricted by cotton import quotas. According to customs statistics, in April 2017, my country imported 104,900 tons of cotton, an increase of 35,100 tons or 50.30% year-on-year; from January to April 2017, my country imported a total of 478,900 tons of cotton, an increase of 199,400 tons or 71.36% year-on-year. . Especially since late May, ICE’s main contract has fallen below the 77 cents/pound and 76 cents/pound mark. The quotations of bonded cotton and shipping cotton such as US cotton, Australian cotton, West African cotton, and Uzbek cotton have fallen sharply in response. ON-CALL Point-price contracts and fixed-price contracts continue to grow, and the price difference between EMOTSM and Xinjiang cotton has widened to more than 1,000 yuan/ton. However, considering that a total of 894,000 tons of 1% tariff import quotas were issued in 2017, the unused quota by the end of May may be less than 450,000 tons, and it will be maintained until at least the end of February 2018. Therefore, the demand for high-grade cotton will continue to be strong. .
Source: China Cotton Trading Network
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