A brief analysis of the cotton yarn market in April

In April, the negative impact of the epidemic continued, the yarn market became more and more deserted, the demand for textiles and apparel fell sharply, which was transmitted to the spinning link, cotton yarn stocks continued to accumulate, and spinning companies faced a test of survival. With the recent volatility of the cotton market coming to an end, the profitability of spinning is expected to recover on the margin. The difficulty lies in the decline in orders.　　 The price of cotton yarn continues to fall, and the cost-effectiveness of outer yarn decreases. Affected by the global epidemic, textile and apparel consumption has stagnated, and cotton yarn prices have fallen. After late March, domestic cotton yarn prices have accelerated and fell below the Vietnamese cotton yarn prices. According to data from the National Cotton Market Monitoring System, as of April 24, the yarn index CNCottonC32S of the National Cotton Market Monitoring System was 19,165 yuan/ton, down 6.7% from the beginning of March; the average pick-up price of 32 carded cotton yarn ports in India and Vietnam 19827 yuan / ton (including 300 port miscellaneous transportation fees), down 3.7% from the beginning of March. The current domestic cotton yarn price is lower than the average price of India and Vietnam at 660 yuan/ton.　　Figure 1 Domestic and foreign cotton yarn price trends since 2019 　　The production and sales of the international cotton yarn market are weak. Affected by the epidemic, European and American textile and apparel orders have fallen sharply, and Vietnamese cotton yarn is facing the dilemma of breaking contracts and reducing prices and re-signing contracts. Data from the Ministry of Industry and Trade of Vietnam shows that in April and May, Vietnamese textile and footwear orders will drop by about 70% year-on-year. Vietnam’s largest state-owned apparel company, the Vietnam National Textile and Apparel Group, is considering suspension of work and pay for 50,000 employees; India’s cotton yarn exports from January to February fell by 64% year-on-year (Figure 2), of which China fell by 8%, and India closed down in March. After the country, cotton yarn sales and transportation have almost stagnated. Although some textile factories can resume production at present, there are reports that the blockade of some hardest-hit areas in India may be extended again for June. The follow-up depends on the Indian government blockade plan; Pakistan announced the extension of the national blockade. As of May 9, a few spinning mills began to resume work, and downstream demand did not recover.　　Figure 2 The cumulative monthly export volume of Indian cotton yarn in the past two years 　　The stock of imported yarn at domestic ports has been more in and less out. According to customs statistics, my country imported 280,000 tons of cotton yarn from January to February 2020, a year-on-year decrease of 1.4%. From January to March 2020, my country imported about 490,000 tons of cotton yarn, a year-on-year decrease of 0.6%. Since orders to foreign yarn mills are generally 2-3 months in advance, orders from foreign exporters and intermediaries are generally 1-2 months. Actually, there are not many foreign yarn orders placed in February and March, mainly on December 1st. For the orders of January, the quantity of foreign yarns arriving in Hong Kong in March did not significantly decrease, and the price of foreign yarns arriving in Hong Kong was at a disadvantage. The high inventory of imported yarns at the port resulted in high warehousing and low output.　　Figure 3 Since 2018, my country’s cotton import volume 　　 domestic textile mills have accumulated cotton yarn inventory, and companies have rushed to cut prices. Under the epidemic situation, foreign trade orders for textiles and apparel have been cancelled, domestic sales have shrunk, and coupled with the pressure of switching from foreign sales to domestic sales, companies are competing to cut prices and compete for limited orders, and even lower prices can not grab orders. According to wind data, the cumulative sales of pure cotton yarn from January to March decreased by 27.69% year-on-year. Although the sales decline has improved compared with February, it is still in a negative growth trend, which means that after the resumption of work and production of domestic yarn mills, the demand recovery is slow, and the finished products Inventory accumulation. According to data from the National Cotton Market Monitoring System, at the beginning of April, cotton yarn inventory increased by 24.5% year-on-year, which was significantly higher than the same period in previous years. The current shutdown of enterprises means that they are facing a crisis of bankruptcy, and the inventory of non-stop finished products continues to rise. If orders still do not improve in May, and cotton yarn stocks continue to accumulate, many companies may choose to stop and reduce production.　　Figure 4 Changes in yarn inventory of textile companies in the past three years 　　Figure 5 Cumulative year-on-year changes in domestic cotton yarn sales in the past three years 　　 Spinning profits are expected to be repaired. The main difficulty for enterprises is the order issue. According to data from the National Cotton Market Monitoring System, as of April 26, the domestic yarn-cotton price difference was 7,730 yuan/ton (CNCotton C32S-CNCotton B), which was basically the same as the average price difference in the past three years. In theory, spinning profitability is at a normal level. However, most companies have high-price cotton stocks in the early period, and the actual average profit is far from the normal level, or even losses. At present, the decline in cotton yarn prices has slowed down, and cotton prices have consolidated slightly, and the major changes in the market have temporarily come to an end. In theory, spinning profitability is expected to be restored. At present, the main problem that plagues spinning enterprises is the lack of orders. It is not difficult to foresee that in the early stage of market recovery, due to slow start-up of downstream demand, high inventories at this stage, and the cancellation of a large number of foreign trade orders, the textile industry is bound to face unprecedented pressure And a huge challenge.　　Figure 6 The price trend of domestic cotton and cotton yarn since 2019Keywords of the article: 　Cotton yarn market in April