Cotton Yarn Weekly | Companies continue to resume work, orders may become the biggest resistance in the market

It has been nearly a month since the end of the Spring Festival, and as the epidemic situation is gradually brought under control, the resumption of work of major companies is proceeding one after another. As of March 5, the average domestic C32S price closed at RMB 20,648/ton, an increase of RMB 140/ton compared to last week. However, the author is skeptical about whether cotton yarn trading can continue to rise. The reasons are as follows: 　　1. Although the proportion of resumption of work is relatively high, the operating rate still does not reach the level of the same period in the past three years.　　 At present, the overall resumption of work in textile companies is relatively good. According to a survey by Cotton Information Network, the resumption rate of the surveyed companies is 79.07%, and another 20.93% of the companies plan to resume work in mid-to-late March. However, it can be seen from the above chart that the start-up load of textile enterprises was only about 45% at the beginning of March this year, while it was above 60% in the same period in previous years. Recently, the trading atmosphere of the pure cotton yarn market is good, mainly due to the rigid replenishment of the downstream weaving mills. However, at the beginning of the resumption of work, the production capacity of textile enterprises was very low, and they basically relied on inventory to move goods, and the market supply was obviously lagging behind. On the other hand, the downstream grey fabric market has ushered in a 'small springBut with the increase in production capacity, prices have lost momentum.　　 2. The recovery of production logistics is weaker than that of life logistics.　　 Hubei region ushered in the turning point of existing confirmed cases on February 19, while non-Hubei region ushered in the turning point of existing confirmed cases as early as February 14. The non-Hubei region also resumed work and production as early as mid-to-early February, while the Hubei region cannot resume work earlier than March 10. The regional characteristics of the epidemic have also made the difference in the resumption of work and production in the cotton textile industry chain market more obvious. However, the State Council’s Joint Prevention and Control Mechanism held a press conference on the 6th. Gao Gao, deputy secretary-general of the National Development and Reform Commission, introduced that at present, the recovery rate of living goods logistics is relatively fast, and the rate of resumption of work and production is relatively high. Relatively speaking, the production logistics has a wide range and large volume, and it involves the coordinated linkage of different industries and different upstream and downstream. Therefore, the recovery of the production logistics is weaker than the recovery of the life logistics. The increase in the cost of cargo transportation and the cost of loading and unloading has further contributed to the increase in spinning costs.　　 3. The slow recovery of downstream orders has hit the demand for yarn materials.　　 Entering March, one of the biggest problems reported by various textile companies is that there are very few new orders, and large factories still barely receive some piecemeal. Small factories simply can't remember. The global epidemic has spread, and conventional consumption has been greatly impacted. The breaches and cancellations of old foreign orders are increasing day by day, and the number of new orders is extremely small, and many production plans have to be cancelled. While looking at the country, although the epidemic has been basically under control, it is still necessary to be highly alert for imported cases from abroad. If you are not careful, there may be local outbreaks. However, most communities and rural areas still implement very strict control measures. This makes downstream garment factories unable to keep up with their production capacity. Coupled with the sluggish downstream consumption, companies such as grey fabrics, printing and dyeing have been cautious and slowly recovering production capacity.　　 In terms of imported yarn, the price of international cotton yarn is lower than that of domestic yarn. As of March 5, the spot price of FCY Index C32S discounted to RMB closed at RMB 20,469/ton, a decrease of RMB 28/ton from last week. The quantity of imported yarns arriving from February to March is normal, but under the shrinking demand, the port inventory has now exceeded the inventory of the same period of the previous two years by more than twice. If prices continue to fall, imported yarn may have an advantage in the market outlook and may still have a place in the Chinese market. However, overseas, as the epidemic has spread to Japan, South Korea, and Europe, and is likely to spread further, the international market’s concerns about the epidemic have become more serious. From the sharp decline in foreign stock markets and commodities this week, it can be seen that the market is worried about the epidemic from Macroscopically affect the normal operation of the global economy. Specific to international cotton yarns, first of all, in the short term, sluggish demand in China will continue to put pressure on yarn mills in Vietnam, Pakistan, India and other places. Secondly, Japan and South Korea, which have already experienced severe epidemics, are themselves important importers of textiles and garments. Many Vietnamese companies said that the current epidemic in South Korea has affected the export orders of Vietnamese yarn mills to South Korea. In addition, Europe and the United States are the world's major textile consumers, and the spread of the epidemic will inevitably affect terminal consumption. At present, due to the general pessimistic expectations of the epidemic in the international market, the confidence of the spinning mills in India, Vietnam, Pakistan and other countries has been hit, and the pessimism may accelerate the decline in prices.　　 On the whole, how the yarn market will go next depends on the recovery of the downstream. Domestically, although the government has introduced many positive measures to encourage enterprises to resume work. For example, some areas in Jiangsu have given a 5% reduction in electricity bills, social security, tax reduction and exemption measures, and some areas in Hebei and Sichuan have provided subsidies for enterprises to charter and pick up workers to help small and medium-sized enterprises overcome difficulties. But the epidemic abroad may have just begun. Only when the global epidemic is under control and countries have successively introduced economic rescue policies to stimulate the economy, the yarn market will have a clear turning point. I look forward to this day soon. Article keywords: 　Cotton Yarn Weekly