Cotton Yarn Weekly | The fall in raw materials is transmitted to the industrial chain, capital flees to the turning point of the epidemic

Since the new crown epidemic, the demand for masks, protective clothing and other products has skyrocketed, driving the entire non-woven industry chain. The prices of raw materials and finished products have risen several times or even dozens of times before the epidemic. Driven by interests, the industry Of enterprises have begun to increase production and capacity, and enterprises outside the industry have begun to transform into production, and the overall development is showing a trend of blowout. Compared with the popularity of the non-woven industry, the cotton spinning industry can only bow its head in shame. Since mid-March, the yarns that have been 'strength' can no longer withstand the huge pressure, showing a 'cliff-like' decline. As of April 16, the average domestic C32S price closed at RMB 19,218/ton, which continued to fall by RMB 118/ton from the previous week.　　 The “firm” yarn prices in the early stage were mainly due to the delay in the resumption of work and production of most companies after the outbreak, and the yarn quotations of the companies remained at the level before the Spring Festival. This is not so much to hold up the market's plunge, as it is to temporarily delay the process. At that time, the raw material cost of cotton was about 13,000 yuan/ton, a stagnant market plus a high cost, so the yarn fall was delayed for at least 20 days. By April, most of the spinning mills had started and resumed production, and low-cost raw materials had been transferred to the spinning field normally. According to the reactions of many textile companies, most of the cotton used in yarns currently costs around 11,000 yuan/ton, and the prices of upstream raw materials are gradually stabilizing. It is reasonable for textile companies to lower their product quotations under the condition that the cost of raw materials drops sharply. At the same time, the downstream consumer end 'can't afford to lie down,' so the yarn price finally couldn't support it under this kind of squeeze and downward pressure, and the downward pattern started.　　 On the other hand, from the perspective of the start-up load of the cotton spinning industry chain, as of April 16, the start-up load index of China's yarn and grey fabrics were 51.6% and 50.2%, which are both more than half. The inventories of the two have risen to 27.1 days and 29.2 days, both at high levels in the past three years. On the one hand, there is huge production capacity, and on the other hand, the products are severely unsalable. The pressure on enterprises can be imagined. Due to the recent lack of external orders and the extremely scarce internal orders, warehouses may be overwhelmed at any time. In order to reduce inventory and increase liquidity, many companies have intensified price wars between companies.　　 Compared with nearly half of the domestic operating rate, imported yarn has just entered a state of complete shutdown. As of April 16, the spot price of FCY Index C32S in RMB closed at 19,938 yuan/ton, a decrease of 45 yuan/ton compared with the same period last week. Among them, India began a 21-day blockade on March 25. On April 15, Prime Minister Modi announced that the nationwide 'blockade' will be extended to May 3, and some industries can start to resume work with approval. According to investigations, in early April, due to employees stranded in the mills in northern India, individual spinning mills started production. At that time, most of the operations in India were still suspended. Starting from the second week of April, spinning mills in Uttar Pradesh, Gujarat, Punjab and other regions of India can submit applications to the government for start-up. A small number of spinning mills resume production, and the restarted factories will start at 1-5% to produce the recently received Mainly small orders. Some factories have not resumed production due to lack of workers and no orders even though they were allowed to start work. Some factories reported that after completing domestic sales and a small number of export orders, if there are no more new orders, they may choose to shut down again in the end. From a macro perspective, since the current round of the new crown epidemic broke out in January, the impact will be concentrated in the GDP of the first quarter of 2020. The international rating agency Standard u0026 Poor's predicts that China's domestic GDP will shrink by 10% year-on-year in the first quarter of 2020. Compared with the news released by the Bureau of Statistics at 10:00 today, China’s gross domestic product in the first quarter was 20,650.4 billion yuan, a year-on-year decrease of 6.8% at comparable prices, which is obviously too pessimistic. But from another point of view, the current round of the epidemic is a global event and will inevitably lead to a slowdown in global growth. In this case, the country may pay more attention to people’s livelihood and employment rather than protecting GDP. Therefore, in the short term, GDP year-on-year May continue to fall. However, some financial institutions believe that the fuse of this crisis is the new crown epidemic, rather than financial systemic risks like 2008. Once the epidemic is controlled, the market will regain confidence and even retaliate.　　 In this context, since the beginning of January, the price of cotton has fallen by 20.47% and the price of cotton yarn has fallen by 6.52%. Because cotton yarn is transmitted downward by cotton prices, there is a lag, and the decline is less than that of cotton. From the perspective of historical prices, cotton is close to the lowest price. Due to the support of planting costs, it is expected that there is not much room for further decline. But the price of cotton yarn in the later stage is really hard to say. After all, even if the inflection point of the epidemic comes soon, because the recovery of downstream consumption still takes time, the price decline is still a long way. In view of this, many business owners no longer feel at ease selling goods, and many have switched careers to start other businesses: buying stocks, buying gold, speculating in futures... According to reports, the black swan encountered by the new crown epidemic this year, everyone can only sell. It is better to invest in other products. If the investment is right, doubling the capital is not a dream. Article keywords: 　Cotton yarn raw materials