Raw material shocks cause market downturn, companies may start Dragon Boat Festival early

As the Dragon Boat Festival approaches, after a wave of recovery in May, domestic cotton yarn demand collapsed severely in June. As of June 18, the average domestic C32S price closed at RMB 18,682/ton, a decrease of RMB 40/ton from last week.　　 This week, the upstream cotton ushered in a decline after a small rise. The cotton spot CC3128B index closed at RMB 1,2011 per ton, down RMB 72 per ton year-on-year, or 0.59%. According to the feedback from some mainland cotton warehouses, the current inventory and spot are relatively stable, and the number of sunrise warehouses fluctuates significantly with futures. When the futures price falls, the number of outbound bills of lading will increase, and the futures price will increase, and the shipment volume will decrease. According to feedback from some textile mills, when the epidemic situation at home and abroad has not been fully controlled and the yarn inventory has not been quickly digested, as long as the market is positive, textile companies will surely lower their purchase prices. Therefore, many trading companies also understand the truth. Generally, when the futures price drops, they rush to provide the spinning mills with price-resource orders. Some traders get meager profits, and some may fulfill their established sales tasks. , And some people may withdraw corporate funds in time. In a competitive landscape where there is too much money, all parties will inevitably start a price war to reach a deal. Over time, participants become exhausted and their enthusiasm for operation also decreases. Along the way, you may find that cotton prices will fall as long as there is no favorable market stimulus, which seems to have become a hidden law. On the other hand, the original downstream sales were bleak, coupled with the volatile raw material cotton futures market, the willingness of textile companies to replenish the inventory has dropped to a freezing point. But even so, most textile companies are reluctant to lower prices, mainly because the price of lint in the early stage has risen and the cost has risen. If it drops again, it will inevitably lose more.　　 At present, the cotton yarn market has entered the off-season in June, and the overseas epidemic has not yet been well controlled. Beijing has reproduced local confirmed cases, and the market is worried about the outbreak of the epidemic again. The superposition of the above two factors makes the cotton yarn market, which was originally poorly sold, even lighter. Spinning enterprises tend to take the goods at the same price to remove inventory, and the prices are stable and declining. Under the situation where the bottom has a bottom and the top is under pressure, some industry players believe that the market lacks a trending market. Under the strategy of seeing more and less moving, their enthusiasm for operation has obviously cooled. In terms of cost, according to the current cotton spot price, the processing cost of C32S is about 18800-19300 yuan/ton, while the current domestic spot price is about 18500-19000 yuan/ton, and textile enterprises lose about 300 yuan/ton. In terms of start-up, following the profound lessons that high inventories have brought huge damage to textile companies, under the epidemic crisis this year, most textile companies have strictly controlled production and sales and maintained a low start-up and low inventory operation mode. At present, it is not common for textile companies to further reduce and stop production. However, due to the gradual decline in shipments, the comprehensive inventory of textile enterprises still rose slightly. The signs of poor operating rate of downstream weaving mills are even more obvious. In terms of different regions, the start-up rate in Weifang, Shandong has been reduced significantly, and the current start-up rate of enterprises operating is about 30% to 5%. Due to poor market demand, the weaving factory has long wanted to take a holiday. This large-scale holiday with the 'wheat harvest' is expected to last until the end of June. The end of June will face the Dragon Boat Festival. It is expected that the start-up will be slower. The demand in Jiangsu and Zhejiang is relatively good. The Lanxi and Nantong fabric factories can still start up more than 50%, mainly because the demand for white billet can still be maintained. However, the demand for denim in Jiangsu and Zhejiang is very poor, and the denim operating rate has also been significantly reduced; Guangdong opened in May The rate once recovered to 4-5%, and there was a significant drop in June. Generally speaking, under the sluggish off-season of the textile industry, manufacturers have successively started holiday arrangements. It is expected that this year’s Dragon Boat Festival holiday phenomenon will be more common than in previous years, and the holiday duration will be extended appropriately. Weaving factories will begin to take holidays one after another within this week. At the same time, there are few orders before the holiday, and it is unlikely that the market will recover after the holiday. In terms of imported yarn, the price of imported yarn continued to stabilize this week. As of June 18, the spot price of FCY Index C32S discounted to RMB closed at RMB 18,526/ton, down 21 RMB/ton year-on-year. Domestic and foreign prices were upside down and maintained at RMB 170/ton. about. Although the epidemic in Southeast Asia has not been completely controlled, for the sake of economy, India, Pakistan and Vietnam are gradually restoring production capacity. Recently, the import volume of imported yarn is gradually recovering or even increasing, and the price of imported cotton yarn has also risen to varying degrees. But looking back at the domestic downstream situation, it may have a certain impact on the production and sales of domestic low- and medium-branch varieties, but there is a question mark here as to how long it will last. Article Keywords: 　Cotton Yarn