Cotton Yarn Traders' Hasty Orders Are Likely To Be "Trapped"

According to the analysis of cotton mills in Henan, Hubei and other places, the cost pressure caused by the recent sharp rise in cotton raw materials has been gradually transmitted to yarn, cloth and clothing. However, compared with the transaction price of CF1701 and the national reserve cotton, which has risen by 2690 yuan/ton and 1913 yuan/ton in just 20 days, the cotton yarn only reported an increase of 500-1000 yuan/ton (300-800 yuan/ton actually); However, the quotation of grey cloth is in a state of stupidity, which is strongly resisted by domestic and foreign sales orders. A 50000 spindle spinning mill in Henan reported that the spot price of cotton in 2015/16 increased more dramatically due to the bidding price increase and transaction price of the national reserve cotton, and spinning C21S, C32S, C40S Instead of profit, yarn has a loss of 500-1000 yuan/ton. In order to complete the order, textile enterprises can only increase the price to compete for the national reserve cotton from the traders, virtually becoming the "executioner" of raising the cotton price, just like the current property market - buyers and Cotton price To form an "endless cycle", if we want to jump out of this "strange circle", we can only reduce production or stop production. The outstanding orders can only delay delivery or terminate the contract.

It is understood that by the late June National reserve cotton Under the influence of the violent rise of the auction transaction price and the spot price of cotton, cotton yarn operators and yarn mill offices in Guangdong, Zhejiang, Jiangsu and other places have reduced, stopped picking up goods from cotton mills or postponed procurement in order to avoid the risk of "intestinal obstruction", reduce the capital occupation, and O10S-OE21S, C21-40S yarn inquiry and transaction were significantly less than in May and June. Traders said that, on the one hand, some cotton yarn factories at or below C40S generally reported an increase of 400-500 yuan/ton, and some large factories even reported an increase of 800-1000 yuan/ton. However, downstream intermediaries and weaving mills were not strong in digestion, and it was difficult to negotiate and clinch a deal on yarn prices. Traders were worried about "riding a tiger"; On the other hand, cotton textile mills, garment enterprises and foreign trade companies have a strong expectation that the relevant national departments will introduce policies to control cotton prices in the near future, such as setting up a "special textile market" for national reserve cotton competition, increasing the average daily rotation of national reserve cotton to 50000 tons or even 70000 tons (20% - 30% of non public inspection or spot check), and increasing the issuance of processing trade and tariff sliding cotton Import quota wait.

Some institutions and media speculate that the medium and long-term rise channel of cotton has been opened, the rise of cotton yarn, grey cloth, clothing, and foreign trade contract prices will gradually "become logical", and the "intestinal obstruction" problem of the industrial chain will soon be cleared. The author does not agree with this view: first, China's economic data is under great pressure to stabilize, and cotton consumption will fall into a low after the peak season of March June; Secondly, not only will the EU economy and stability become more uncertain, but the Federal Reserve may also "hit the nail in the hole" by raising interest rates, and the rebound of commodities will be a long way off; Thirdly, traders and speculators "turned the clouds and turned the rain", which caused serious damage to the real economy such as cotton processing enterprises and cotton textile mills, and threatened the entire national economy. The country could not hold more than 10 million tons of national cotton stocks without doing anything; The Indian government will also take measures to suppress speculation and let cotton prices return to normal; In addition, American cotton is growing well, and Australian cotton has also entered the Chinese market in a large scale. Brazilian cotton with "poor quality and low price" has become the focus of Chinese textile enterprises, and ICE will take the lead in declining; The key factor affecting Zheng Qi is not the fundamentals, but the price at which the speculative funds can make a profit when they are available.