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SunSirs: Chinese Spot Lint Rose up to 400 RMB/ton in early April
April 16 2020 09:01:10SunSirs(Linda)

According to SunSirs data statistics, as of April 15, the domestic lint cotton spot market average price was 11,483 RMB/ton, up 2.35% from the beginning of the month and down 26.62% year-on-year. After the Ching Ming Festival, the news of crude oil production boost boosted the market, and oil prices rebounded sharply, once rebounding by 27%. The U.S. stock market picked up, ICE cotton stood at 50 cents, and the Chinese lint spot rose up to 422 RMB/ton, an increase of 3.81%.

Positive factors

The stock market rebounded and ICE cotton stood firm at 50 cents. Everything starts with a rebound in crude oil. At the beginning of April, Saudi Arabia considered a large-scale reduction in oil production and eased the oil price war with Russia. International oil prices soared, and stock markets and futures rose. As of April 14, ICE July cotton reported 53.18 cents per pound, up 3.42 cents / lb from April 2 or 6.87%. As of the 15th, Zhengzhou cotton's main 2009 contract settlement price was 11,425 RMB/ton, an increase of 525 RMB/ton from April 1, an increase of 4.82%.

Due to the impact of COVID19, the decline in US cotton planting area may increase. The NCC ’s planting survey conducted earlier this year showed that the United States ’intention to plant cotton fell by 5% year-on-year.

In 2020/21, Pakistan ’s cotton production is expected to be 6.3 million bales, a year-on-year decrease of 21%, due to a 12% year-on-year decrease in cotton planting area.

Negative factors

The domestic textile export data is not good, the cotton price rises stagnantly. On the domestic front, the latest data from the General Administration of Customs of China indicated that in March 2020, China's textile and apparel exports were $ 15.43billion, down 15.13% year-on-year; from January to March, China's textile and apparel exports totaled $ 45.265 billion, down 17.70% year-on-year. ; Among them, the cumulative export value of textiles is 22.694 billion US dollars, down 14.62% year-on-year; the cumulative export value of apparel is 22.57 billion US dollars, down 20.58% year-on-year.

The latest weekly report on US cotton exports shows that from March 27 to April 2, the number of U.S. upland cotton contracts decreased by 1,179 tons this year, a record low for the year. China, Indonesia, Pakistan, and South Korea cancelled a large number. The COVID19 affects global trade. Due to the need for anti-epidemic measures, the operating rate of non-medical related textile companies is lower than in previous years, and even irregular production shutdowns occur. Textile companies face the embarrassment of order cancellation and no new orders. Without an order, of course, there is no need to purchase raw materials, lint consumption makes the market worry.

Cotton prices rebounded at the bottom, and cotton yarn manufacturers remained intact. From February to the end of March, lint fell at a very fast rate, and the lowest fell below 11,000 RMB/ton. With the help of the first agreement between China and the United States, the price of lint cotton continued to rise years ago. At the end of the year, the company restocked its raw materials according to orders and production plans for the coming year. The plan can not keep up with the changes. A joint survey by the China Cotton Textile Industry Association and the China Textile Industry Association shows that as of the end of March, orders for direct export of cloth products in some textile clusters fell by 50% -70%, and orders for indirect export yarns decreased by about 30% -50%. It is difficult for textile companies to digest high-priced cotton. Because there are few new orders, low-priced cotton does not want to buy. Some yarn companies consider digesting inventory, lowering the selling price after the Ching Ming Festival, withdrawing funds, and then purchasing low-cost cotton to lower production costs. However, after the holiday, lint prices showed an upward trend, and price adjustments were shelved.

SunSirs analysts believe that the turning point of cotton consumption will not appear in the short term and it does not have the strength to rise sharply. Cotton prices have risen by about 400 RMB/ton in the past week. The duration of this rebound has improved, driven by the stock market and crude oil, but the demand side has not yet regained vitality. Futures are in turmoil, spot cottions haave a sigh of a slight drop. It is expected that the spot will be closed at around 11,400 RMB/ton.

If you have any questions, please feel free to contact SunSirs with support@sunsirs.com.

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