Price trend:

According to the SunSirs' commodity market analysis system: Last week, yarn trading volume decreased slightly, with Xinjiang performing better than inland regions. Inland inventories accumulated slightly, and orders were mainly small and short-term. Downstream fabric manufacturers' orders remained stable but showed a slight decline, providing weak support. Overall prices remained largely unchanged. As of December 5th, the reference price for 21S cotton ring-spun yarn in Shandong province was around 21,900 RMB/ton, unchanged from the previous week; the reference price for 32S cotton ring-spun yarn was around 23,200 RMB/ton, also unchanged from the previous week.

Market Analysis

Last week, yarn trading volume decreased. The price of 32s cotton yarn remained stable, while the price of 40s and higher count cotton yarn increased slightly. New orders for textile enterprises in mainland China decreased significantly, mainly consisting of small orders, leading to inventory accumulation. A small number of textile enterprises reduced production capacity, indicating a clear off-season. Sales in Xinjiang were better than in mainland China, with operating rates remaining above 90%, although the pace of new orders slowed down. Downstream textile production remained stable but with a slight decrease, and orders remained scarce, leading to procurement based on demand. The off-season is expected to become more pronounced in the coming period, and prices are projected to fluctuate weakly.

Operating conditions: Last week, mainland Chinese textile companies received limited new orders, mainly small orders. Inventory accumulated, and a small number of textile companies reduced their operating capacity. Operating rates in Xinjiang remained relatively stable at around 90%, while those in the mainland were around 60%. As of December 5th, the operating load of textile companies in mainstream regions was 65.3%, a decrease of 0.31% compared to the previous week.

Inventory Situation: Last week, inventory at mainland textile companies increased significantly, but there was temporarily no inventory pressure; production of 40s and above yarn in Xinjiang was still on schedule, with approximately 35 days of finished yarn inventory in Xinjiang and about 15 days of inventory at mainland companies. As of December 5th, the average yarn inventory for textile companies in major regions was 30.2 days, a weekly increase of 0.67%. 

In terms of costs: The cotton market continued its volatile but generally upward trend last week.  Ginned cotton supply continued to increase, leading to a build-up of commercial inventories and a gradual increase in supply pressure. Downstream textile companies were in their off-season, but with the release of production capacity in Xinjiang, demand in Xinjiang was significantly stronger than in other parts of China, resulting in a clear divergence in demand. The cotton market is expected to maintain a range-bound trading pattern in the short term.

Demand side: Downstream weaving operations remained at a low level. As of December 5th, the operating rate of cotton textile weaving was 44.25%, a decrease of 0.98% compared to the previous week.

Market Outlook:

As of December 5, downstream weaving orders remained weak, and with the approaching Lunar New Year overseas, support from overseas orders was insufficient. Overall domestic and international demand was weak, and without clear drivers in the supply and demand fundamentals, the weak and volatile trend in the cotton yarn market is expected to continue in the short term.

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