Price trend

This week, the cotton market fluctuated narrowly, with a slight upward shift in the center of transactions, while the price of cotton yarn remained stable. As of February 13, the spot price of 21S cotton ring-spun yarn in Shandong, China, was around 22,200 RMB/ton, unchanged from last week; the spot price of 32S cotton ring-spun yarn was around 23,600 RMB/ton, also unchanged from last week.

Market analysis

During the week, textile enterprises, fabric factories, and distributors in mainland China successively shut down for the holidays, resulting in very limited market transactions and a near halt in shipments. Textile enterprises in Xinjiang maintained stable operations, leading to an accumulation of inventory. Next week will officially mark the start of the Spring Festival holiday; attention should be paid to the resumption of operations after the holiday.

Operating Rate: Operating rates declined significantly this week, with most textile mills in inland areas shutting down for the holidays. However, operating rates in Xinjiang remained above 90%. As of February 12th, the operating rate of textile mills in major regions was 46.2%, a decrease of 23.64% compared to the previous week.

Inventory Situation: Yarn inventory increased significantly this week. With the Spring Festival approaching, textile mills in inland areas shut down for the holiday, and shipments were largely suspended. Production in Xinjiang remained stable, leading to a significant increase in inventory. Finished yarn inventory in Xinjiang is approximately 35-40 days, while inventory at inland enterprises is around 15-21 days. As of February 12th, yarn inventory at major textile mills in key regions was 32.8 days, a weekly increase of 1.55%.

On the cost side: This week, the cotton market showed narrow fluctuations with a slight upward shift in the transaction center. With the Spring Festival approaching, downstream demand weakened, and the willingness to replenish stocks decreased significantly; the basis was generally high, and ginning mills and traders were inclined to maintain prices. The USDA supply and demand report was bearish, and the cotton market is expected to remain largely unchanged before the holiday. Attention should be paid to the pace of replenishment after the holiday.

On the demand side: The grey fabric market has entered a shutdown period as migrant workers return to their hometowns. The overall industry operating rate has declined significantly, with only a few large manufacturers maintaining low-load operation of some production lines during the Spring Festival due to order support. Affected by the scarcity of spring orders, manufacturers' production enthusiasm is generally low, and raw material inventory is lower than in previous years. Most companies plan to moderately replenish their inventory after the holiday based on raw material price trends. According to statistics, as of February 12, the average operating rate of domestic cotton textile manufacturing was 8.22%, a decrease of 21.57% compared to the previous period.

Market outlook:

Cotton yarn prices are expected to rise slightly after the holiday. With restocking underway at various stages, market transactions will increase significantly, and the price of cotton 32S yarn is expected to fluctuate narrowly within the range of 21,600-21,200 RMB/ton.

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