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Why does the Transaction of Imported Yarn Find a Way out

October 18 2019 13:24:46     CNCOTTON.COM (Linda)

SunSirs: Oct 18

According to the feedback of cotton yarn traders and weaving enterprises in Guangdong, Jiangsu, Zhejiang, Shandong and other places, the situation of inquiry, purchase and delivery of imported cotton yarn has continued to bottom up since early October and middle of October, especially 8S-16S Pakistan sirospun yarn, C21-C32 medium and high-end knitting yarn and OE10S-OE21S yarn. However, the sales of 40S and above high counts imported cotton yarn has not improved much, and the business focus of traders has adjusted to low counts and medium end self winding yarn.

According to the survey, cotton yarn trading enterprises, which have ‘suffered’ for several months and have large port inventory, have seized the opportunity to ship and reduce their positions. it is also known that at present, inquiry and contract signing of ‘futures yarn’ from Pakistan, Vietnam, India and other countries are also gradually picking up, and OE10S-OE16S and C20S-C40S are still the ‘main force’ for Chinese traders and weavers to pay attention to and import.

Why is the imported yarn turning around and trading relatively active? The analysis is as follows:

First, the prices of Zhengzhou futures have rebounded since the recent half month (from 11,970RMB/t to 12,830RMB/t), and the spot prices of cotton rose by 600-800RMB/t, the prices of domestic cotton yarn have alo been forced to keep up. While the quote in RMB of imported yarn stabilized (the prices of Indian yarn are relatively weak). Therefore, the price gap between domestic and foreign cotton yarn has narrowed significantly.

Secondly, garment and weaving enterprises in Guangdong, Jiangsu and Zhejiang have reported that they have received short and medium-term orders (mainly for jeans, bedding, towels, shirts, etc.). Although there is a gap with the expectation of ‘golden nine silver ten’, the situation of start-up, production and sales has continued to pick up, and the demand for low count yarn (below C40S) has increased.

Thirdly, the RMB exchange rate has rebounded significantly, which is conducive to the import of cotton and cotton yarn. Driven by the improvement of trade environment and other good news, in the past five trading days, the RMB exchange rate has rebounded nearly 1% from the vicinity of 7.14, and even rebounded more than 600 points in the offshore RMB on October 10.

Fourthly, China and the United States reached the first stage agreement in the 13th round of trade negotiations. On October 15, the United States suspended raising tariffs on $250 billion Chinese imports. The negotiations between have returned to the ‘right track’. The benefits to the cotton textile and apparel industry chain are obvious.

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