Entering 2021, looking back on the fourth quarter of last year, the entire cotton yarn industry showed a roller coaster market. After experiencing a surge in October and a correction in November, the yarn market has heated up again since December. As of January 7, 2021, CY C32S pure cotton yarn closed at 23,480 yuan/ton, a sharp increase of 2,300 yuan/ton, or 10.86%, compared with the same period last month on December 7.
From the national cotton market monitoring system, as of December 31, 2020, new cotton picking across the country It is basically over; the national sales rate is 98.3% (of which Xinjiang is close to 100%); the national seed cotton processing rate is 92.8%, of which Xinjiang’s processing rate reaches 93.7%. It can be seen that by the end of December, Xinjiang acquisition and processing have been fully completed; However, the national sales rate during the same period was 43.2%, an increase of 4.8 percentage points year-on-year and 5.5 percentage points higher than the average of the past four years, of which Xinjiang sales were 41.2%. This shows that although in 2020/21, due to the “inversion” of Xinjiang cotton price production and sales in the early stage and the “inversion” of cotton futures, Xinjiang ginners and cotton companies have very low willingness to hedging or basis price sales of lint; even though the 500,000 yuan in 2020/21 The policy of rotating tons of Xinjiang cotton cannot be started because the price difference between domestic and foreign cotton is always higher than 800 yuan/ton. However, the sales progress of Xinjiang lint cotton this year is not slow. The price of cotton has been rising repeatedly since late November last year. As of January 7 this year, the CC3128B cotton index closed at 15,302 yuan/ton, an increase of 720 yuan/ton from the same period last month. Strong raw material prices have become one of the driving forces for the surge in cotton yarn. However, it can be seen from the picture above that the rise of cotton yarn is much better than that of cotton. It can be seen that this round of surge is not mainly due to rising costs, but more driven by demand. Calculated from the cost perspective, the current textile companies should all be profitable, and the profits are around 1,000-1,500 yuan/ton.
The yarn market in December is lively, prices continue to rise, sales are relatively optimistic, and yarn mills have basic supply. Not much, and the supply of high-count yarns is even tight. At the end of December, China’s yarn inventory index fell back to about 7 days in mid-October and continued to decline. As of January 7, the inventory index closed at 6.7 days, a record low. Looking at the first half of December, due to orders coming in from Jiangsu and Guangdong, market demand has increased, and manufacturer prices have shown a steady and rising trend. Around the middle of the year, due to the strong demand for high-count 60S combed yarn, the price continued to soar, and the supply of yarn mills was tight. As a result, the cotton yarn market continues to have a good atmosphere, with volume and price continuing to rise, effectively boosting market confidence. Merchants and weaving mills are gradually driven to purchase, yarn sales are heating up significantly, and yarn mills’ supply is tightening. In the second half of the year, although the overall market atmosphere eased slightly and transactions were average, due to the impact of environmental protection and power cuts in some areas, the supply of goods from yarn mills decreased, and prices were mainly stable and strong. It is understood that in order to seize the opportunity, textile companies have started production at full capacity, and most companies have chosen not to have a holiday during New Year’s Day. During the following Spring Festival, according to past practice, large enterprises have holidays according to national regulations, and small and medium-sized enterprises have longer holidays than large enterprises. However, there may be variables this year. The main reasons are: 1. Compared with last year’s Spring Festival, most textile companies did not expect that an epidemic would occur after the year, thus delaying production time. This year, taking advantage of the improvement in the market, some small and medium-sized enterprises have shortened the Spring Festival holiday. Thoughts; 2. It is currently the coldest winter, the overseas epidemic is still spreading, and sporadic cases have also occurred domestically. Many places in China advocate less movement of people during the Spring Festival. Many textile companies are worried about the same situation as last year at the beginning of the new year, and intend to keep non-local employees in the factory to celebrate the new year.
On the downstream side, although this round of increase is driven by demand, the increase in downstream gray fabrics is generally not as high as that of yarn. As of January 7, cotton gray fabric C32 closed at 5.28 yuan/meter, which was only an increase of 0.25 yuan or 4.97% compared with a month ago. China’s gray cloth inventory index closed at 20.5 days, which is not as good as the market trend in October. Therefore, many weaving mills have expressed that they are unable to bear the rising prices of cotton yarn. However, in the short term, yarn is still a seller’s market, and it is more likely that high prices will remain volatile.
Looking at the imported yarn again, people just shout “Good guy! “. On the one hand, the most obvious change is the exchange rate. As of the 7th, the central parity rate of the RMB exchange rate has risen above 6.5, and the exchange rate issue is directly related to the foreign exchange settlement cost of imported yarn. Theoretically, the higher the exchange rate rises, the lower the cost of imported yarn will be. However, the price of imported yarn inner discs has been rising steadily. Firstly, due to the recent downstreamDemand is strong, yarn finished product inventory is low, and some orders are affected by the Xinjiang-related bill. More weaving mills choose to replenish their stocks of imported yarn. As of the end of December last year, the inventory of imported yarn ports fell back to about 8.2 days, which is relatively low, and demand has raised prices. On the other hand, major foreign yarn producing countries such as India and Vietnam have seen their external quotations soar due to good domestic demand. Coupled with the recent shortage of containers, freight rates have increased and shipments have been delayed. Currently, traders are more cautious in ordering. After experiencing the “beautiful scenery” of the United States yesterday, US President Trump has “unprecedented and unprecedented” plans to pardon himself. The U.S. Congress has also officially confirmed that Biden won the election. Shortly after he takes office, he may give the U.S. economy a shot in the arm and trigger a rebound in the exchange rate. It will take time to verify where the market will go by then.
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