According to feedback from cotton yarn traders in Guangdong, Jiangsu and Zhejiang, etc., due to the fact that the main ICE cotton futures contract has continued to consolidate at 82-85 cents/pound in the past two weeks, except for OE16-OE26S and other medium and high-count imported yarn inquiries and shipments are unsatisfactory. In addition, the trading volume of C21S-C40S cotton yarn in India, Pakistan and Vietnam has shown obvious signs of slowing down compared with before mid-May, and the actual contract price of customs clearance cotton yarn has also dropped by 50-100 yuan/ton.
A medium-sized textile import and export company in Foshan stated that since mid-May, sales of Pakistan’s 8S-16S siro spinning yarn have continued to be light, and downstream weaving factories and middlemen have expressed concerns about C21, C26, The procurement of C32S knitting yarn also fluctuated and weakened. 40S and above compactly spun Indian yarn and Vietnamese yarn were not favored by Chinese buyers due to high quotations (“upside down” inside and outside) and low bonded and customs clearance quantities. The company reflected that due to the recent continuous decline in the price of the CF2109 contract, coupled with the impact of domestic cotton spinning companies’ expected reduction in cotton yarn ex-factory prices due to slowed shipments and rising capital flow pressure, as well as the sharp appreciation of the RMB, ports in Vietnam, Pakistan, There is a strong atmosphere of price cuts and shipments of foreign yarns from Uzbekistan and other producing areas.
However, in the past week or so, some large and medium-sized yarn mills and domestic traders in India have not only failed to “divide” the domestic cotton yarn quotations with ICE and Zheng Cotton, but the domestic cotton yarn quotations have remained stable. It was weak and fell back, but went up slightly against the trend, creating a very “independent” market, which contrasted with the steady downward trend of cotton yarn quotations from other origins.
Why do Indian cotton yarn quotations “not follow the rules”? The industry summarizes the following points:
First, although ICE fell below 82 cents/pound, the domestic cotton futures price in India is firm at the CCI floor price. Cotton planting area in 2021 It continues to rebound under the background of substantial postponement, the gradual control of the epidemic, and the accelerated recovery of cotton spinning mill production;
Second, since the sudden outbreak of the epidemic in India in mid-March and out of control, weaving, fabrics and Clothing and other enterprises have a high proportion of production reductions and suspensions, and the consumer demand for cotton yarn has plummeted. Therefore, domestic sales and export quotations of cotton yarn have fallen sharply. At present, with the turning point of the epidemic and the return of orders from Europe and the United States, cotton yarn quotations have begun to recover;
Third, the exchange rate of the Indian rupee against the US dollar continues to fall. According to statistics, as the COVID-19 epidemic in India worsened in March/April, the exchange rate of the Indian currency rupee against the U.S. dollar fell by more than 3% in April alone, and the depreciation of the rupee continued in May. Therefore, in order to avoid being “snatched”, spinning mills can only take Coping with price increases. </p
