1. Cotton spinning raw materials and various types of yarns have increased across the board
Price changes of main cotton spinning raw materials and products in February
Unit: Yuan/ton
February coincides with the Spring Festival holiday, and the demand for replenishment at the end of the year has been relaxed before the holiday. The industry is generally cautiously optimistic about the post-holiday market and does not dare to stock up on large quantities, mainly to meet short-term order needs. As can be seen from the above table, during the pre-holiday period in February, except for viscose staple fiber and rayon yarn products, which had higher price increases, the price increases of other raw materials and yarn products were smaller compared with January, and the basic changes were not significant. After the Spring Festival, the prices of various raw materials and yarns have sharply improved. Affected by the rise in bulk commodities, textile raw materials led by polyester staple fiber have risen sharply. The average price of polyester staple fiber after the holiday is 7,541 yuan/ton, a sharp increase of 21.92 yuan from the average price in January. %. Viscose staple fiber has continued its strength since February. The average price after the holiday exceeded 15,000 yuan/ton, a 21.08% increase from the average price in January. The surge in raw materials has also driven up downstream yarns, with rayon yarn and polyester yarn also increasing by more than 10%. During the Spring Festival, foreign cotton continued to hit new highs, which brought upward momentum to the domestic cotton market. After the holiday, cotton spot prices exceeded 16,000 yuan/ton, setting a new high in the past two years. Affected by the rise in raw materials and the improvement in demand, the downstream cotton yarn market will increase even more than cotton after the year. The spot market once saw a phenomenon of chaotic quotations and invalid orders.
Compared with last year, only polyester staple fiber and polyester yarn prices at the beginning of the year were lower than the same period last year. The rebound in the market that began in the third quarter of last year was significantly weaker than that of cotton and viscose varieties. Polyester products still have a certain amount of supply. room for growth. Since the rebound of viscose staple fiber in mid-December last year, the price increase has been fierce and continues to this day. It can also be seen from the price difference of cotton viscose that the long-term maintenance of 4,000 yuan/ton last year has approached the current level of about 1,000 yuan/ton. The increase is obviously too large. It is expected that the short-term increase in viscose will be limited, and we will wait and see the price difference of cotton viscose. Return to a reasonable range. The overall cotton price is still on a stable upward trajectory, and cotton is still at a low level from the historical price point of view. Recently, USDA has significantly increased global cotton consumption and total production in 2021/22, while also significantly reducing global cotton ending stocks, and focusing on increasing cotton demand in major textile countries such as China and India. Overall, cotton prices still have room to rise.
II. Operation status of cotton textile industry
China yarn inventory (days)
Data source: TTEB
China yarn load (%)
Data source: TTEB
Judging from China’s yarn inventory announced by relevant agencies, yarn inventory has been significantly reduced since the end of 2020, and the enthusiasm for restocking at the end of the year is evident. At the beginning of 2021, yarn inventory dropped to about 6 days, which is far lower than the same period in previous years. According to a survey by China Yarn Network, during this round of replenishment, a large amount of yarn was transferred from production companies to market middlemen. As the new year approaches, yarn stocks rise slightly and last until the end of February. It can be seen that the trading market will not be as prosperous as the market performance after the new year. Looking at the production load, we can also see that since the resumption of work during the Spring Festival, the production load has rebounded rapidly, which is the same as in 2016 and 2019, but significantly lower than in 2017. From the perspective of inventory and production, this year’s post-holiday market is not special compared with previous years, and is very dull compared with the “rare-in-ten” market situation for raw materials.
Pure cotton yarn inventory (days)
Data source: TTEB
Pure polyester yarn Inventory (days)
Data source: TTEB
Rayon yarn inventory (days)
Data source: TTEB
From the perspective of product inventory breakdown, pure cotton yarn products performed best. The inventory at the end of February was only 6.4 days, significantly lower than the same period in previous years. The inventory of rayon yarn is 11.5 days. The inventory has continued to decline since December 2020, indicating strong downstream demand and also providing impetus for this round of substantial price increases of viscose raw materials and yarns. The inventory of pure polyester yarn at the end of February was 13.3 days, which was significantly higher than the same period in previous years, and the changes in inventory are not optimistic. At the beginning of 2021, the inventory of pure polyester yarn was 5.5 days, slightly lower than in previous years. Then the inventory level continued to rise. Even when the prices of polyester staple fiber and polyester yarn rose sharply after the holidays, the inventory level was still rising. The downstream acceptance of polyester products is obviously weaker than that of viscose, so in the short term, the prices of polyester staple fiber and polyester yarn will face adjustments.
National gray cloth inventory (days)
Data source: TTEB
Cotton gray fabric inventory (days)
Data source: TTEB
Rayon gray fabric inventory (days)
Data source: TTEB
Since 2021, gray cloth inventory has been relatively volatile Stable, with an overall slight decrease. At the end of February, the national gray cloth inventory was 19.8 days, better than in previous years. Among them, the cotton gray cloth inventory was 19.8 days, a slight decrease from the previous period. The price of cotton gray cloth was driven by the increase in cotton yarn prices, and the price was in the stage of supplementary increase. From the inventory changes It seems that the demand has increased. The inventory of rayon gray cloth is 20 days, which is at the average level compared with previous years. The overall inventory changed little in February. From the demand side, it is not as strong as rayon yarn. Faced with the rapid rise in raw material prices, downstream manufacturers wait and see. Mostly.
3. Multiple factors drive the rise of the textile market
From a macro level, China’s GDP will maintain a positive growth of 2.3% in 2020, and the national The overall economy is running smoothly, and with the nationwide epidemic under effective control, the public has full confidence in the full economic recovery in 2021. With the gradual popularization of vaccines in Europe and the United States, the development of the global epidemic has been greatly curbed, with new cases in the past month The number has steadily declined, and during the Spring Festival it hit the lowest level in the past six months. After taking office, U.S. President Biden issued 17 executive orders, saying that his first priority was to control the epidemic, and later proposed a US$1.9 trillion economic relief package. plan, which also brought inflation expectations to the global commodity market. Its direct impact is to cause crude oil, chemicals and crops to rise rapidly.
The textile industry will be hit hard by the shrinking domestic and foreign consumption in 2020 and will recover. Expectations have begun to sprout from the end of the year. During the 2021 Spring Festival, the country advocates celebrating the New Year in situ. In order to reduce the pressure of epidemic prevention and control, companies across the country have responded by introducing measures to encourage employees to celebrate the New Year in situ. This has alleviated to a certain extent the pressure on textile companies that are short of soldiers when rushing to make orders. Feedback from most companies shows that the resumption rate after the Spring Festival this year has increased compared with previous years. The accelerated production pace of enterprises coincides with the increase in raw material prices, which makes enterprises more willing to ship and purchase goods. The reduction in the circulation of goods on the market further supports product prices. Since then, the continued rise in raw material and product prices has been driven more by expectations for the industry’s improvement and global inflation expectations. It has been divorced from the fundamentals of the industry and has become an irrational rise. Judging from the recent actual transactions in the textile market, downstream acceptance of price increases is limited, and textile companies also face a dilemma when receiving orders.
Recently, bulk commodities have begun to correct, with polyester short fiber futures out of six consecutive negative days and cotton futures prices falling below 16,000 yuan/ton. As raw material prices fall, wait-and-see funds are expected to enter the market at bargain prices. The order situation of textile companies is generally good, and some companies said that the construction schedule in the first half of the year is full. From the perspective of the whole year, the textile and apparel industry is in a rebound period, with terminal consumption growth expected to be relatively strong, and the raw materials and spinning and weaving industries are generally improving in the long term. However, with the market rising rapidly and social funds excessively involved in the futures market, entities still need to be wary of short-term market risks. </p
