Recently, a variant strain of the new coronavirus has appeared in the UK, and a new coronavirus case has been discovered in Antarctica for the first time. The risk of the global epidemic has escalated, and many places have urgently closed cities. According to data from the WHO website, as of 23:00 on the 22nd, Beijing time, the number of confirmed cases worldwide increased by 52,000 from the previous day, reaching more than 76 million, and the cumulative number of deaths reached 1.7 million. The domestic commodity market fell across a wide range, with Zheng Cotton giving back its previous gains sharply in just two days. The price of Zheng Cotton’s main 2105 contract fell from a high of 15,100 yuan/ton to around 14,500 yuan/ton.
As futures prices fall, spot prices also fall, while cotton-related capital companies, trading companies, and ginning companies increase their shipping capacity. Zheng Cotton’s rapid decline has caused some industry players to tighten their mentality. Why do cotton-related companies speed up their sales pace?
It is understood that on the eve of the fall of Zheng Cotton, the domestic cotton yarn market was in a hot situation. The volume and price of some yarns increased, and there was a “out of stock” phenomenon. However, the enthusiasm for cotton yarn transactions has not decreased much in the past two days. Mainly because most textile companies have locked in production orders and are steadily promoting raw material procurement and product sales in order to complete the work on schedule before the Double Festival. The decline in cotton spot prices has just met the goals of some downstream companies to reduce costs and increase revenue, and has provided space for upstream companies to ship goods.
In the early stage, a large number of Xinjiang ginning companies had resold lint cotton to trading companies and textile mills. In particular, basis difference companies accounted for most of the spot goods. With the current futures decline, their profit margins from cotton sales have expanded, and some Companies have even launched limited-time pricing, basis locking and other methods to encourage downstream customers to speed up transactions. Driven by the profit-seeking mentality of traders and the cost reduction goals of textile companies, spot transactions did not fall but increased. According to feedback from a large trading company, the short-term epidemic situation has worsened, and there is still room for recovery in the market outlook. Textile companies may also take this into consideration, so they have broken the previous thinking of buying up and not down, and decided to replenish some raw materials in the near future.
In addition, spot transactions have increased slightly recently, mainly to meet the needs of low-raw material textile enterprises. However, most enterprises said that they dare not add excessive inventory at will. Furthermore, cotton yarn, gray fabric and other markets will be affected in the near future. If there are any changes, slight adjustments will be made to cotton purchases in the future. </p
