Domestic Textile Industry Should Deal With Upstream Cotton Price Fluctuation Risk In The Short Term

 

Zheng cotton main contract settlement price of 11015 yuan / ton, compared with the previous week fell 745 yuan / ton, or 6.3%; on behalf of the mainland standard grade lint market price of the national cotton price B index average price of 12215 yuan / ton, compared with the previous week fell 410 yuan / ton, or 3.2%.

 

    ICE cotton main contract settlement price 53.68 cents / pound, compared with the previous week fell 6.81 cents / pound, or 11.3%, representing the average price of the international cotton index (M) on behalf of imported cotton, China's main port average price of 67.62 cents / pound, compared with the previous week, 3.08 cents / pound, or 4.4%, and the cost of import of RMB 11889 yuan / ton (calculated by 1% tariff, including port and freight), decreased by 525 yuan / ton, or 4.2% percent, compared with the previous week. The difference expanded 114 yuan / ton compared with the previous week.

 

Reserve cotton bid price limit of 12901 yuan / ton, the difference between inside and outside cotton price has expanded again. In March, the price difference between inside and outside of cotton for 18-20 consecutive days exceeded 800 yuan / ton for 3 consecutive days.

 

According to the national cotton market monitoring system, as of March 20th, the total sale of 5 million 786 thousand tons of seed cotton and lint cotton was reduced by 209 thousand tons as compared with that of the previous year. The total output of processing cotton lint was 5 million 734 thousand tons, a decrease of 152 thousand tons compared with that of the previous year, and the processing rate of 99.1%.

 

With the continuous improvement of domestic epidemic prevention and control situation, the recovery rate of textile enterprises has increased rapidly, but the market is worried about the order risk, and the stock of cotton yarn has increased, and the price has dropped slightly. The conventional yarn is 130 yuan / ton higher than the domestic yarn, and the polyester staple price has dropped by 250 yuan / ton to 6028 yuan / ton.

 

China has basically achieved no new local cases. Data show that except Hubei and other places, the national recovery rate has exceeded 90%, of which the eastern coastal area has nearly 100%. The development and Reform Commission said it would promote relevant reserve policies in a timely manner and increase the intensity of the policy. The general office of the State Council said it would increase its burden reduction and stabilize its posts and speed up the implementation of the policy of reducing taxes and lowering taxes. In addition, the central bank's 20 day loan market offer rate (LPR) remained unchanged, indicating that the next policy space is adequate. Compared with the Fed's "one down to the end" policy, China's policy force has maintained a good momentum and has played a positive role in consolidating the RMB exchange rate and stabilizing foreign capital confidence.

 

In order to save the liquidity crisis in the international market, the Fed carried out a 500 billion dollar repurchase and announced a liquidity swap with 9 central banks. Dozens of countries and regions followed the interest rate cut, indicating that the global economy or epidemic fell into recession. Customs data show that the export volume of textiles and clothing in China dropped more than 1-2 in the month.

 

With the outbreak of foreign epidemic, restrictions on economic activities in Europe and the United States are likely to further impact on China's textile exports. The domestic textile industry should not only deal with the risk of upstream cotton price fluctuations in the short term, but also undergo the test of shrinking demand at home and abroad, so we need to pay close attention to the release process of international market risk and the time when foreign epidemic turning points will come. As cotton prices continue to refresh low, it is estimated that cotton planting areas in major countries may be substantially reduced this year, or will play a supporting role in cotton prices.