资讯 1 10 英文网 283 Cotton News 594026 Why is cotton reserves so popular with mills? 2020-07-15 09:13:22 yangfang
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Why is cotton reserves so popular with mills?
2020-07-15

According to the statistics, from July 1 to 13 2020, China National Cotton Reserve Corporation has a total listed cotton reserve of 72,494.5561 Yuan/ton, with a turnover rate of 100%. In the context of the global COVID-19 epidemic and the difficulty of the cotton textile industry, the reasons for the continuous high turnover rate of cotton reserves are worth exploring.  

 

Reserve cotton is favored by textile enterprises due to its high cost performance. From July 1 to 13 2020, 147 enterprises have dealt in the cotton reserve bidding, among which, there are 104 textile enterprises, accounting for 70% of the total number of enterprises that have dealt; there are 43 trading enterprises, accounting for 29.3%. Both textile enterprises and trading enterprises showed high bidding enthusiasm, especially textile enterprises. According to textile enterprises participating in bidding, prices of reserve cotton with the same indicator were significantly lower than those of market spot, using reserve cotton as raw materials to produce yarn products with the same quality showed obvious advantages, decline of production cost results in the decline of product price, thus improving the competition advantages. Data shows the average transaction price of cotton reserves at present is about 500 Yuan/ton lower than the spot market price. Moreover, compared with the spot price, it is more convenient in transportation for bidding for reserve cotton in the mainland warehouses than price-point trading of Xinjiang warehouses. 

 

Changes in the consumer market have prompted structural changes in products. At this stage, the epidemic situation at home and abroad is quite different. Foreign trade orders have declined sharply, domestic demand has steadily increased, and many export-oriented textile enterprises have to turn to domestic market. According to the bidding enterprises, mid-to-high-end combed yarn products are mainly oriented to foreign market, while mid-to-low-end carded products are mainly oriented to domestic markets. In case of a decline of foreign trade demand, meeting domestic market has become a necessary choice for enterprises to adjust business strategies. Affected by this, the cotton used to produce carded yarn is very popular in the market, which is not only because the price is low, but the most important thing is that the produced product is easy to sell and does not carry excess inventory. Under the protect of the national ensuring six priorities and stability in six areaspolicies, domestic consumption market is showing vigor and vitality. Interviewed bidding textile enterprises said that production is running normally at present, domestic orders are sufficient, yarn inventory is low, and some products are in short supply. The current cotton and cotton yarn sales price ensures certain profits for textile enterprises, so reserve cotton has played a positive role in promoting the domestic cotton spinning industry to build the domestic market ecosystem.  

 

Value investment depression shows for reserve cotton. The global COVID-19 epidemic has led to record low prices for many commodities and long-term investment value shows. In the future, with the vaccine trials under way, COVID-q9 will be eventually be brought under control, and textile consumption market will begin to recover. In this expectation, the market for future cotton prices remain optimistic. Participating in the auction of large trading enterprises, their active participation in the reserve cotton auction is mainly for own use and sale, and the amount of agent auction is very small. Once there is a suitable price in the market, they will follow the market to sell, and vice versa they will store cotton and wait for a higher price later. In addition, the current cotton price is at the bottom of the market range, the price of reserve cotton per ton is 500 Yuan lower, and the investment value of investment is obvious.  

 

Futures and spot prices link, leading to high turnover rate. On June 29, Zhengzhou cotton went upwards unsteadily, CF2009 contract rose to the highest 12,250 Yuan/ton from 11,600 Yuan/ton, and until today it shows a sign of temporary consolidation. In the rising process of half a month, coincided with the sale of reserve cotton, rise of both futures and spot has increased the bullish atmosphere in the market, leading to the continuous all transaction of reserve cotton. According to bidding enterprises, the higher the price of reserve cotton, the more daring to bid, and if prices fall, they will wait and see, so as to take corresponding strategies. The total amount of sale of reserve cotton this time is 500,000 tons, and despite the increase in market supply, due to the limited quantity, textile enterprises and traders still focus on this years commodity cotton and new cotton. After all, 500,000 tons of reserve cotton is not enough to meet the consumption of the market for a month. Textile enterprises believe, the purchase focus in the future will still be commodity cotton. Now, enterprises are producing at full capacity, mainly relying on commodity cotton, with reserve cotton as a supplement. After all, there is certain uncertainty in bidding, abortive auction will affect the normal production of enterprises, so they mainly rely on commodity cotton inventory.