After the Spring Festival holiday, cotton and cotton yarn showed a simultaneous upward trend. At present, the downstream industry is in the process of gradually resuming work after the holidays. The market is still mainly focused on completing orders before the Spring Festival, and spot purchases and sales are still light. It is expected that after the Lantern Festival, downstream textile enterprises will fully resume work, and the market will gradually enter the critical stage of verifying demand.
Global cotton textile consumption remains weak
Recently, US cotton weekly signings have improved. As of the week of January 19, 2022/2023 U.S. upland cotton weekly contracted 48,500 tons, a weekly increase of 2%, of which China signed 13,400 tons and Turkey signed 12,500 tons; the 2022/2023 U.S. upland cotton export shipment was 3.99 million tons, a weekly decrease of 4% and an increase of 24% compared with the average level of the previous four weeks, including 12,900 tons in China and 9,200 tons in Pakistan. Although the weekly signing data of US cotton has improved, it is still weak on a year-on-year basis, and the US cotton balance sheet is still better than the global cotton balance sheet. If the phased export data is favorable, cotton prices may experience a strong trend, but global supply continues to loosen and factors such as weak cotton spinning demand will limit its upper height.
In November 2022, the U.S. textile and apparel import volume was 6.89 billion square meters, a year-on-year decrease of 23.9% and a month-on-month decrease of 11.7%, marking the sixth consecutive month of decline. The import volume reached US$86.8, a year-on-year decrease of 15.6%. As the most important textile importing country, the United States’ import demand continues to weaken, with a sharp year-on-year decline. Moreover, domestic wholesaler inventories are at historically high levels, and subsequent import demand is likely to continue to be weak.
There are not many variables on the global supply side in 2022/2023. Pakistan’s output is basically determined and cotton purchases are basically completed. According to statistics from the Pakistan Cotton Ginners Association (PCGA), as of December 31, 2022, Pakistan’s 2022/2023 new cotton market volume has reached 715,000 tons, a year-on-year decrease of 37.2%; India’s 2022/2023 cotton market progress continues to be significantly skewed Slowly, as of January 29, 2023, India’s cumulative cotton market volume in 2022/2023 is approximately 1.9951 million tons, a cumulative decrease of approximately 1.4227 million tons compared with the three-year average.
On the whole, on the supply side, the output of U.S. cotton and Pakistan is basically determined. India’s launch continues to be slow, causing market concerns. Although the market has lowered India’s output, the cumulative launch year-on-year gap is still huge; Brazil will plant more than half of the cotton in 2022/2023, and the market is generally It is expected to be a bumper harvest year, and the current supply-side variables are mainly concentrated in India. On the demand side, weak performance continues. U.S. cotton contracting data has improved, but is still weak year-on-year. The start-up of Southeast Asian textile companies is at a low level, and U.S. imports of textiles are also continuing to weaken.
Textile enterprise inventories are at low levels
Zheng cotton has been oscillating higher since the end of November 2022, with the 2305 contract falling to a minimum of around 12,200 yuan/ton. Supported by the cost of new cotton, demand recovery has become the main logic of disk trading. After the domestic epidemic prevention and control policies were optimized, upstream cotton processing and public inspections accelerated significantly, and the gap with the same period last year continued to narrow. As of January 31, 2023, the total cumulative processing volume of lint cotton in Xinjiang was 5.0114 million tons, a year-on-year decrease of 3.45%; Xinjiang cotton transportation has also returned to normal, and freight rates have also declined; downstream cotton yarn transactions and demand have improved, and cotton yarn inventories of spinning companies have decreased. It has reached a low level in the same period last year, but due to the limited recovery of orders, cotton procurement is also cautious. After the Spring Festival holiday, the impact of the first wave of the epidemic in China has passed. Residents’ outings and consumption improved significantly during the Spring Festival holiday, which also boosted market confidence to a certain extent, but the final degree of demand improvement still needs to be verified.
In the international cotton market, the biggest variable on the supply side is still India’s output. Global cotton spinning demand may continue to be weak. Structural differences show that the U.S. cotton balance sheet is still better than the global balance sheet. Therefore, U.S. cotton export demand is still determined by short- and medium-term price performance. The essential. After the domestic epidemic prevention and control policy was optimized, the main line of cotton trading gradually changed from the expectation of demand recovery to the situation of demand landing. Cotton stocks and cotton yarn stocks of textile enterprises are at low levels. There is a certain demand for replenishment in the market, but the digestion of gray fabrics is obviously poor. In cotton yarn. The market outlook needs to continue to pay attention to the demand performance of cotton spinning companies. In the short term, Zheng Cotton maintains a strong oscillation view.
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