Downstream orders are not good cotton prices are difficult to "rise"

In recent days, the cotton price has remained weak, and the stable spot market has also shown a downward trend. The market’s anticipation of the sell-off of the State Reserve Bank is getting stronger and the price is expected to be low, which will have a big bearish effect on the cotton market.

Cast stocks are expected to suppress cotton prices

Last year, the country began dumping stocks in July and ended at the end of August. Prices were higher at the end of the year, and the final transaction was very small at less than 70,000 tons. On the other hand, this year, the quality of domestic cotton is relatively poor, and it is no longer able to meet the needs of textile companies. Therefore, the market is more urgent for the country to throw away storage.

There are some changes in this throw compared to last year. The first is that it may be advanced in time, and it is expected to start dumping in April. The second is that the price may be reduced significantly and it is closer to market demand. Finally, the quality of reserve cotton that is ready for delivery will also be considered.

As the market has placed this year's stockpiling on the above expectations, it has formed a greater negative impact on the spot market. Textile companies are not in a hurry to purchase cotton, and they are more likely to purchase quality and cheap cotton from the State Reserve, resulting in more difficulty in the current spot market sales.

Poor sales, spinning mills are struggling

Since the second half of last year, the spinning mill's living conditions have deteriorated significantly. Since the spot price of cotton fell less than the price of cotton yarn, the conversion of 1 ton of C32S pure cotton yarn required 1.1 tons of cotton. Last year, the processing fee fell from 6,400 yuan/ton in the middle of the year to 5,800 yuan/ton in the current year. After that, the company has lost money. At the same time, due to the difficulties of the downstream fabric companies, the current purchase of yarns has been reduced, general accounts have been postponed, and yarn inventory has increased. As a result, the financial pressure on textile companies has increased significantly. The impact of the two aspects led spinning mills to start production. It is understood that the number of companies that have closed down at the small and medium-sized spinning mills has obviously increased. Many companies are ready to sell machines and sell them as scrap iron. Companies that are still able to survive have also reduced the operating rate, and the Spring Festival holiday period has generally been extended to cope with the lack of orders. The onset of the cold wave in the textile industry has directly reduced the demand for domestic cotton, making cotton sales slow.