Tongzhou Market Information Brief, Week 5, December 2020
I. Epidemic and Vaccine Progress
The cumulative number of global infections has exceeded 80 million. Last week, the daily increase in global infections was around 550,000. The daily increase in the United States fell below 200,000, while the daily increase in Europe (UK/Russia/Spain) and Asia (South Korea/Japan) increased.
A mutated virus was discovered in the UK, with an increase in infectivity of 50-70%. Currently, there is no evidence that the vaccine is ineffective against the mutated virus; specific effects will require months of verification.
The EU has approved the use of the Pfizer vaccine, and European countries have begun widespread vaccination.
To prevent the rapid spread of the mutated virus, most countries have banned flights from the UK. More than 20 countries have discovered the mutated virus, and Japan has restricted the entry of non-Japanese citizens.
II. Overseas Market Information
1) As of the 25th, the United States has cumulatively tested 2.79 million tons, with a progress rate of 80.55%, a 5-year average of 80.77%, and 87.2% in the same period last year. Based on the listing progress, the US production is estimated at 15.8 million bales, and the USDA forecast is 15.9 million bales.
2) As of the 17th, the cumulative sales of American cotton reached 2.64 million tons, with cumulative shipments of 1.2 million tons. The contract progress rate is 80.8%, and the shipment progress rate is 36.8%, which remains the fastest level in history.
3) As of the 25th, India's cumulative listing was approximately 2.2 million tons, a year-on-year increase of 35%, of which 54% entered CCI inventory. Last week, India raised the reserve price for old cotton by 300 rupees and the price for new cotton by 100 rupees; transactions were completed.
4) Last week, the operating rates of cotton mills in India, Pakistan, and Vietnam remained stable. Vietnam's spot profits improved, and factory orders extended to March.
III. Domestic Market Information
1) As of the 25th, 4.8 million tons of cotton had been processed domestically, and 4.47 million tons had been inspected.
2) The Information Network announced that as of the end of November, commercial inventories totaled 4.57 million tons, industrial inventories were 727,000 tons, and total social inventories were 5.2984 million tons, a month-on-month increase of 1.3852 million tons, and a year-on-year increase of 78,500 tons.
3) Downstream textile enterprises' yarn inventories have fallen to their historical lows. The price increase of yarn has slowed, the operating rate of grey fabrics has decreased, and weaving continues to replenish yarn inventories. Textile enterprises' cotton inventories are at historical highs.
4) The state adjusted the formula for the sliding scale tax. From January 1st, based on the current ICE price, the sliding scale tax rate will decrease by 3%, and the RMB cost will decrease by about 330 yuan. The price difference between domestic and international spot markets is 1697 yuan, still not meeting the conditions for reserve procurement.
IV. Bullish and Bearish Factors in the Domestic Market
Bullish Factors
1) Warehouse receipts/January contract holdings are at their lowest level in the past three years. The price difference between January and May contracts strengthened last week.
2) The general price increase of yarn due to spring and summer orders and pre-holiday inventory replenishment demand, smooth price transmission, and improved profits.
3) Support from acquisition costs; 80% of Xinjiang cotton sales; high hedging costs in southern Xinjiang; high inventory costs for textile enterprises.
Bearish Factors
1) Hedging pressure.
2) After the reduction of the sliding scale tax, the price difference is bearish for the domestic market.
3) Potential bearish factors after the end of pre-holiday inventory replenishment due to the epidemic affecting downstream industries.
V. Bullish and Bearish Factors in Overseas Markets
Bullish Factors
1) Due to slow listing and fast exports, US domestic inventories have fallen to their lowest level in nearly four years.
2) Southeast Asia still maintains high operating rates and low cotton yarn inventories.
3) Support from India's reserve procurement policy.
4) The price difference between domestic and international markets is conducive to purchasing imported cotton.
5) Last week, the cotton-soybean-corn price ratio continued to decline.
Bearish Factors
1) After the virus mutation, various countries have increased lockdown measures, potentially affecting consumption.
2) The difference between the actual and expected effects of vaccine promotion on consumption.
Pay attention to the situation of overseas orders and the sustainability of domestic orders.
Leaders from Xiamen C&D Group visited Tongzhou for investigation and guidance
On March 3, Wang Yongqing, Vice President of Xiamen CNOOC Group, visited Tongzhou Group for investigation and guidance. Wei Gangmin, Chairman of our company; Huang Hongyu, President; Li Tao, Vice President; and Zhang Zhiyan, Director of the General Office, met with and participated in a symposium.
Tongzhou Cotton Market Brief, Week 1 of March 2025
1) This week's National People's Congress and the Chinese People's Political Consultative Conference (NPC & CPPCC) in China boosted market expectations for steady growth. In February, the Purchasing Managers' Index (PMI) for manufacturing stood at 50.2%, up 1.1 percentage points from the previous month, indicating a significant improvement in the manufacturing sector.
In 2024, China's dyeing industry saw rapid export growth to ASEAN and RCEP member countries, exceeding the overall export growth rate. However, this growth was accompanied by a decline in prices. From January to December, China's exports of eight major dyeing products to ASEAN totaled 7.908 billion meters, a year-on-year increase of 12.14%, 4.61 percentage points higher than the overall export growth rate, accounting for 23.58% of total exports. The average export price was US\$1.19 per meter, a year-on-year decrease of 2.75%, 0.64 percentage points lower than the overall decline. Exports to RCEP member countries totaled 8.431 billion meters, a year-on-year increase of 11.35%, 3.82 percentage points higher than the overall export growth rate. The average export price was US\$1.17 per meter, a year-on-year decrease of 2.79%, 0.60 percentage points lower than the overall decline.
On February 28, Mr. Huang Hongyu, President of our company, was invited to attend the 2025 Zhangjiagang Cotton Industry Development Conference and, as a guest speaker at the "Xiangshan Roundtable," shared his views on the cotton market and trading opportunities.
Henan Tongzhou Cotton Industry Co., Ltd.
Contact
Henan Tongzhou Cotton Industry Co., Ltd.
Address: 10th Floor, Henan Nongxin Building, No. 19 Commercial Outer Ring Road, Zhengdong New District,Zhengzhou, China
Tel：86037165836206
Email：tongzhou@tongzhoucotton.com
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