Tongzhou Market Information Brief, Week 1 of March 2021
I. COVID-19 Pandemic and Vaccine Progress
As of the 27th, the global cumulative confirmed cases reached 114 million, with approximately 350,000 new cases daily, an increase of about 50,000 compared to the average daily increase in the previous week. Daily new cases in the US remained below 100,000 last week, and in the UK, it fell below 10,000. However, daily new cases rebounded in France, Italy, Poland, and India. Countries with higher vaccination rates, such as Israel, the UAE, and the US, saw a significant decrease in the 7-day average of new cases. The US FDA approved the Johnson & Johnson vaccine, which will further accelerate the vaccination progress in the US.
II. Overseas Market Information
1) As of the 27th, the US cumulative tested 14.05 million bales, with a progress rate of 97.87%, and the weekly market volume continues to decline. Some areas in the Delta and Southeast cotton regions have stopped entering the market. It is estimated that the US cotton production will be revised downward by 100,000 bales to 14.85 million bales.
2) As of the 18th, the cumulative sales of US cotton reached 3.2 million tons, with cumulative shipments of 1.85 million tons. The signing progress is 94.8%, and the shipment progress is 54.9%. Historically, contract completion is around week 35, and it is expected to complete the export target around week 33 this year.
3) As of the 27th, India's cumulative market volume was approximately 3.7 million tons, a year-on-year decrease of 1.74%. Last week, CCI raised the price by 800 rupees, and the transaction volume was approximately 1.2 million bales.
4) After the Chinese New Year holiday, the operating rate of Southeast Asian countries rebounded, with orders mostly extending to the end of April and some to early May. CIF CMP prices have risen.
III. Domestic Market Information
1) As of the 27th, domestic processing reached 5.81 million tons, and inspection reached 5.58 million tons. The inspection volume is expected to return to normal from this week.
2) After the Spring Festival holiday, yarn prices increased by an average of about 1500 yuan/ton, and the profits of textile enterprises continued to improve. Grey cloth prices also rose, and downstream transmission was smooth.
3) In terms of inventory in the industrial chain, finished goods inventory of grey cloth enterprises decreased, and raw material yarn inventory increased. Textile enterprises saw a double decrease in yarn and cotton inventories. Overall, yarn inventories in the industrial chain remain at historically low levels.
4) After the ICE callback last week, the price difference widened. The price difference between domestic and international spot prices was 1510 yuan/ton on Friday last week, still not meeting the conditions for reserve purchases.
5) The basis of imported cotton at ports has generally declined, and shipments have been slow. Port inventories of imported yarn have decreased. Due to the increase in the future price of imported yarn, port spot prices have certain advantages.
IV. Domestic Market Bullish and Bearish Factors
Bullish Factors
1) Cotton warehouse receipts and forecasts of 800,000 tons are close to the peak of warehouse receipt resources.
2) Price transmission in the textile industry chain is smooth, and spinning profits continue to improve.
3) Limited quota availability and the reserve purchase cycle mean domestic cotton currently has no supply pressure.
Bearish Factors
1) China's PMI data is not ideal, especially the backlog of orders index. The order and inventory situation of terminal clothing needs to be investigated.
2) There is a large price difference between domestic and international markets, and the absolute amount of domestic supply is still large.
V. Overseas Market Bullish and Bearish Factors
Bullish Factors
1) US cotton inventories remain relatively low, having fallen to levels close to those of the 2015/16 marketing year.
2) The operating profits of overseas textile enterprises in China remain good.
3) Last week, the price ratio between cotton and production-side substitutes decreased. Although the absolute price is high, the comparative advantage of cotton planting is limited, and the area is expected to be around the USDA's estimate of 12 million acres.
4) Last week, the price ratio between cotton and consumer-side substitutes continued to decline, especially the price ratio between cotton and viscose, which has fallen below the average.
Bearish Factors
1) Prices are at an absolute high outside the historical 2010/11 marketing year, and the net long position has risen to 39%, with concentrated long trading.
2) The spot basis has significantly weakened, indicating a lack of spot follow-up.
3) The basis between ICE and Indian spot prices remains at a historical extreme, with ICE prices being relatively high from a price difference perspective.
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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