Tongzhou Market Information Brief, Week 5 of May 2021
I. US Cotton
Positive Factors:
1) Global economic data has reached a new high since 2008, suggesting further upward potential for global cotton consumption in the 2021/2022 season.
2) The cotton/soybean and corn price ratio is at a historical low, discouraging increases in cotton planting area in various countries.
3) The downstream cotton industry chain in China and Southeast Asia is improving, with strong orders and a continuous increase in demand for cotton replenishment.
Negative Factors:
1) Persistent inflation in the United States raises market concerns about the Federal Reserve's early start to interest rate hikes/balance sheet reduction.
2) Continuous rainfall in the main producing areas of Texas has effectively alleviated drought; relatively stable monsoon expectations in India, continuous improvement in Australian water reserves, and accelerated planting in Pakistan are conducive to stable/increased global production in the 2021/2022 season.
3) Repeated outbreaks of the epidemic in India and Southeast Asia have to some extent suppressed cotton demand.
II. Zhengzhou Cotton
Positive Factors:
1) Global economic data has reached a new high since 2008, suggesting further upward potential for global cotton consumption in the 2021/2022 season.
2) The downstream cotton industry chain continues to improve, yarn prices are rising, orders are increasing, and the desire to replenish raw material inventories is increasing, potentially leading to a busier-than-expected off-season.
3) The epidemic in India and the lockdown in Bangladesh have led to a certain degree of return of foreign orders.
4) Due to abnormal weather during the planting season and a decrease in planting area in Xinjiang, the market estimates that production will most likely decrease year-on-year.
Negative Factors:
1) The State Council executive meeting called for effective response to the rapid rise in bulk commodities, and the commodity correction dragged down cotton prices.
2) Commercial cotton inventories remain relatively large, coupled with expectations of reserve releases, the market is not short of cotton.
3) The widening price gap between domestic and international markets has significantly increased the demand for imported cotton and yarn, further increasing domestic supply pressure.
• Core Logic: Downward pressure is supported by the downstream industry, while upward pressure is due to inventory pressure. In the long term, there is a driver of positive global economic growth, and in the short term, there is pressure from concerns about tightening global liquidity. However, the global production situation currently being tracked is good, dragging down the long-term bullish expectations. The price difference between domestic and international markets is significantly higher than the sliding scale tariff, with industrial return driving force, and the time is mainly from 1 to 12 months.
• Variables to Watch: Fiscal and monetary policies of various countries, production variables caused by weather, downstream industry tracking, and reserve release policies.
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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