Tongzhou Market Information Brief, Week 5, November 2021
I. US Cotton
Positive Factors:
1) Globally low inventory-to-consumption ratio lays the foundation for a generally higher price level of US cotton.
2) With the national release of cotton reserves, expectations for future purchases of US cotton by the state reserves are strengthened, supporting US cotton prices.
3) From the perspective of the futures market, the bullish sentiment is quite strong.
4) The on-call percentage is at its historical highest, and a large number of unpriced contracts also support US cotton.
Negative Factors:
1) Judging from the US cotton export data, the current shipment speed cannot meet the export estimates given by the USDA.
2) The Omicron variant has caused market panic, and the specific impact is yet to be assessed.
3) In the long term, the high price of US cotton this year will lead to an increase in planting area next year.
II. Zhengzhou Cotton
Positive Factors:
1) Currently, the registered warehouse receipts for new cotton are only 189,800 tons, the slowest progress in the past three years.
2) There may be some rigid replenishment demand for Spring Festival orders.
3) Serious contango, the contradiction remains unresolved.
Negative Factors:
1) The Omicron variant caused market panic, and the previous bearish sentiment release may have contributed to the price drop.
2) Downstream transactions are sluggish, most spinning mills are cutting prices to sell, and spinning mills are rapidly accumulating inventory, with finished goods inventory at a historical second-high level.
3) Domestic sales remain weak, with the year-on-year growth rate of apparel, footwear, and textile retail sales in October being -3.3%.
4) Inventories of downstream spinning mills and weaving mills are at historically high levels, and downstream transmission is not smooth.
Summary: In terms of macro factors, the biggest variable last week was the market panic caused by the Omicron variant, coupled with the fear of heights due to previously high valuations, stock markets, bond markets, and commodities all saw sharp declines, with crude oil falling by 13%. Whether the subsequent impact of the virus will affect commodities as a turning point event still needs to be assessed. In terms of fundamentals, the cost of new cotton has been solidified, the basis has been reduced, and some new cotton transactions have taken place in the market. Downstream transmission is not smooth, and the prices of yarn and cloth have fallen simultaneously, with finished goods inventory of spinning mills rapidly accumulating and reaching a historical second-high level. There are sporadic Spring Festival orders downstream, but no signs of improvement have been seen. As the January contract approaches delivery, the market will show a clearer direction.
Focus Points: Changes in terminal consumption; national policies; Omicron variant
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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