Tongzhou Market Information Brief, Week 4, January 2022
I. Zhengzhou Cotton
(1) Positive Factors
1) Recently, with the strengthening of the futures market, downstream reluctance to sell has become stronger, unwilling to sell at low prices.
2) With downstream replenishment before the holiday, the raw material inventory of spinning mills has been reduced to the average level, and post-holiday rigid demand replenishment will support the market.
3) Strong overseas markets are driving up Zhengzhou cotton prices.
(2) Negative Factors
1) China's macroeconomic environment has moved away from high inflation, no longer supporting excessive price increases in bulk commodities.
2) The price of Zhengzhou cotton is too high for the downstream sector, with immediate profits for spinning mills losing about 2000, making it difficult for the downstream to pass on the cost increase.
3) Although there will be downstream rigid demand replenishment after the holiday, some spinning mills are not optimistic about the future market, limiting the replenishment scale.
4) The ban on Xinjiang cotton puts some pressure on Xinjiang cotton prices.
II. US Cotton
(1) Positive Factors
1) Recently, crude oil and the broader market remain strong, driving up cotton prices.
2) The recent shipping speed of US cotton has accelerated, and the shipping speed is expected to further accelerate as supply chain issues gradually ease.
3) Southeast Asian spinning mills are highly profitable and have strong demand for US cotton.
4) The proportion of March ONCALL still has the possibility of a short squeeze.
(2) Negative Factors
1) The Federal Reserve's January interest rate meeting is imminent, and tighter liquidity is putting pressure on bulk commodities.
2) The tense situation between Russia and Ukraine may spill over to bulk commodities.
3) The excessively high cotton prices in the 21/22 season may lead cotton farmers to increase the planting area in the 22/23 season.
Summary: At the macroeconomic level, the Federal Reserve's interest rate hike is the market's biggest concern, and attention should be paid to the signals transmitted to the market by the January interest rate meeting this month. In terms of industry, downstream pre-holiday inventory replenishment is basically over, and spinning mills are starting to take holidays one after another. The impact of the downstream on the market before the holiday is not significant. If there are no major changes in the macro environment this week, it is expected that the market will mainly fluctuate this week.
Focus on: January interest rate meeting
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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