Tongzhou Market Information Brief, Week 3 of February 2022
I. Zhengmian (China's cotton futures contract)
(1) Positive Factors
1) The macroeconomic environment is loose. Last week, some cities relaxed the proportion of first-home loans, and real estate policies were slightly relaxed.
2) The current futures market is still inverted by 1500 points, with a return to the spot market expected.
3) Overseas markets remain strong, driving domestic markets.
4) Downstream raw material inventories are still at low levels, and there will be rigid replenishment.
5) Banks are not yet urgently urging cotton ginning factories to repay loans, and the ginning factories still have the intention to maintain prices.
(2) Negative Factors
1) Downstream orders in the second week after the holiday were below expectations. Spinning mills stated that apart from orders received before the holiday, there were limited new orders after the holiday.
2) The arrival of imported yarn gradually increased after the holiday, squeezing the demand for Xinjiang cotton from domestic spinning mills.
3) US sanctions on Xinjiang cotton are suppressing Xinjiang cotton.
4) Last week's market performance showed an increase in positions downwards. Short sellers actively exerted force. If the 21000 mark is broken, the decline may accelerate.
II. US Cotton
(1) Positive Factors
1) Logistics problems in the first quarter remain unresolved.
2) There are still 15,000 contracts of the March contract that have not been priced, which is at a historical high.
3) India's domestic cotton supply and demand pattern remains tight.
4) Southeast Asian spinning mills are still profitable and have a demand for cotton.
5) The net long position of funds is rising, and the speculative atmosphere in the market is positive.
(2) Negative Factors
1) The US CPI in January increased by 7.4% year-on-year, continuing to hit a record high, accelerating the pace of the Fed's interest rate hikes.
2) NCC's forecast for the next year's US cotton planting area is a 7% increase.
3) The shipment performance of US cotton is not good. In the week of February 10, US cotton signed 36,600 tons and shipped 62,300 tons. The total shipment volume up to that week was only 1.06 million tons, with a shipment progress of only 33%.
4) Due to weak demand in the domestic markets of India and Pakistan, the prices of imported yarn have fallen. India's 32-count yarn price has fallen by 1200.
Summary: In the second week after the holiday, the willingness of domestic downstream companies to replenish inventories was not strong. There was a small amount of inventory replenishment, but raw material inventories were still below the average. The small spring order was below expectations. In terms of the market, short sellers actively attacked last week. If orders remain below expectations later, the upward momentum will lack power. Overseas, weak demand in India and Pakistan has led to falling yarn prices, and changes are beginning to appear in downstream transmission. This week, we will mainly focus on the 21000 mark. If it is broken, it may continue to fall.
Focus: Downstream inventory replenishment and order situation after the holiday
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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