Tongzhou Market Information Brief, Week 1 of March 2022
I. China Cotton
(1) Positive factors
1) Raw material inventories of yarn and fabric mills are only higher than the same period in 2016, and it is inevitable to purchase raw materials on demand.
2) Ginning factories are not under significant repayment pressure recently, and the time for banks to urge repayment has not yet arrived. Ginning factories still have time to maintain prices.
3) The near-month contract is excessively discounted; the market discount is excessive, and no one is delivering the warehouse receipt.
4) The Agricultural Outlook Forum's assessment of China's 22/23 season further lowered the inventory-to-sales ratio by 3.9 percentage points.
5) Due to the rise in crude oil next year, fertilizers and other raw materials have soared, and planting costs have risen.
6) If the temperature rises in the next two weeks and spring and summer orders are placed, it may trigger a wave of inventory replenishment.
(2) Negative factors
1) Downstream finished product inventory pressure is too great; cotton yarn and gray fabric inventories are at their highest level in history.
2) Insufficient downstream terminal consumption has led to orders not meeting the "golden March, silver April" expectations.
3) The increasing amount of imported yarn arriving in port is squeezing domestic spinning mills' demand for Xinjiang cotton.
4) As of February 17, the Xinjiang sales rate was only 32.1%, 30 percentage points lower than the same period last year. Subsequently, ginning factories will accelerate sales, and prices may fall rapidly.
5) The warming this year is slower than in previous years, and spring and summer orders are less than in previous years.
II. US Cotton
(1) Positive factors
1) The drought situation across the United States is still one of the most severe droughts in history. In view of this, the Agricultural Outlook Forum has raised the abandonment rate for the next year from 8.6% to 19.7%.
2) As of the week of February 18, there were a total of 138,000 unpriced contracts for US cotton, which, although decreased month-on-month, remains at a high level in recent years.
3) Net long positions for funds rose from 37.8% to 38.1%.
(2) Negative factors
1) The Russia-Ukraine conflict pushed up oil prices, exacerbating the US inflation level, and the US is about to raise interest rates.
2) In the week of February 17, US cotton shipments were 89,400 tons, the best shipment volume this year. Smooth shipment of US cotton eased logistical pressure.
3) Indian spinning mills are experiencing losses in their spot profits, and spot profits are also shrinking in Vietnam and Pakistan. National market demand for cotton is gradually weakening.
Summary: The Russia-Ukraine conflict is the biggest variable this week. Cotton prices are too high; fear of heights has made the market show obvious reactions to variables. In the domestic market, downstream orders are insufficient, and the pressure of finished product inventories is high. Yarn prices are reduced to sell but the results are poor, and finished product inventories have accumulated to the highest level in the same period in history. Continuous losses of yarn and fabric mills have made it impossible to pass on such high cotton prices. Later, as ginning factories accelerate sales due to repayment pressure, prices may fall rapidly. In the foreign market, demand from spinning mills in India, Vietnam, and Pakistan is weak, and spot profits are shrinking. The accelerated shipment speed of US cotton has eased logistical problems, putting downward pressure on cotton prices.
Focus: Russia-Ukraine conflict Spring and summer orders
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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