Tongzhou Cotton Market Brief, Week 3 of March 2022
I. Zhengmian (China's cotton futures contract)
(1) Positive factors
1) Spinning mills' raw material inventory decreased month-on-month, reaching the second lowest level in the same period of history. There is rigid replenishment of raw materials by spinning mills.
2) The support of high production costs remains effective, and ginneries are unwilling to lose too much.
3) Downstream still expects a peak season, and the operating rate of spinning mills has not yet decreased.
(2) Negative factors
1) Recently, there have been multiple outbreaks of the epidemic, affecting residents' production and business activities.
2) The National Development and Reform Commission issued the first batch of cotton import tariff-rate quotas in 2022 on Friday, with a total of 400,000 tons, suppressing Xinjiang cotton.
3) The loan repayment time for ginneries is approaching, and recently the sales attitude of ginneries has been more positive than before.
4) Downstream spinning mills and textile mills have high finished goods inventory pressure and lack long-term and large orders.
5) Severe loss of external orders; due to the Xinjiang ban, some orders have been lost to Southeast Asia.
6) Slow spring warming this year has affected the placement of spring orders.
II. US Cotton
(1) Positive factors
1) US cotton signing volume performed well, with the latest week's signing volume at 80,500 tons, the signing progress reaching 96.8%, exceeding the signing progress of last year and the average.
2) Drought conditions across the United States continue to worsen, with drought in Texas worsening month-on-month.
3) As of the week of March 4, the outstanding unpriced contracts for US cotton remained at 140,000 bales, the second highest in the same period of history, and a large number of unpriced contracts still have the suspicion of forced liquidation.
(2) Negative factors
1) US CPI in February hit a new high of 7.9%, with inflation intensifying and reaching a new four-decade high.
2) Net long positions fell by 0.5 percentage points to 37.9%, with long positions reduced by 4,997 contracts.
3) Profits of spinning mills in the Indian market continue to decline, yarn prices in the Vietnamese and Pakistani markets are stable to slightly weaker, and profits continue to shrink.
Summary: On the macro side, the US CPI data in February pushed inflation to a new high again, and the Federal Reserve is about to tighten liquidity. The recent acceleration of peace talks in the Russo-Ukrainian war has gradually eliminated the biggest variable that caused the surge in crude oil prices. On the industrial side, the USDA lowered global production by 70,000 tons to 26.09 million tons in March and increased consumption by 20,000 tons to 27.12 million tons, reducing the overall inventory-sales ratio by 1.5 percentage points to 66.3%, which is generally positive. However, the global downstream consumption situation is gradually deteriorating, with insufficient demand for yarn mills in India, Vietnam and Pakistan, lower yarn prices, and increasing immediate losses. The domestic situation is even more severe, with high finished goods inventory pressure and no improvement in orders, resulting in continuous immediate losses. Overall, cotton is supported by the rigid demand for replenishment of raw materials by spinning mills and high costs, but at the same time, due to the impending tightening of macroeconomic liquidity and no improvement in consumption, there is a lack of upward momentum.
Focus: March interest rate meeting, the Russo-Ukrainian conflict
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.
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Henan Tongzhou Cotton Industry Co., Ltd.
Address: 10th Floor, Henan Nongxin Building, No. 19 Commercial Outer Ring Road, Zhengdong New District,Zhengzhou, China
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Email：tongzhou@tongzhoucotton.com
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