Tongzhou Cotton Market Brief, Week 4 of March 2022
I. Zhengmian (China's cotton)
(1) Positive factors
1) Currently, ginneries are not under significant debt pressure and still have the willingness to maintain prices.
2) Downstream raw material inventories are low, and there will be some price support when the market falls.
3) Crude oil remains at a high level, which has a positive effect on cotton prices.
(2) Negative factors
1) Recent outbreaks of the epidemic have affected residents' consumption and travel.
2) Weak end-consumer demand, yarn mills and textile mills lack orders, and are not actively purchasing high-priced cotton; they mainly buy as needed.
3) Yarn mills and textile mills continue to suffer losses, and finished product inventories continue to accumulate, with plans to reduce production capacity in the future.
4) There will be a large number of hedging orders above 21500-22000, putting upward pressure on prices.
II. American cotton
(1) Positive factors
1) On Friday, the Sino-US leaders held a video conference, and Sino-US relations may ease, and China may increase its purchases of American cotton.
2) American cotton signing data is impressive. As of March 10, the signing progress of American cotton has reached 99.5%.
3) Currently, the national reserve inventory is low, and there is a need to purchase American cotton recently.
4) As of March 11, there are 143,000 unpriced contracts for American cotton, including 40,000 unpriced contracts for May, which is the highest level for the same period in history.
5) Due to tight supply and demand in the Indian market, cotton prices continue to rise, supporting American cotton prices.
(2) Negative factors
1) The shipping progress of American cotton is only 42%. If the shipping speed is not accelerated later, some contracts may be cancelled later.
2) Downstream demand in Southeast Asian markets continues to weaken, and losses in the Indian and Vietnamese markets are expanding.
3) The net long position/total position of funds is 37.8%, which is at a historically high level for the same period, and there is not much upward room.
Summary: From a unilateral perspective, in the short term, domestic ginneries are not under significant sales pressure and are unwilling to cut prices. There is insufficient effective circulation in the market, and there is short-term support below. However, in the long term, downstream demand does not support the transmission of high cotton prices, coupled with the increase in planting area next year, the center of gravity of cotton prices will shift downward. Overseas, the signing of American cotton has basically ended. If the later shipment is not completed, it will increase the domestic supply of American cotton; the downstream in Southeast Asian markets continues to weaken, and the profits of yarn mills are shrinking, lacking upward momentum for American cotton. American cotton rose by the limit on Friday, and the price difference between domestic and foreign markets will narrow on Monday, but the probability of domestic cotton continuing to rise sharply is not high, because there will be a large number of hedging orders around 21500-22000, putting upward pressure on prices.
Points to watch: Downstream orders Russia-Ukraine war
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
Tel：86037165836206
Email：tongzhou@tongzhoucotton.com
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