Tongzhou Cotton Market Brief, Week 3 of June 2022
I. Zhengmian (China's cotton futures contract)
(1) Positive factors
1) Reduced actual liquidity in the spot market, with a large amount of cotton held by ginneries; significant price drops in futures contracts pose a delivery risk.
2) Significant drop in raw material prices, resulting in improved immediate profits for textile mills. Currently facing the lowest raw material inventory in recent years, yarn mills are showing improvement in replenishing raw materials.
3) Large price difference between domestic and international markets; some companies have switched from using imported cotton to Xinjiang cotton, potentially increasing the demand for Xinjiang cotton.
(2) Negative factors
1) Excessive cotton price drop in the past two weeks has led to cautious purchasing behavior among downstream textile mills, shifting to a wait-and-see approach.
2) Ginneries face mounting loan repayment pressure, with no positive policy news yet.
3) The Xinjiang Cotton Act will be implemented by the US from June 21st, increasing psychological pressure on textile mills.
II. US Cotton
(1) Positive factors
1) New-crop US cotton contracts show positive performance. As of June 9th, cumulative new-crop contracts reached 860,000 tons, a 77% year-on-year increase. Currently, the tight supply-demand situation next year has not eased significantly.
2) The drought situation in the US remains severe. There has been no rainfall in Texas in the past two weeks, similar to the situation in 2013, maintaining the potential for weather-related market speculation.
3) US end-consumer demand remains resilient. May clothing retail sales remained flat compared to April at $26 billion, remaining at a high level without signs of turning, with a year-on-year growth rate of 6% in May.
(2) Negative factors
1) The Federal Reserve raised interest rates by 75 basis points to 1.5-1.75%, the first 75 basis-point increase in nearly 30 years. The Fed's significant rate hike has led to significant declines in major commodities, such as crude oil and copper, from high levels.
2) Speculation on July's short-squeeze has ended. The large unfixed volume for July, which previously supported cotton prices, now faces the first notification date, bringing this speculative factor to a temporary close.
3) The Southeast Asian market continues to weaken. Currently, the global yarn production situation has deteriorated, indirectly proving that global cotton consumption is gradually declining, and there is insufficient driving force to support cotton prices through consumption.
Focus on: Policy changes, rainfall in Texas
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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