Tongzhou Cotton Market Brief, Week 1 of July 2022
I. Zhengmian (China's cotton)
(1) Positive Factors
1) The current cotton price has fallen too sharply, far below the acquisition cost of cotton ginning plants. Ginning plants that purchased cotton in the 21/22 season have had to lie flat. If recent rumors of government reserves are true, cotton prices may stabilize.
2) Yarn mills' raw material inventories are at their lowest historical levels for the same period. Low cotton prices stimulate downstream inventory replenishment. With the 01 contract currently falling to 16000 (presumably a price), compared to the previous 21000, yarn mills' expectations of replenishing inventories have increased.
3) Xinjiang has experienced sustained high temperatures, which is unfavorable to the growth of cotton bolls. If high temperatures persist, it may affect cotton quality.
(2) Negative Factors
1) The sharp drop in cotton prices has dampened downstream inventory replenishment motivation. Currently, yarn mills and fabric mills are facing historically high finished goods inventories and are mainly focused on destocking. The inventory pressure is high, and there is currently no visible willingness to replenish.
2) Southeast Asian garment exports have turned negative month-on-month, and global cotton garment consumption is turning downward. The downward trend in cotton consumption is ongoing.
3) The implementation of the Xinjiang ban will suppress Xinjiang cotton in the long term. Some institutions estimate that the ban may affect the use of 1.2 million tons of Xinjiang cotton.
II. US Cotton
(1) Positive Factors
1) Concerns about US cotton weather remain. The Texas region has lacked rainfall in the past two weeks, and drought continues. The good quality rate of US cotton is 37%, the worst growth condition in nearly ten years.
2) The Xinjiang ban has deterred domestic exporters, and garment exporting companies can only increase their demand for US cotton to maintain their customers.
3) Among the overseas agricultural products, only cotton has experienced the sharpest drop in a short period. A rebound after the oversold condition is expected soon.
(2) Negative Factors
1) The Federal Reserve has emphasized its commitment to suppressing inflation. The hawkish interest rate hike and balance sheet reduction stance has sparked market concerns about a recession, and the driving force behind the rise in commodities over the past year no longer exists.
2) Regarding end-consumer clothing consumption, US May data remained flat compared to April. With inflation and declining household income, there is a high probability that end-consumer clothing consumption will turn downward from its peak.
3) The Southeast Asian market continues to weaken. India's April garment exports were -32% month-on-month. The clear downturn in exports from the Southeast Asian market also indirectly confirms the downward trend in consumption in Europe and the United States. High-frequency data from the operating conditions of downstream yarn mills show that the month-on-month deterioration has not changed.
Points to Watch: 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
Mobile
CopyRight © 2025 Henan Tongzhou Cotton Industry Co., Ltd.