Tongzhou Cotton Market Brief, Week 3 of August 2022
I. China Cotton
(1) Positive Factors
1) The recent worsening of the Xinjiang epidemic has caused problems with Xinjiang cotton leaving the region, leading to a significant increase in the price difference of inland cotton.
2) Downstream sales have recently loosened, as autumn and winter orders and Christmas orders are being placed successively. Downstream businesses are anticipating a "golden September and silver October," and finished goods inventories have fallen from a high point for the first time this week.
3) Market rumors suggest that the central bank has issued a document approving the extension of cotton loans for 2021 by one year, easing the sales pressure on cotton gins and state-owned enterprises.
(2) Negative Factors
1) July's economic data showed a comprehensive decline, with the risk of a double-dip recession. The total retail sales of consumer goods in July increased by 2.7% year-on-year, significantly lower than the market expectation of 5.3%. The economic fundamentals are not optimistic.
2) Although yarn mill inventories have recently declined, the absolute value remains at a historical high. Moreover, judging from terminal orders, there has been no substantial improvement. The main changes are in downstream expectations and sentiment.
3) The Xinjiang cotton ban has a long-term impact on Xinjiang cotton consumption. According to estimates from the Cotton Information Network, this impact affects 1.12-1.2 million tons of Xinjiang cotton consumption, accounting for 21% of Xinjiang's output.
II. US Cotton
(1) Positive Factors
1) The August report significantly reduced production by 640,000 tons to 2.73 million tons due to drought issues, and the stock-sales ratio was lowered to 12.6%, the lowest in nearly twenty years. The tight supply-demand pattern pushed up US cotton prices.
2) Supply from the Southern Hemisphere is not as optimistic as before. Brazil and Australia face a further risk of production reductions due to previous drought issues.
3) Recently, the Indian market has seen continuous price increases in spot goods due to the tight supply-demand situation, and the resurgence of the Indian market has also boosted US cotton prices.
(2) Negative Factors
1) The August USDA report showed a national abandonment rate of 43% and a Texas abandonment rate of 68.8%, far exceeding the abandonment rate of 2011. However, in terms of drought severity, this year's drought is not as severe as 2011. US production this year may have been over-reduced, and there is potential for upward adjustments later.
2) In June, US terminal clothing imports decreased by 5% month-on-month, indicating that the US policy of raising interest rates to curb rising prices has had limited effect, and still cannot conceal the downward trend in US consumer demand for textiles and clothing.
3) From the perspective of funds, recently funds have been in a wait-and-see attitude, with the net long ratio consistently at a low level of 20%.
Points to Watch: US hurricanes; downstream 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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