Tongzhou Cotton Market Brief, Week 5, August 2022
I. Zhengmian (China's main cotton variety)
(1) Positive Factors
1) The expectation of a peak season in September and October, coupled with profitable yarn mill production, is expected to sustain downstream stocking for some time. If the peak season expectation materializes, it will encourage yarn mills to replenish their inventories significantly.
2) The price difference between substitutes has fallen to a level below the average. Compared to polyester staple fiber and short fiber, cotton's advantages are beginning to emerge.
3) The price difference between domestic and international markets has widened again recently. Under a 1% tariff, the price difference for the main contract has reached approximately -6000. This significant price gap significantly enhances the competitiveness of Xinjiang cotton, encouraging companies to consider shifting from exports to domestic sales.
(2) Negative Factors
1) While yarn mill sales have improved significantly recently, and inventory depletion has accelerated, the transaction volume shows that it's mainly a price-for-volume exchange. The price of 32-count ordinary combed yarn continues to fall, indicating that there's no significant improvement in terminal orders, but rather an intentional inventory reduction by yarn mills.
2) As of August 25, the national cotton sales progress is 68.8%, a year-on-year decrease of 31%, with 1.812 million tons of 21/22 cotton remaining and carried over to the new year.
3) Affected by the Xinjiang ban, more and more downstream yarn mills are showing signs of "de-cottonization", intending to switch to chemical fibers.
II. US Cotton
(1) Positive Factors
1) Cotton is currently in a crucial boll-opening period, requiring temperature and sunshine. However, two consecutive weeks of rain in the Delta region will affect cotton growth, boll-opening progress, and quality in the Delta region.
2) Pakistan is facing the worst floods in its history, with the southern region, particularly Sindh province, being the hardest hit by the rainfall. The market expects a production reduction of nearly 300,000 tons.
3) Fund non-commercial long positions have increased for two consecutive weeks, with the latest increase exceeding 7,400 contracts, and the net long proportion of funds has risen by 2 percentage points.
(2) Negative Factors
1) The other three major producing areas globally—China, India, and Brazil—are showing good growth. Brazil's production is expected to be 2.6 million tons, an increase of approximately 250,000 tons; India's planting is complete, up 6.7% year-on-year, and current rainfall has not yet substantially affected production.
2) In Southeast Asian countries, the operating rates of yarn mills in India and Pakistan continue to decline. This week, Indian yarn mills reduced their operating rates by another 3 percentage points, while Pakistan reduced them by 1 percentage point.
3) In terms of terminal inventory cycles, Europe and the United States have entered the stage of active destocking, and the global market is entering a destocking cycle.
Focus: Opening price; 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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