Tongzhou Cotton Market Brief, Week 4 of September 2022
I. Zhengmian (China's cotton futures contract)
(1) Positive Factors
1) The current Zhengmian index has more than 1 million open contracts, indicating significant market divergence. Funds and industry players are bullish due to the perceived undervaluation of cotton.
2) Faced with high domestic and international cotton and yarn prices, countries like Pakistan have expressed interest in domestic yarn. If further channels open up, it will benefit the export of Xinjiang cotton yarn.
3) After this round of inventory reduction, yarn mills' overall inventory has fallen to a historically low level. If the new cotton acquisition price remains stable, yarn mills will have a tendency to replenish or stock up.
(2) Negative Factors
1) From the demand side, the peak season of September and October is coming to an end. Most notably, the operating rate of weaving factories in Guangdong, such as Zhangcha, has dropped significantly by 10 percentage points, and domestic demand has fallen again.
2) The current acquisition price has repeatedly hit new lows, generally concentrated at 5.1-5.5 yuan/kg, equivalent to a raw cotton price of 10500-12000.
3) New cotton is about to be listed, and the problem of short-term supply tension and high basis will soon be alleviated. Spot cotton faces downward pressure.
II. US Cotton
(1) Positive Factors
1) On Thursday, Hurricane Ian made landfall in Georgia, bringing heavy rainfall to the region and affecting 20% of US cotton production.
2) Some yarn mills in Southeast Asia indicated that if US cotton prices remain stable at 90, they would consider purchasing some. This shows that there will still be buying interest at a low level.
3) Beware of a potential squeeze in December. Currently, the number of undelivered December contracts is 53,000, accounting for 31%, the highest ever.
(2) Negative Factors
1) India's cotton growth is proceeding normally. The market estimates that if the weather remains normal in the coming weeks, production could reach 6.3 million tons.
2) On the demand side, the end-consumer apparel market in Europe and the US is entering a destocking cycle, with US imports of cotton textiles turning negative year-on-year, and global apparel consumption entering a downward trend.
3) Non-commercial long positions have decreased further, falling by 3,700 this week, and net long positions of funds decreased by 3 percentage points.
Points to Watch: Opening price; Hurricane Ian
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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