Tongzhou Cotton Market Brief, Week 2 of November 2022
I. Zhengmian (China's cotton futures contract)
(I) Positive Factors
1) Recently, there has been continuous news of relaxation of domestic epidemic prevention and control measures in China. Shijiazhuang is suspected of no longer checking nucleic acid certificates in public places. The relaxation of domestic epidemic prevention and control measures is conducive to the recovery of market sentiment.
2) On November 13, the China Banking and Insurance Regulatory Commission (CBIRC) issued 16 measures to support the real estate market. The notice stated that efforts should be made to ensure the steady and healthy development of the real estate market with current financial support.
3) Raw material inventories are too low at various stages of the industrial chain. Currently, the raw material inventories of yarn mills and fabric mills are at the lowest levels in the same period of history. If the epidemic situation is relaxed later, there will be a wave of inventory replenishment downstream.
(II) Negative Factors
1) The US ban on Xinjiang cotton has long suppressed the consumption of Xinjiang cotton. Coupled with the destocking cycle of European and American terminal clothing, China's exports will not improve in the short term.
2) The pressure of domestic bumper harvest is gradually emerging. With the acceleration of processing and inspection in Xinjiang, the formation of new cotton warehouse receipts, and the increase in available resources in the market, the spot market faces the pressure of bumper harvest, and the futures market faces hedging pressure.
3) There is a lack of orders and weak consumption in the domestic downstream market. It is expected that there will not be much improvement in the downstream market before the end of the year.
II. US Cotton
(I) Positive Factors
1) The 75 basis point interest rate hike in November has been implemented, and the stage with the greatest pressure of interest rate hikes in the short term is over. The market has seen a sharp rebound, and the overall bullish sentiment for bulk commodities is strong.
2) The year-on-year CPI in the United States in October was 7.7%, exceeding market expectations, further triggering market speculation about a slowdown in future interest rate hikes.
3) The progress of listing in India has been slow, lagging behind by about 40% year-on-year. Indian spot prices are still above 100 cents, which means that US cotton remains relatively competitive.
(II) Negative Factors
1) The US federal funds target rate has reached 4%, such a high interest rate level will have a huge impact on the real economy, and the US will face the risk of economic recession later.
2) The European and American terminal markets have entered the active destocking phase, and the textile and apparel industries have entered the active destocking cycle, with demand continuing to decline.
3) Yarn prices in the Bangladesh market fell sharply this week. Southeast Asia is currently facing high-priced cotton purchased earlier, while demand continues to decline, and the degree of actual loss is at its highest.
Matters to be concerned about: China's domestic epidemic prevention and control policies
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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