【2022 Chairman Interview】: Cotton prices will shift downward in 2022

【2022 Chairman Interview】: Cotton prices will shift downward in 2022
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  • 【2022 Chairman Interview】: Cotton prices will shift downward in 2022
Wei Gangmin, vice president of the China Cotton Textile Industry Association, president of the Raw Material Industry Chain Branch, and chairman of Henan Tongzhou Cotton Industry Co., Ltd., stated in an interview with My Agricultural Products Network on January 25, 2022, that cotton prices in 2022 will be mainly determined by three factors: macroeconomic conditions, industry dynamics, and valuation.
    Macroeconomic Factors US inflation is at a 40-year high since 1982, with the Federal Reserve poised to raise interest rates. Global liquidity is beginning to contract, eliminating the basis for significant inflation. The upcoming interest rate hikes and balance sheet reduction will affect the economic and market speculation sentiment.
    Industry Factors Spinning mills cannot bear the excessively high cotton prices, resulting in significant immediate losses. Orders have not improved due to insufficient domestic demand, making it impossible to pass on the high cotton prices, leading to an inevitable price decline. In addition, the excessively high cotton prices have led to an increase in the planting area for the new year, so the price center will definitely shift downward. However, it is undeniable that due to the year-on-year increase in planting costs, the production cost of cotton prices in the new year continues to rise; coupled with the expectation of replenishing low national reserves, CCI inventories are at a historical low, Southeast Asian demand remains strong, and the uncertain La Niña phenomenon all affect the smooth decline of cotton prices.
    Valuation Factors Cotton prices are also at their highest level in nearly a decade. According to the pendulum theory, they should also revert to the median value.
In short, macroeconomic liquidity contraction is imminent, valuations are at a ten-year high, and the industry cannot withstand such high cotton prices. Such prices are unsustainable, but they will not fall rapidly in the short term due to factors such as cost support. It is expected that the center of gravity will shift downward in the first half of 2022 and will continue to decline in the second half.

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Leaders from Xiamen C&D Group visited Tongzhou for investigation and guidance

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.

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Leaders from Xiamen C&D Group visited Tongzhou for investigation and guidance
Tongzhou Cotton Market Brief, Week 1 of March 2025

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.

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Tongzhou Cotton Market Brief, Week 1 of March 2025
In 2024, China's exports of dyed and printed fabrics to Vietnam and Bangladesh increased significantly.

In 2024, China's exports of dyed and printed fabrics to Vietnam and Bangladesh increased significantly.

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.

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In 2024, China's exports of dyed and printed fabrics to Vietnam and Bangladesh increased significantly.
President Huang Hongyu was invited to attend the 2025 Zhangjiagang Cotton Industry Development Conference

President Huang Hongyu was invited to attend the 2025 Zhangjiagang Cotton Industry Development Conference

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.

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President Huang Hongyu was invited to attend the 2025 Zhangjiagang Cotton Industry Development Conference

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