Tongzhou Cotton Market Brief, Week 4 of May 2023

I. Zhengmian (China's cotton futures contract)
(1) Positive factors
1) Currently, the overall operation of downstream industries remains healthy, and the finished goods inventory of yarn factories is still at a low level, with no significant negative feedback.
2) With the sharp rise in the US cotton 07 contract, and the increase in the sliding scale tax price of Zhengmian, the upward space for Zhengmian has shifted upward.
3) Recently, some areas in southern Xinjiang have experienced sandstorms, and there have been hailstorms in places like Wusu. This year's supply-side weather has been unusually abnormal, and the market is highly sensitive to this abnormality.
(2) Negative factors
1) The current valuation of Zhengmian is in the mid-to-high range. Based on the relatively relaxed supply and demand in this year, cotton prices do not have the potential for a significant rise.
2) Although supply has decreased, prices have risen by 2,000 yuan/ton from the low point of 14,000 yuan/ton, and the market has fully traded the short-term weather factors.
3) Entering the latter half of May, downstream industries are gradually entering the off-season, and consumption has decreased compared to the previous period, with no bright spots on the consumption side.
II. US cotton
(1) Positive factors
1) There are very few US cotton warehouse receipts; recently, they have decreased from 75 to 63. A low number of warehouse receipts can easily lead to a short squeeze.
2) US cotton has shown good weekly signings in the past four weeks. US cotton is oversold, and end-of-period inventories continue to decline.
3) Pay attention to the impact of the El Niño phenomenon on the weather in India. If the monsoon is delayed or rainfall is significantly reduced, India may experience a third consecutive year of reduced production.
(2) Negative factors
1) The US debt ceiling issue is imminent, and the impact is increasing. If a debt ceiling agreement is not reached, the US government will be unable to pay all its bills within days or weeks, and the consequences will be enormous.
2) With the increase in US cotton prices, downstream purchasing intentions are weak, and high cotton prices cannot be effectively transmitted.
3) Downstream operations in Southeast Asian countries are still poor, exports have not improved, and the destocking cycle in Europe and the US has not yet ended.
 
Points to note: Weather premiums
 

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Tongzhou Cotton Market Brief, Week 3 of May 2023

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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