500mm High Speed Single Twisting Machine

Since June 2018, cotton prices at home and abroad have experienced a "bear market" for up to one and a half years, including a 37.8% decline in the Zheng cotton index and a 40% decline in the US cotton index. Since October 2019, with the improvement of Sino-U.S. trade relations, cotton prices have rebounded from oversold, among which Zheng cotton has risen by 16.13% in total. The start time of American cotton rebound is 20 days earlier than that of Zheng cotton, and the increase has expanded to 20.8%.

Under the influence of the psychology of "buying up but not buying down", the center of cotton operation has been shifted up, and the market confidence has improved significantly. In December 2019, the downstream cotton spinning enterprises even took the initiative to replenish the stock, which has boosted the resonance rise of Zheng cotton period, and the rise of 3128 grade lint spot reached 10.84%.

Increase in price of raw materials boost cotton yarn

In the case of low demand and wait-and-see in the downstream, cotton yarn market started slowly. In late December 2019, cotton yarn price officially entered the rising channel. In the meantime, it rose three rounds successively, one round in late December 2019, one round around New Year's day and one round in early January 2019. Although the order quantity before the Spring Festival is insufficient, due to the continuous improvement of the price of raw materials, cotton textile enterprises continue to be bullish in the aftermarket, and the atmosphere of reluctant to sell is rising. Some enterprises do not receive large orders before the festival, but only small orders; some enterprises accelerate the accumulation of cotton yarn inventory, and stop production for 1-3 days before the Spring Festival, and start construction for 1-7 days later according to the inventory situation after the festival. However, product sales generally return to work early, mostly from the sixth to the eighth day of the first month.

Cotton textile enterprises actively stock up

Since the improvement of Sino-U.S. trade relations in October 2019, with the rise of raw material prices, especially since December 2019, the raw material prices have accelerated, the cotton textile industry chain is expected to improve, the speed of cotton yarn destocking has accelerated, and the profits of cotton textile enterprises have been restored. In addition, near the Spring Festival, cotton textile enterprises actively stock up. As of January 19, the available days of cotton stock of cotton spinning enterprises in Shandong are 45 days, and some large enterprises have higher stocks, 60-90 days, while some small and medium enterprises have lower stocks, less than 30 days. At the same time, local cotton spinning enterprises cotton yarn inventory for 25 days, active winter storage before the festival. It is expected that cotton textile enterprises will resume production from the sixth to the eighth day of the first month. However, the logistics and transportation mostly return to normal after the Lantern Festival. According to this calculation, the cotton yarn of Shandong cotton spinning enterprises will continue to accumulate, which may exceed 30 days.

In addition, the increase of import yarn price and the reduction of central bank's standard have helped the cotton spinning market to a certain extent. On January 16, China and the United States signed the first stage trade agreement. With the implementation of the agreement, downstream orders are no longer waiting. After the Spring Festival, orders are expected to "blowout", and the cotton yarn market will usher in "little spring".

Although cotton prices continue to rise, but the problem of downstream price reduction is prominent, and some weaving enterprises intend to turn to chemical fiber products. For example, before the Spring Festival, a pure cotton production enterprise received 70% of the foreign trade orders. The orders were maintained until March, but the price was seriously depressed by foreign businessmen. In order to save costs, the enterprise intended to transfer the production of cotton. In addition, the signing of the first phase agreement between China and the United States means the alleviation of short-term trade friction, but it is not the end. Therefore, although the cotton yarn market is expected to be better after the Spring Festival, it is also necessary to be cautious. For textile people, only by exercising their internal skills and using hedging tools such as futures and options, can they cope with the possible trade friction in the later period.

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