Oversupply Cotton Yarn Price Temporarily Difficult To Rise

Since the Spring Festival holiday, domestic and foreign cotton yarn has been picking up. The increase in production and marketing has been accompanied by a continuous decline in manufacturers' inventory.

Will cotton yarn continue to pick up or even improve in the next 3-5 months?

Starting from the current supply and demand pattern of cotton yarn, the possible trend of cotton yarn market is judged by analyzing the incremental changes of supply side and demand side in the future.

First, forecast the supply and demand balance sheet of cotton yarn in February: supply exceeds demand.

In February, due to the influence of Spring Festival holidays, the average holiday time of cotton spinning factories in China was 3-5 days later than that of the weaving factories, and the average time of commencement after the holidays was 3-5 days earlier than that of the weaving factories.

Cotton production is expected to increase on the basis of 7-10 days' supply (equivalent to 100 thousand tons per month).

Customs data show that the total imports of pure cotton yarn in January 2019 amounted to 156 thousand and 100 tons.

From the point of order before trade and after the festival, the total amount of imported cotton yarn in February is more than that in January.

Since the Spring Festival, the order recovery of weaving factories is relatively slow, and the traditional peak season is not prosperous. Therefore, it can be assessed that the current supply and demand pattern of cotton yarn can be characterized as oversupply.

Analysis of supply side variables in two and 3-5 months

1. production will continue to increase.

Up to now, the domestic cotton yarn factory comprehensive start-up rate has returned to 56.9%, lower than the same period in 2018 (59.6%) and 2017 (61.5%). It is expected that the 3-5 month opening rate will still rise, and the supply of cotton yarn will continue to increase.

2. domestic yarn stocks continue to go stock situation

As of now, domestic cotton mill pure cotton yarn inventory for 21.2 days, lower than the same period in 2018 (27.5 days), higher than the same period in 2017 (18.3 days), a normal high level.

Judging from the current factory and conventional seasonal rules, the cotton yarn inventory goes on to the middle of April.

3. import yarn stocks continue to increase

At present, the import yarn port stock is 75 thousand and 100 tons, lower than the same level in 2018 (81 thousand tons) and 2017 (95 thousand tons).

At present, inventory can be oriented to a normal low level. However, as traders concentrate their orders before March, the supply of imported yarn will continue to increase, and will replace and impact domestic yarn.

Three, future demand side variables analysis

1. looms continue to resume.

Up to now, the domestic cotton mill's comprehensive start-up rate has returned to 61.3%, slightly higher than that of the same period in 2018 (56.9%), much lower than that of the same period in 2017 (77.5%). It is expected that the 3-5 month opening rate will still rise, and the demand for cotton yarn will further increase.

2. weaving mill inventory continues to inventory

Up to now, cotton cloth inventory in China's weaving factories has been integrated for 29.12 days, higher than the same period in 2018 (28.8 days) and 2017 (22.6 days). The current cotton inventory is still at a high level in history.

From the current factory cargo and traditional seasonal law, cotton cloth to stock situation will continue to mid April, this cotton yarn supplement will form a positive pmission effect, the key is to see the speed and rhythm of cotton to stock.

3. traders will stockpile goods rationally.

At present, domestic cotton traders are not willing to hoard goods and order goods. The main reasons are: first, the orders of downstream factories are generally restored, and the peak season is not obvious. Two, at present, the supply of cotton yarn is not lacking, and the output of domestic cotton yarn and the import yarn to port volume are increasing continuously. There is no shortage of goods. Three, cotton trend is not clear, the resistance to overshoot is heavy and the downward space is very limited since the beginning of the holiday. Four, the cotton cotton yarn has gone up and down sharply last year, many traders are seriously injured due to the operation rhythm disorder, and the capital and courage of the blind gamble after the market are restricted.

Therefore, traders are rational and wait for the mainstream mentality.

Four, future market forecast and concerns

To sum up, the current supply and demand pattern of cotton yarn is still oversupply, and the price of gauze is temporarily difficult to rise. The pmission of industrial chain is blocked in the grey cloth link, which is unfavorable to cotton yarn and cotton replenishment.

In the next 3-5 months, from the output and import volume of cotton yarn, the supply side is still adequate. Whether the demand side of grey cloth can be effectively started is the core of the market trend.

If Sino US trade war is reconciled, the order of internal and external sales can be effectively released, and the higher cotton cloth inventory will be more smoothly digested, thus leading to the positive pmission of the industrial chain.

If the peak season continues to continue, the order of grey fabrics has not yet seen a big improvement. The finished inventory of gauze products will be staged again. There will be no suspense in the price decline of the industrial chain products.

Focuses on the following three aspects: first, the order and paction of Shanghai yarn fabric exhibition factory in March, two is the progress of cloth mill cotton inventory digestion and speed, and three is gauze trader's stockpile order time and operation method.