Industry Observation: Textile Market Recovered, Domestic Cotton Price Continued To Rise

In 2019 / 20, affected by the epidemic situation and Sino US economic and trade frictions and other factors, the demand for cotton market was weak, and the overall cotton price dropped significantly, but with the steady recovery of the domestic economy, the cotton price gradually rose; the domestic cotton policy remained stable, the target price continued to be implemented in Xinjiang, the rotation of reserved cotton was steadily promoted, and the import quota was timely issued; Cotton output decreased slightly, imports continued to decrease, and inventory at the end of the period decreased compared with the previous year.

In August, the traditional textile peak season is approaching, the market has improved, the orders of enterprises have increased, the domestic cotton price has continued to rise, the reserved cotton has continued to be sold, and the commercial inventory of cotton has decreased. China Cotton Association predicts that in 2020 / 21, the total cotton production in China will be 5.9315 million tons, with a year-on-year increase of 0.44%; the import volume will be 1.98 million tons, with a year-on-year growth of 25.3%; and the consumption will be 7.99 million tons, with a year-on-year increase of 4%.

1、 Cotton production in China increased slightly

In August, the meteorological conditions in most cotton areas of the country are suitable for cotton growth, and the occurrence of diseases and insect pests is light and the growth is good. Most of Xinjiang is in the boll opening stage, which is less affected by diseases and insect pests, and the yield has increased steadily; the meteorological conditions in the Yangtze River Basin are conducive to the recovery and growth of cotton after the disaster, and the decline rate of yield is narrower than that of last month; most of the meteorological conditions in the Yellow River Basin are favorable for cotton growth, the occurrence degree of diseases and insect pests is relatively light, and the yield is basically the same as the previous period. According to the prediction of China Cotton Association, the total cotton output in 2020 will be 5.93 million tons, with a year-on-year increase of 0.44%. Among them, the cotton output in Xinjiang will be 5.244 million tons, with a year-on-year increase of 4.1%; the cotton output in the Yellow River Basin will be 386000 tons, with a year-on-year decrease of 15.3%; and that of the Yangtze River Basin will be 256000 tons, a year-on-year decrease of 28.9%.

2、 Domestic cotton price rose, while foreign cotton price was lower than domestic cotton price

In August, all the domestic reserved cotton was sold, the production of textile enterprises improved slightly, and the domestic cotton price continued to rise; affected by the epidemic situation, the decline of the US dollar index and other factors, the international cotton price rose slightly. At the end of the previous month, the cotton price was RMB 1248 / ton, up from the end of the previous month to RMB 1248 / ton, up from RMB 1278 yuan / month-on-year. China's import cotton price index fcindex m was 70.14 cents / pound, up 0.76 cents month on month. At the end of last month, it was 71.09 cents / pound, higher than 1.47 cents / pound at the end of last month. The 1% tariff was reduced to 12275 yuan / ton, which was lower than 433 yuan of domestic spot goods in the same period. The difference between domestic and foreign cotton prices was 290 Yuan larger than that at the end of last month.

3、 Commercial banks continue to decline

Textile market recovered, enterprises actively bid for reserve cotton, commercial inventory continued to decline. The national total cotton inventory decreased by 46.14% compared with the end of last month. Affected by the epidemic situation and the rise of highway freight, Xinjiang cotton export volume continued to decline. According to statistics, Xinjiang cotton professional warehouse outbound shipment volume was 187400 tons, a month on month decrease of 60200 tons, a year-on-year decrease of 68800 tons.

4、 Enterprise orders have increased, textile and clothing exports maintain a positive growth

With the advent of the traditional textile season, the textile market has improved, and the orders of enterprises have increased. This month, yarn output rose 3.4% month on month, down 4.6% year-on-year; cloth output rose 3.8% month on month, down 4.9% year-on-year. Although the textile market has recovered, the sustainability is insufficient. Enterprises purchase raw materials cautiously and reduce the inventory pressure. At the end of August, the cotton inventory of textile enterprises was 605600 tons, down 23900 tons compared with the end of last month, with a year-on-year decrease of 81700 tons.

In August, China's foreign trade exports continued to maintain a positive growth. According to the customs data, China's textile and garment exports reached US $30.93 billion, an increase of 20.26% over the same period of last year, of which the export of textile yarn, fabric and products reached 14.72 billion US dollars, an increase of 46.96%; and the export of clothing reached 16.21 billion US dollars, an increase of 3.23%. From January to August, the cumulative export of textiles and clothing was 187.41 billion US dollars, up 8.11% year-on-year, 2.5 percentage points higher than that of the previous period. Among them, the export of textile yarn, fabric and products was 104.8 billion US dollars, with a year-on-year increase of 33.4%, 2.1 percentage points higher than that of the previous period, and the export of clothing and accessories was 82.61 billion US dollars, with a year-on-year decrease of 12.9% and a decrease of 3.7% compared with the previous period.

5、 400000 tons of sliding standard tax quota will be issued

On August 31, the national development and Reform Commission (NDRC) announced that in order to meet the needs of textile enterprises for cotton, a certain amount of import quota of preferential tariff rate beyond tariff quota (hereinafter referred to as cotton import sliding standard tax quota) will be issued this year, with a quantity of 400000 tons, all of which are non-state-owned trade quotas, and are limited to processing trade import.