Cotton Prices Hit A New High For Two Years! Textile Companies "Muddled" Dare Not Take Goods.

In early April of this year, cotton prices remained stable for nearly two years.

In just two months, the spot price of cotton rose from the original 15500 yuan per ton to the highest point of 18000 yuan at the end of May.

Cotton prices hit a two-year high and downstream companies reduced stock.

Why did it push up the price of cotton? What kind of impact would this bring to downstream enterprises? The "economic information network" reporter visited Dongying, Shandong, one of the main cotton producing areas in the country.

Xu Zengguo, the head of a cotton processing plant in Dongying, told reporters that the factory was shut down for 4-10 months every year because there was no cotton in the market and new cotton had just been planted, so the whole factory was in a state of shutdown.

However, because of the high cotton prices this year, Lao Xu is not idle now. He buys some cotton from the state store from time to time and sells it to the downstream textile mill.

Xu Zengguo, general manager of Tianxin Cotton Industry Co., Ltd., Dongying, Shandong Province: now, a habit of textile mills is to buy when used, and it does not stock up.

In the factory warehouse of a large textile mill in Zibo, Shandong, the head of the enterprise told reporters that because of the recent unstable cotton prices and a lot higher than the first half of the year, the enterprises did not dare to hoard large quantities of goods. The current inventory is only enough for less than two months' production demand.

Liu Zongjun, general manager of Shandong Zibo silver textile (Group) Co., Ltd.: for the new demand, we should adopt the "instant" method, and no longer increase our next inventory.

It is understood that at the peak of cotton purchase at the beginning of this year, the price was about 13000 yuan. Unexpectedly, in the off-season of April, the price suddenly rose, and the spot price was about 18000 yuan, which has been maintained at about 16000 yuan recently.

The price of cotton has remained at a high level for two years, resulting in less enthusiasm for the downstream cotton textile enterprises to get the goods, but cotton futures prices have been rising rapidly in a short time, from the original 15000 yuan per ton to the highest point of 19250 yuan in May 30th.

Wang Shutong, an analyst of the cotton industry, Zhuo Chuang: the futures price has experienced three consecutive trading restrictions since May 16th, so it has played a great role in the stock market.

Short term demand is difficult to support price rise

Insiders say that

The short-term fluctuation of spot price is mainly affected by the rising of futures price.

So what is the reason for attracting capital? Will there be a shortage of cotton supply on the market?

Xu Zengguo, general manager of Tianxin cotton processing plant in Dongying, Shandong Province: I think a large part is speculation. They are now hyping the weather.

In mid May, the strong wind and sand dust weather in Xinjiang caused some damage to cotton seedlings in some cotton producing areas, which led to the first rise in futures prices and the rise in cotton prices in the short term.

The reporter learned from the downstream textile enterprises that this year's orders did not increase substantially, and the demand for raw materials for cotton remained basically stable.

Data show that in May, the operating rate of cotton textile enterprises above designated size was 56.17%, down 3.05 percentage points year-on-year.

Wang Shutong, Chinese cotton clothing analyst

If the competitiveness and the ratio of Southeast Asia are not so strong, it is not too large to accept the premium space for the rise of cotton prices.

Nevertheless, faced with the rapid rise of cotton prices, the central reserve cotton promptly adjusted the policy of dumping and storage, increased the intensity of dumping and storage, restricted the entry of traders, and prevented the middle sectors from driving up prices.

As of June 9th, the total storage capacity of the State Reserve totaled 1 million 291 thousand tons, with a turnover rate of 62%.

In addition, the NDRC recently announced that it increased cotton import quotas by 800 thousand tons in 2018, and cotton futures and spot prices also fell.

Chen Lei, deputy manager of Shandong Tianyuan cotton storage Co., Ltd.: cotton futures through a period of time

The rapid rise in prices to the present is relatively stable, should be fully reflected in addition to throwing away the meaning of storage.