Trading Continued To Be Light, RMB Exchange Rate Appreciation To Repair The Cost Of Imported Yarn

Since July, the overall trading volume of yarn market has been much lighter than before. The mentality of traders and textile enterprises continues to lose, and most of their confidence in the future market has declined. As of July 9, the average price of c32s in China had closed at 18602 yuan / ton, which continued to drop by 22 yuan / ton compared with last week.

After a round of decline, cotton raw material prices began to rebound in April. At the end of June, many textile enterprises and traders believed that cotton should gradually fall down with the increase of market supply. However, in July, the sale and storage officially began, and 100% of the transactions were completed every day. However, the auction price went up. The spot price and Zheng Mian both started a big rise mode, which caught the textile enterprises by surprise. In the first three trading days of July, the main contract price of zhengmian rose from the lowest price of 11650 yuan / ton to the highest price of 12015 yuan / ton, up to 360 yuan / ton; at the same time, the average transaction price of the state-owned storage cotton in the first three trading days reached 12704 yuan / ton, which was more than 867 yuan / ton higher than the reserve cotton round sales reserve price, and 769 yuan / ton higher than the settlement price of zhengmian's main contract of 11935 yuan / ton. Many textile enterprises that keep raw materials in stock in the early stage have to join the "auction and storage army" for fear that the price of raw materials will rise later.

It is reasonable to say that the rise in upstream costs will drive cotton yarn to be better together, which is the most willing market change for textile enterprises. However, through the understanding of many textile enterprises, they generally reflect that it has entered the textile off-season. Affected by the risk of secondary outbreak of the global new crown pneumonia epidemic, the downstream sales are still difficult, and the cotton yarn price has no sign of rising at all. On the contrary, there is still a risk of falling and difficult to rise. At present, the foreign trade of the downstream has fallen to the freezing point, and the only one that still has a little market is domestic sales. However, the domestic demand for cotton yarn is not high. It is understood that at present, the price of 40 yarns and above yarn can not go up, and the goods can not go away. On the contrary, the high performance price ratio of state-owned storage cotton meets the requirements of textile enterprises, which is also the fundamental reason for the popularity of auction storage in recent days. On the other hand, it is not friendly to small-scale enterprises to increase the price of cotton, as well as large-scale storage charges. Many small textile enterprises have no choice but to lower the power on, and even some textile enterprises that have never had a national holiday have a continuous holiday.

In July, the grey fabric market continued to deepen in the off-season of May, and new orders were scarce. Although under the seasonal transformation, the thicker fabrics were gradually sold, but due to the weak demand of terminal links, sporadic orders were difficult to support the whole off-season market. Under the shortage of orders, some weaving factories had to reduce prices or increase preferential policies to ship goods at the price. The price of grey cloth was stable and weak. As of July 9, CG C32 of all cotton grey fabric had reported for 4.5 yuan / m. Since April, the stock of weaving factories has been accumulating rapidly, reaching a high level of about 33 days so far. Especially after the end of the order of mask cloth in June, the production and sales of other grey fabrics are relatively low, and some of them have already been above the level of January. In this case, the weaving mill has to take a series of measures, such as reducing the start-up, holidays, changing production and so on.

As for imported yarn, as of July 9, the spot price of FCY index c32s converted into RMB was quoted at 18476 yuan / ton, slightly rebounded on the same period, up 15 yuan / ton, and the domestic and foreign prices were inverted and maintained at about 120 yuan / ton. The exchange rate of the RMB against the US dollar rose sharply this week, breaking through 7 to close at 6.9943. The appreciation of RMB reduced the purchase cost of imported yarn, and the profit of traders was restored. However, compared with the spot price, the current ship price converted into RMB has little advantage over the spot price. Considering that the downstream demand has not improved, traders and textile mills are still cautious in ordering imported yarn. Therefore, the RMB exchange rate rise of hundreds of points is temporarily difficult to promote the purchase of a large number of ships. However, it is a good time point for settlement of foreign exchange for early orders.