In the domestic market, the characteristics of the traditional off-season are obvious, enterprises purchase raw materials cautiously, mainly de-stock and withdraw funds, and the overall market supply and demand is loose. It is expected that the domestic cotton price will remain low in the short term. In the international market, in the context of the continued slowdown in global economic growth, the consumption prospects of textiles and clothing are still bleak, and it is expected that there is a large downward space for the international cotton price in the short term.
[Details]
(1)Domestic cotton prices fell month-on-month. This month, the overall shortage of downstream orders has not improved, the textile enterprises' start-up rate is at a low level, the finished product inventory is high, and the willingness to purchase raw materials has declined. According to the data of the Inventory Survey Report of China's Cotton Industry, in December 2022, the start-up rate of the surveyed enterprises was 76.2%, down 4.2 percentage points year-on-year and 12.5 percentage points year-on-year; The average days of inventory use was about 26.4 days, with a month-on-month increase of 0.6 days and a year-on-year decrease of 7.5 days; Enterprises preparing to purchase cotton accounted for 57.7%, with a decrease of 2.5 percentage points on a month-on-month basis, an increase of 8.5 percentage points on a year-on-year basis, and a decrease of 2.0 percentage points from the average level of the same period in the past five years. In December, the average monthly price of domestic 3128B cotton was 14966 yuan per ton, down 1.8% month-on-month and 31.9% year-on-year. The monthly settlement price of Zheng Mian futures main contract (CF301) was 13788 yuan per ton, up 4.3% month-on-month and down 30.6% year-on-year.
(2)International cotton prices fell month-on-month. This month, the Federal Reserve announced a 50 basis point interest rate increase and released a signal of continued interest rate increase, which triggered the concern of the international market about the United States and even the global economic recession. The United States Department of Agriculture (USDA) significantly reduced the global cotton consumption, and the international cotton price stopped rising and falling. In December, the average monthly price of Cotbook A index (equivalent to domestic 3128B cotton) was 101 cents per pound, down 0.2% month-on-month and 15.4% year-on-year.
(3)The difference between domestic and foreign cotton prices has widened. The Cotbook A index (equivalent to domestic 3128B cotton) is equivalent to 15661 yuan per ton, 695 yuan higher than the China Cotton Price Index (CC Index) 3128B level per ton, and the price difference is 71 yuan higher than last month. The monthly average price of imported cotton price index (FC Index) M grade (equivalent to domestic 3128B grade cotton) is 101.00 cents per pound, and the price after 1% tariff is 17393 yuan per ton, which is 2427 yuan higher than the domestic price, and the price difference is 6 yuan higher than the previous month; The sliding rate is reduced to the CIF price of 17528 yuan per ton, which is 2562 yuan higher than the domestic price, and the price difference is 9 yuan higher than last month.
(4)Cotton imports increased on a month-on-month basis, while textile and clothing exports decreased on a month-on-month basis. According to customs statistics, China imported 178000 tons of cotton in November, up 37.4% month-on-month and 85.0% year-on-year; The export of textiles and clothing reached US $24.386 billion, down 2.6% month-on-month and 14.9% year-on-year. From January to November, China imported 1.76 million tons of cotton, a year-on-year decrease of 12.2%; The export value of textiles and clothing reached US $297.6 billion, up 4.5% year on year.
(5)The spinning volume fell on a month-on-month basis, and the yarn price fell on a month-on-month basis. According to the data of the National Bureau of Statistics, China's yarn production in November was 2.44 million tons, down 3.2% month-on-month and 6.3% year-on-year. From January to November, China's yarn output reached 24.535 million tons, a year-on-year decrease of 5.8%. In December, the average price of 32 pure cotton combed yarns of the main representative varieties was 22718 yuan per ton, down 1.3% month-on-month and 20.9% year-on-year.
(6)The global cotton supply and demand is loose. The International Cotton Advisory Committee (ICAC) predicted in December that the global cotton output in 2022/23 would be 24.27 million tons, down 760000 tons from the previous month. The consumption was 23 million tons, down 1.91 million tons from last month. The trade volume was 8.66 million tons, down 820000 tons from the previous month. The ending inventory increased to 21.05 million tons, and the global inventory consumption ratio was 91.5%.
(7)It is expected that the domestic and foreign cotton market will be weak in the short term. In the domestic market, Xinjiang cotton processing and sales progress is still slow. According to the data of the national market monitoring system, as of December 29, the cotton processing and sales progress in Xinjiang were 72.4% and 16.8% respectively, down 18.1 and 1.0 percentage points respectively year on year. Downstream demand as a whole has not recovered significantly and is in the traditional off-season. Textile enterprises are cautious in purchasing raw materials, mainly in de-stocking and collecting funds. With the continuous listing of new cotton, the overall supply and demand of the market is loose, and it is expected that the short-term domestic cotton price correction space is limited, and it will still remain low. In the international market, USDA and ICAC significantly reduced the cotton consumption in 2022/23 on a month-on-month basis, and reached a consensus on the loose pattern of global cotton supply and demand. Affected by the European energy crisis, the OECD predicted in the Global Economic Outlook Report released in November that the global economic growth rate will be 3.1% in 2022 and will slow to 2.2% in 2023. In the context of the continued slowdown of the global economic growth, the consumption prospects of textiles and clothing are still bleak, and it is estimated that there is a large downward space for the short-term international cotton price.
