Has Kim Gu Been Far Away From Yarn To Spring?

Looking forward to it, Kim Gu finally arrived. The market, as we all look forward to, has finally welcomed some good signs. As of September 5th, the domestic C32S average price was 20538 yuan / ton, down 120 yuan / ton compared with last week.

As can be seen from the above figure, the phenomenon of textile enterprises cutting down and shutting down in the first half of August remains unchanged, and stocks are slowly accumulating. However, in the second half of the month, the market sales also improved slightly with the slightly increased orders from the downstream. Part of the pre cut production enterprises have resumed. But at the end of the month, because of the $300 billion tax problem, inventories increased again, and things didn't get better until the beginning of September.

Judging from the upstream raw materials, since the end of August, the price of domestic cotton and other textile materials has gone through a sharp decline. At present, the price is expected to hit bottom. According to the ginning factory, the spot cost is nearly 2000 yuan / ton. Many industries believe that cotton prices have bottomed out. Therefore, for textile mills, the current minimum price will be the lowest cost. Many textile mills said that as the upstream raw materials stabilized or played a certain role in supporting the yarn. In particular, the raw material is in the low position, and the future is easy to rise or fall.

From the profit point of view, if the spinning enterprises are buying now, the profits have already turned to profitability and even reached about 600 yuan, and if the cotton spinning is used before, most of the spinning enterprises are still near or near a break even line. It is understood that part of the textile enterprises to implement low-cost quick forward strategy, the current business situation is acceptable. The efficiency of some spinning enterprises is not as bad as that of the market. For the whole market, many textile enterprises lost money in 2019, and they could not operate. However, many people neglect that some other manufacturers are making good progress and making good profits. According to some manufacturers, although the recent orders have not been particularly improved, enterprises have already used low cost raw materials, and the yarn profit margins are still good. And some big factories have better operating efficiency and bring some impetus to the market.

The feedback from downstream textile mills started from late August, and the inventory of grey fabrics began to slow down. Although the inventory level remained at a high level of nearly three years, fortunately, most dyeing factories did not easily increase the dye fee, and the dye cost of many dyeing factories did not rise or fall, which brought good benefits to the cost of yarn and cloth products, and it was also a major performance of the market from the off-season to the peak season.

In recent months, the price of internal and external yarns is almost the same. As of September 5th, the FCY Index C32S index was 21230 yuan / ton, down 72 yuan / ton compared with last week. In August, the RMB exchange rate was greatly weakened by macroeconomic factors. The exchange rate made the cost of import cotton yarn raising substantially increased, and imported cotton yarn manufacturers increased their risk aversion and acted cautiously.

With the global economic downturn and the decline in China's demand, global yarn prices are also falling slowly. But it is worth noting that the recent trend of cotton yarn rebounding in India is due to the high cotton prices in India this year. At present, the price of India S-6 is 72.5 cents / pound, while the Cotlook A index is 69.65 cents / pound, which is also the main reason why the cotton yarn in India can not fall. At the same time, the high price of raw materials has also affected the domestic textile and clothing industry in India. The export is seriously hampered and the international competitiveness is declining.

To sum up, although downstream demand has some action, it has not yet been released. Textile enterprises are still in the inventory stage. But on the other hand, although there are many pressures on Sino US trade frictions, the continued depreciation of the RMB and environmental protection in recent years, many textile companies are also working hard. Especially in September, some manufacturers' orders and profits have been better. After a long decline, is it possible for the yarn to arrive in the spring? Let's wait and see.