CNCotton: Local resources from Hebei, Shandong and Tianjin reported that trading of domestic cotton expanded during the Labor Day holiday with prices falling below 14,000 yuan per ton.
The March-May period is known as the busiest season for textile market. This year, however, domestic textile market has been much less dynamic. A 20,000-spindle mill in Shandong province registered very good cotton yarn sales before the Spring Festival. Since then, cotton yarn sales has turned very flat and yarn stock rose to 200 tons, which in turn caused a serious financial restraint. Despite this, this mill is forced to maintain normal operation by purchasing raw materials on credit. Anther factor is the problematic textiles export and millshand-to-mouth strategy appeared just unavoidable, which is also unfavorable for boosting domestic sales. Currently, all cotton enterprises that hold large cotton stocks are facing a major risk and how to liquidate the stock as quickly as possible became the top issue.
At present, while the downward potentials of domestic price are uncertain to the industry, people are fully aware that prices are at least unable to rally. The consistent sluggish market, along with the pressure of bank loans and higher storage cost, some cotton enterprises have no choice but to sacrifice. One cotton enterprise in Hebei province could suffer a loss of 200-500 yuan per ton if it sells T328 at 13,900 yuan per ton or T428 at 13,300 yuan per ton.
The "May Bull"has thrown the market into a depression in which many enterprises feels nothing but uncertainty. Industry analyst noted that the key point of government controls is to maintain stability. As a result, no major fluctuations are expected in the last few months.
