Physical trade improved with steady price
This week, domestic spot price maintained steady. Both ZCE and CNCE market experienced a wide consolidation. Cotton yarn price posted marginal decline and polyester staple price continued to fall.
1. Physical market turned a bit active
According to the survey by the National Cotton Market Monitoring System with the 11 provinces (56 counties/cities), by May 24, cumulative seed cotton procurement totaled 1747 tons, 96.89% of the entire production. This is 0.04% higher than previous week but 1.75% lower than year ago level.
According to another survey with the 66 mid-large size cotton processing enterprises, by May 24, the progress for the new cotton s processing was at the rate of 95.60%, 0.57% higher than previous week but 3.80% lower than year ago level. Average selling progress rate recorded 62.71%, up 1.67% from a week earlier but a 14.86% decline year on year.
Based on a 5.7 mil ton crop, cumulative lint cotton procurement has reached 5.47 mil tons, a 2,000 tons increase compared to previous week. Cotton processing was up 30,000 tons to 5.23 mil tons and cumulative selling increased 90,000 tons to 3.43 mil tons.
2. Physical price stable, ZCE and CNCE in a wide consolidation
This week, cotton enterprises from various regions have been more active in sales in an effort to avoid market risk and offset any pressure from bank loans. Prices managed to hold the level. However, due to lagging sales at the downstream market, spinners are slow to increase purchase. ZCE and CNCE market consolidated with an insufficient support from the spot trade.
On May 25, CNCotton B index average price declined 7 to 14078 yuan per ton, a decrease of 0.05% from previous week. MA0606 rose 167 to 14,413 RMB/ton, reflecting a 1.17% decrease. CF0607 closed at 14315 RMB/ton, down 10 yuan from last week, a drop of 0.07% from previous week.
3. Cotton yarn price posted marginal decline, polyester staple continued to fall
Domestic cotton yarn price registered small declines. 32s carded yarn is quoted at 19460 RMB/ton, down 20 yuan from previous week, reflecting a 0.10% decrease. Polyester staple price dropped 30 yuan to 10600 RMB/ton, a decline of 0.28% from a week earlier.
4. Outlook for the coming week
For the first period of 2006, U.S. import of Chinese textile products increased both in quantity and in value terms. Total volume surged 3.51% to 3.6 billion square meters and gross value totaled 4.775 billion USD, up 0.13% from year ago level. Average unit price declined 4.6% year on year. Prices for items in the categories of Sino-U.S. agreement fell 28.76%. U.S. achieved expansion in textile imports from Pakistan, Indonesia, Bangladesh, Cambodia and other Asian countries with a year on year growth rate above 10%. Pakistan has replaced Mexico to become the second provider, taking 7.43% of the total imports during this period. Such a condition indicate that, the imposition of textile quota by U.S. and E.U. on Chinese textile products and an accelerated RMB appreciation have resulted in a loss of export orders. At the same time, Chinese textile mills, suffering from a declining orders and a much lower profit, are forced to reduce purchase of raw materials so as to improve cash flow. This coupled with a weakening demand for the downstream products and an intensifying bank loan restraints, provide little chance for domestic price to stage a rebound.
