During the week ending June 30, domestic cotton price continued to go down; both ZCE futures and CNCE price showed further decline; cotton yarn price remained stable while polyester staple price went up aggressively.
1. Spot trading reduced
According to the sample survey of National Market Monitoring System (NCMMS) among 608 cotton growers of 11 provinces as of June 28, cumulative sales of seed cotton reached 1,754 tons, accounting for 97.82% of their total inventory, up 0.12% from the previous week but down 1.36% year on year. Another survey of NCMMS among 66 ginners shows that the ginned seed cotton accounts for 97.69% of their total inventory, up 0.68% from the previous week but down 1.71% year on year, with sold cotton accounting for 69.36% of their total inventory, up 1.02% from the previous week but down 16.17% year on year.
Based on the cotton production of 5.7 million tons and harvested cotton accounts for 99.05% of the total, procured cotton had reached 5.4923 million tons as of June 28, up 0.68% from the previous week, with ginned cotton reaching 5.365 million tons, up 43,000 tons from the previous week. Cumulative lint cotton sales reached 3.81 million tons, up 60,000 tons from the previous week.
2. Spot price continued to go down while ZCE futures and CNCE price showed further decline
The Agricultural Development Bank of China (ADBC) hastened ginners and merchants to repay the loan more frequently. As a result, most ginners and merchants cut prices constantly. In spite of it, mills did not show any enthusiasm at all. Trading remained light, with T328 fell below 14,000 yuan/ton in some region. Both ZCE futures and CNCE price showed further decline. It should be noted that the price of the most active ZCE contract had been lower than spot price. On June 29, T328 was averaged at 14,061 yuan/ton, down 12 yuan or 0.09% from the previous week. ZCE August contract was settled at 13,900 yuan/ton, down 175 yuan or 1.24% from the previous week. CNCE August contract was averaged at 14,096 yuan/ton, down 201 yuan or 1.41% from the previous week.
3. Yarn price remained stable while and polyester staple price went up aggressively. Cotton yarn price went on smoothly while polyester staple price increased sharply. 32S carded cotton yarn was offered at 19,395 yuan/ton, almost unchanged from the previous week. Polyester staple price was offered at 11,450 yuan /ton, up 200 yuan or 1.78% from the previous week.
4. Outlook
Misfortune never comes singly. Safeguard actions, yuan appreciation, reduction of VAT rebate, and traditional low season came one after another. Furthermore, the National Development and Reform Commission (NDRC) issued an urgent notice to raise the price of electric power on June 28 and announced the relevant details on June 30. Average power network price increased by 11.74 yuan/MWh; and average power selling price increased by 24.94 yuan/MWh, which is equivalent to 0.02494 yuan/KWh. Insiders point out that the increase of power price aims at enterprises. As domestic textile mills are struggle for the withering profit margin, this act is simply a fatal blow upon them. Therefore, it takes time for domestic cotton merchants to be rescued from current desperate situation.
