On Thursday (24th), CCIndex3128B reported at 17,943 yuan per ton, for the first time to break through the threshold of 18,000 yuan per ton. Since China abandoned its temporary purchase and storage policy and issued a cotton target subsidy price policy of 19,800 yuan, the domestic cotton spot trading market continued to fall for 25 trading days, and it fell sharply in the past five trading days.
The CCIndex3128B index, which reflects the domestic standard-level cotton spot transaction price trend, shows that as of the current cotton fermentation period in April, CCIndex3128B has fallen by 7.6%.
The spot market price of cotton is now close to the reserve price of 17,250 yuan per ton of reserve cotton. The continued downward movement of spot prices will increase the difficulty for China's reserve cotton to go into inventory, and the pressure on the State Reserve Cotton to lower prices will increase further. At present, the country's cotton stock is about 13 million tons. According to the domestic cotton processing volume in 2013, it is enough for the Chinese textile industry to use about 1.5 years. Under normal circumstances, cotton inventory is maintained by the market for 3 months.
The spot price of cotton dropped sharply, resulting in a narrowing of the domestic and foreign cotton price gap to around 3,000 yuan per ton. China's cotton textile industry is enjoying all-round goodness. Considering that since March, the textile industry has successively lowered its corporate cotton inventory, many companies implement the cotton purchase-and-buy policy. The market expects that the initial impact of domestic cotton price decline will be the loss of cotton inventory discounts. It was gradually eliminated at the end of April. At the same time, the profitability of the textile industry will be reflected in the second quarter due to the substantial drop in raw material costs.
According to market participants, under the current cotton policy and without sudden changes in policy variables, the spot price of cotton has already been declining. If the future decline continues, it is expected to increase cotton consumption in the domestic market, and then viscose staple fiber, polyester, etc. Alternative fiber prices have caused some impact.
According to past industry estimates, a 1% drop in demand for cotton will increase the demand for about 10% of viscose staple fiber.
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