Domestic and foreign cotton prices fell, and global textile orders improved
1. International cotton prices adjusted downward
Last week, multiple employment data in the United States showed that the market was still strong, the probability of a small interest rate cut by the Federal Reserve in December increased overall, the US dollar rebounded overall during the week, and the US cotton futures market was under pressure; the contract volume of US cotton fell from the previous high during the week, indicating that demand weakened after the cotton price rebounded. Affected by this, ICE cotton prices fluctuated downward throughout the week. At present, the market still lacks directional guidance, and it is difficult to rise or fall. On December 6, the price of the main ICE cotton contract was 70.10 cents/pound, down 1.85 cents from last week, a drop of 2.57%.
2. Polyester staple fiber prices continued to fall
Last week, the main polyester staple fiber futures rose first and then fell, and the spot price loosened, falling from 6,980 yuan/ton to 6,950 yuan/ton. Weak demand expectations and weak costs have led to a continuous decline in staple fiber prices. On December 6, the price of polyester staple fibers was 6,950 yuan/ton, down 15 yuan from last week.
3. Viscose staple fiber is stable but slightly weaker
Last week, the market price of dissolving pulp, the main raw material of the upstream, remained stable and firm. During the week, some manufacturers of viscose staple fiber underwent maintenance, and the market inventory was slightly reduced, the supply pressure was narrowed, the downstream market demand was weak, and the purchase of raw materials was limited. Under the game of favorable and unfavorable factors, the overall price was stable but slightly weakened. On December 6, the price of viscose staple fiber was 13,720 yuan/ton, down 20 yuan from last week.
4. The pressure to reduce the price of cotton yarn increased, and market expectations were weak
As the market entered December and the off-season deepened, the new orders received by textile enterprises continued to decrease last week, and the pressure on finished product inventory continued to rise. During the same period, cotton prices stopped rising and fell, and the pressure to reduce the price of cotton yarn increased. Textile enterprises reduced prices to varying degrees according to their own tolerance, and the market price was slightly chaotic. The operating rate of downstream weaving enterprises was reduced, traders lacked motivation to replenish inventory, and the pressure on textile enterprises to collect payments continued to rise. There are some differences in the market regarding the expectation of replenishment before the two festivals. Some believe that demand will still increase, while some companies consider that the market sales expectations during the festival are not good, and the expectation of replenishment is not strong. The expectation of Trump's tariff increase continues to ferment, and companies have weak market expectations for next year. Some believe that some textile companies in the mainland will close down. On December 6, the price of rayon 30S was 17,200 yuan/ton, down 100 yuan from last week; the price of cotton 32S was 21,250 yuan/ton, down 50 yuan from last week; the price of polyester 32S was 11,250 yuan/ton, down 150 yuan from last week.
5. Outlook for the future market
From the perspective of the operation of the international cotton market, the decline in the high level of US cotton contracts indicates that the demand side of the international market is still difficult to support a sharp rise in cotton prices. At this stage, the sustainability of the Fed's interest rate cut is in doubt. Trump's coming to power may stir up the expansion of the global trade war, and the overall demand lacks the momentum for sustained growth. The increase in global cotton supply will also suppress the market to a certain extent in the short term.
Judging from the operation of the domestic cotton market, the current supply pressure of concentrated cotton processing and listing has increased, the seasonal weakening of the demand side, the increase in foreign trade tariff barriers, and the strengthening of expectations for the transfer of external demand have caused the industrial chain to enter a wait-and-see state. The production capacity and inventory pressure of textile companies will continue to increase. It is not ruled out that the operating rate will be reduced again in the short term, and the overall industrial chain market will continue to operate under pressure.