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downstream rigid demand may show up gradually and cotton yarn mills are likely to embrace short prosperity
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downstream rigid demand may show up gradually and cotton yarn mills are likely to embrace short prosperity

Views:0     Author:Site Editor     Publish Time: 2019-08-29      Origin:Site

Orders recover slightly: According to the survey, the orders turn better recently. In Guangdong and Shaoxing, orders of some varieties are heard to increase. But under the severe economic environment, both domestic and overseas markets are bearish. Many cotton yarn mills reported that most orders were small yet a bit more frequent. They took orders with thin profits mainly for keeping operating rate and regular customers. Some medium and large-sized mills described that they had standing orders for special varieties which brought them survival room, but their profits also turned much worse than past years.

Inventory differs among regions:Destocking by lowering prices from Jun has brought fruits. In terms of different varieties, carded cotton yarn is sold well and the inventory is less than 10 days in general. Some even have no stocks. However, sales of open-end, combed and high-count ones are stagnated and their inventory is high with open-end one at about one month and combed and high-count one at about 1-2 months.

Operating rate is expected to recover: Jul was the traditional slack season for textile and apparel. Under high inventory, stagnated cash flow and scarce orders, cotton yarn mills had to cut or suspend production and take holidays to lower the operational pressure. As a result, the operating rate decreased to year’s low. However, with “Golden Sept and Silver Oct” coming, the mills which took holidays before restart gradually, thus the operating rate is expected to recover.

In conclusion, as traditional peak season comes, downstream rigid demand may show up gradually and cotton yarn mills are likely to embrace short prosperity. But due to the potential uncertainties, cotton yarn destocking will continue and the peak season may not see “peak”.

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