The Absolute Price Of Cotton Is Low But Counter Substitution Still Takes Time.

At present, the absolute price of cotton has been at a low level and there is limited space to continue.

However, influenced by macroeconomic expectation, cotton prices still maintain a weak oscillation market. In a relatively long period of time, cotton prices are likely to oscillate at the bottom.

In 2015/2016, although the supply and demand relationship of cotton market in China has improved, cotton has entered the inventory cycle as a whole, but it takes time to improve cotton demand.

In addition, taking into account the seasonal characteristics of cotton price fluctuations, cotton prices in 2015/2016 are likely to be low before and after high.

Back to cotton fundamentals, domestic cotton prices have fallen by more than 35% since 2014.

At present, futures warehouse cotton, corps cotton and national cotton are competing to enter the spot market.

Judging from the absolute price, the spot price of cotton has dropped to a low point in the past 6 years. From the relative price, the overall advantage of cotton prices has just begun to show, but the reverse substitution still takes time.

First of all, during the 3 years of cotton storage and storage, domestic cotton was replaced by a large number of chemical fibers, and the chemical fiber products developed well in terms of comfort, functionality and product profits.

At present, the price difference between cotton and PET staple is over 5000 yuan / ton, which is basically the same as viscose staple fiber price.

Cotton price advantage of polyester is not obvious, cotton sticky spreads despite obvious regression, but to recapture the market, from the raw material end of the industrial chain to the consumer end, at least half a year's time, that is, cotton prices need to stop and low oscillation for half a year or so.

Secondly, imported cotton yarn also has obvious substitution for domestic cotton consumption. When domestic cotton price difference is obvious, traders' import enthusiasm is higher.

The path and channel to enter the domestic market have been gradually opened up, and some factories have gradually adapted to the production of imported yarn.

Although there is little difference in the cost of raw materials between the internal and external prices, the cost of processing, financing, water and electricity has increased significantly, the processing cost of spinning has increased year by year, and the actual profit of spinning has been barely flat or even lost.

From the price point of view,

The advantage is not obvious. We must strive for the market from other aspects such as carrying out ability, after-sale service, supply guarantee and so on. This process also requires the relative stabilization of cotton prices in order to give the domestic yarn a breathing space.

Finally, 2014/2015 is domestic.

From the first year of policy to market, there are several prominent problems in the cotton Market: first, the uneven quality of domestic cotton processing and the difficulty in meeting the demand for textile cotton; two, most of the original sales channels of cotton enterprises are lost, and the supply and demand of cotton market are not well matched; the three is that cotton supply is mostly medium and low quality, while the demand is mostly concentrated in medium and high quality, and the low quality of cotton is also lower than the actual quality level.

These structural contradictions need to be solved gradually in the process of market development, so it is necessary to adjust the supply and demand balance step by step.