Global Textile Orders Flooded Into China Cotton Futures Hit A New High In The Year

Recently, with the increase of textile orders during the National Day holiday, the domestic cotton futures market showed a supplementary rise after the festival, up to 1685 yuan / ton, up 11.68%. As of 11:00 on October 15, the price of 2101 contract, the main cotton futures contract, broke through the key position of 14400 yuan and set a new high in the year. Spot market is also booming, downstream orders are very hot, yarn follow the rise.

After several years of silence, the price trend of cotton has experienced a sharp rise for the first time. Some market participants exclaim whether the cotton bull market is coming? Then, is this round of market sustainable? Is the sharp rise in cotton price related to the transfer of Indian textile orders to China. On October 14, Li Xingqian, director of the foreign trade department of the Ministry of Commerce, made a response to the transfer of Indian textile orders to China at a media communication meeting.

Li Xingqian pointed out that China is the world's largest textile producer and exporter, with obvious advantages in the export of labor-intensive products. It is absolutely normal for multinational companies to adjust their order production around the world and for international buyers to select suppliers according to their production capacity. China took the lead in resuming work and production, which effectively guaranteed the supply of the international market and supported the smooth operation of the supply chain of the international industrial chain.

Textile orders transferred to China

According to foreign media reports, in recent months, many large-scale export-oriented textile enterprises in India have been unable to guarantee normal delivery due to the epidemic situation. Many orders originally produced in India have been transferred to China for production, among which the orders for towel and bed sheet are relatively large. Since the beginning of September, the epidemic situation abroad is still grim, and the textile industry in India, Sri Lanka and other countries has been hit hard and delivery is difficult.

In view of the impact of the local epidemic situation, European and American retailers transferred many orders originally produced in India to China to ensure continuous supply. Among the orders transferred from India to China, the orders for towels, bed sheets and other products are relatively large. According to the estimated data, the current order quantity has been arranged to may 2021. As the world's largest cotton producer and the world's largest jute producer, India's situation is not optimistic after entering the second quarter.

According to the data, in 2019, the size of India's textile and garment market will reach 250 billion US dollars (about 1.68 trillion yuan), and the textile industry will account for about 15% of India's total export revenue. As of 13:00, October 14, Beijing time, India has more than 7.24 million confirmed cases, the cumulative number of confirmed cases is the second in the world. With the increasing number of new crown infections in India, the deterioration of the epidemic has led to the shutdown of some textile factories in India, and the phenomenon of layoffs is inevitable.

On the contrary, at the time of the outbreak in China at the beginning of this year, some Indian media believed that the epidemic could make more foreign capital flow into India, so as to reduce dependence on China's manufacturing market and replace made in China. However, the reality is cruel. India's wishful thinking has been completely overturned. Up to now, India's aspirations have been dashed one by one in terms of textile industry and infrastructure construction.

"In the first half of the year, due to the impact of the epidemic, most of the production capacity was idle. After entering August, orders gradually increased. In particular, during the national day, not only all the vacant work stations have been made up, but also the frequency of shift work has been increased. As long as there are orders coming in, we can supply the goods for the customers according to the specified time. " A local textile enterprise in Shaoxing was interviewed by a reporter from China times.

As for the continuous increase of textile orders, Rick's director of information research Lin Guofa told the Chinese times that the demand for clothing orders increased after the cotton Festival. At present, the demand for orders is still strong, the cotton transaction situation is significantly enlarged, and the epidemic situation in India is uncertain. International traders turn their orders to China, which promotes the explosive growth of the demand for clothing and cotton textiles. "La Nina" strong expectations, causing the market to worry about this year's Northern Hemisphere winter, stimulate clothing demand.

Institutions are bullish on 4 stocks

According to the data of the U.S. Department of agriculture, in 2020 / 2021, the global cotton production will decrease, the consumption and import will increase, and the final inventory will decrease. Global production was cut by 900000 bales, mainly from Mali, Pakistan and Greece. Global consumption increased by 1.5 million packets on a month on month basis, mainly from China and India. Global cotton imports increased by 500000 bales on a month on month basis, as China's imports increased by 500000 bales.

Lin Guofa said that only five trading days have been spent after the festival, and the cumulative increase of cotton has reached 1345 yuan / ton. However, from a fundamental point of view, cotton did not show significant positive, the northern hemisphere cotton harvest, this round of cotton rise, part of the reason is due to low cotton prices in the past, the United States cotton production has decreased, India this year's new crown epidemic is serious, may also reduce cotton flower production.

At the same time, from the point of view of cotton price and planting income, cotton prices continued to be low in the past two years, which really affected the cotton planting link, and the global cotton inventory showed a downward trend. With the further increase of quantitative easing in the United States, the weakening of the US dollar, and the expectation of agricultural disaster climate, global agricultural products generally rose, while cotton continued to be under pressure in the early stage, and the current rise was likely to rise explosively.

In addition, affected by the increase in textile orders, on October 14, among the 28 Shenyi class industries, the textile and garment sector rose 2.17%, the largest increase. All cotton era, the parent company of robust medical closed trading limit less than half an hour, mask concept stocks cool smart and Blum Oriental soon opened trading limits. As of the close of October 14, Kute intelligent (300840. SH) and Blum Oriental (601339. SH) were trading, while Jujie microfiber (300819. SZ), Jinchun shares (300877. SZ), Zhongwang cloth art (605003. SH), Xinye textile (002087. SZ) also rose sharply, with the increases of more than 9%, 8%, 6% and 6%, respectively.

According to the data obtained from Alibaba international station, since May, the number of orders for fabrics and textile raw materials in China has increased by more than 100%; the number of orders in the clothing industry has increased by more than 200% over the same period last year, and the clothing industry has achieved a three fold growth in July. Industry insiders believe that in October double festival, double 11, "cold winter" and other factors, with the consumption continues to rise, textile and clothing industry is expected to usher in the peak season.

China's textile and clothing industry "turnover" is mainly in the second half of this year. According to the data, from January to August, China's textile and clothing exports reached 187.41 billion US dollars, a year-on-year increase of 5.6%, 1.3 percentage points faster than that from January to July. In August, China's textile exports amounted to 14.72 billion US dollars, a year-on-year increase of 47%; and clothing exports amounted to US $16.21 billion, a year-on-year increase of 3.2%, achieving the first monthly positive growth in the year.

Affected by the epidemic situation in the first half of the year, more than 80% of the clothing industry enterprises' revenue decreased, which seriously affected the prosperity of the industry. According to the data of the Ministry of industry and information technology, in August, the clothing export volume increased by 3.23% year-on-year, which was the first time that the clothing export volume recovered to positive monthly growth after seven months of negative growth in the year. In addition, it means that the cold weather over the central Pacific and the East China Sea will last for a certain period of time. The extremely cold weather in winter this year has greatly stimulated the consumption of winter clothes.

Recently, the prices of cotton, chemical fiber and other bulk commodities in the upstream have increased, driving the prices of yarn and other products. In addition, with the rise of fabrics and the explosion of dyeing factories, large orders of one million meters appear frequently in the market, mainly for cold clothing fabrics, such as danbu, Nisi, Chunya textile, T400, etc., and the capacity utilization rate of OEM factories has increased to 80% - 95%. A fabric merchant said: "this year, our home textile sales are more impressive than in previous years, mainly due to the large number of orders placed in the U.S. market, and more supplies to IKEA, Wal Mart and other large supermarkets.".

Guoxin Securities believes that October will usher in the third quarter performance disclosure window period, and is optimistic about the excellent performance of high-quality leading companies under the background of the industry boom improving month by month. At the same time, looking forward to the fourth quarter, under the stimulation of October double festival, double 11, "cold winter" and other factors, along with the continuous rise in consumption, it is expected to usher in the peak season market, and we are optimistic about the high-quality companies with potential for performance improvement. It is suggested to pay attention to SEMAR clothing, taipingbird, biyinlefen, kairun, etc.

At the same time, for the later trend of cotton futures, Lin Guofa said that cotton had been in a low shock in the early stage, mainly due to the continuous downturn in cotton prices, which seriously affected cotton planting, the decline in cotton production in the United States and India this year led to a decline in global cotton production. Cotton low price and yield decline limit the decline of cotton space, while the demand downturn suppresses the rise of cotton. With the explosive increase of clothing orders after the festival, changing the original supply and demand changes, the disk has been a breakthrough rise, maintain the low point to do long, the target is to look at 15000, strictly implement the stop loss, the disk fell below 14000 stop loss.