Downstream Textile Enterprises Will Maintain Low Inventory When Demand Shrinks

From the perspective of cotton textile industry, the situation is very low. It is not significant from the perspective of supply alone, because the cotton supply in 2011 may not be less than it is now, and the current cotton supply may not be seriously excessive.

It is mainly the change of the general environment that has led to the deep adjustment of the downstream. First, from the macroeconomic perspective, structural adjustment is the main theme of our country. With the economic downturn, the country will adjust its industrial institutions, and low-end manufacturing industries such as textiles will bear the brunt; Second, China's textile industry has passed the period of high investment, high growth and high profitability; Third, China's textile industry is also obviously undergoing industrial upgrading, while high-end textile production happens to be closed in a large area of low-end textile mills with low cotton consumption and high cotton consumption.

For these reasons, it is difficult for cotton prices to rebound as quickly as in 2008. After the cotton price bottomed out in 2008, it could rise rapidly. First, governments of all countries vigorously stimulated the cotton price, which led to the rapid stabilization and recovery of demand; Second, China's textile cotton consumption was still at its peak at that time. But at present, neither of them is available.

Current market: prices are low, the mentality is pessimistic, traders leave the market, and all links reduce inventory; The price is in the downward channel, and textile enterprises must keep low in order to prevent losses raw material stock. This is a typical bear market feature, and in a bear market, the bargaining power of the buyer to the seller is strengthened. In the macro adverse and

In the case of industrial adjustment, textile enterprises will maintain Low inventory Status. That is to say, although some disadvantages in cotton supply (high inventory, production increase, internal and external price difference) have been gradually digested, the initiative is in the downstream. The cotton market appears: the pricing power is transferred to the downstream, Textile enterprise Low inventory becomes normal.

From the perspective of cotton fundamentals, the cotton price has fallen to the cost of the processing plant, and there will be a game between the buyer and the seller. At present, there is no condition to make the spot goods significantly lower than the cost; On the other hand, the spot has not improved significantly. The processing factory pays attention to the futures price, and will consider selling on the futures if there is a little profit.

In the longer term, cotton planting has become less attractive to farmers, and the reduction of domestic production next year is a high probability event. With the improvement of the macro-economy, cotton for textile is expected to improve. Although there is still room for cotton prices to fall, it is also gradually coming to an end. There is an opportunity to rebound and go long in the second half of next year.

However, at present, the quality is the root of restricting domestic cotton. The quality of cotton represented by futures cannot attract textile mills. The problem of general decline in the quality of domestic cotton caused by storage and storage will take several years to solve. It needs to be adjusted from farmers, processing and trade. The improvement of the industry is not a temporary success. Before the complete improvement, Cotton prices will remain at the bottom for a long time.