Market Analysis: Cotton Demand Peak Season Falls Short Of Expectations

In April, with the warmer weather, a new batch of spring and summer clothing orders were added, which temporarily increased the load of the fabric factory. However, after this batch of orders, downstream demand weakened again.

The national cumulative sales of seed cotton converted into lint cotton was 5.899 million tons, a year-on-year decrease of 812000 tons; The accumulated processing lint is 5.885 million tons, a year-on-year decrease of 780000 tons; The cumulative sales of lint was 3.567 million tons, a year-on-year decrease of 1.452 million tons. By March 2024, China's cotton imports had reached 2.15 million tons, an increase of 1.28 million tons year on year.

The operating rate of domestic pure cotton yarn mills was 57.3%, down 0.5% month on month. The load of all cotton grey cloth mill was 57.5%, down 0.5% month on month.

As of March 2024, the inventory of domestic cotton industry is 748000 tons, an increase of 90000 tons year on year. The commercial inventory of domestic cotton was 4.8594 million tons, a year-on-year decrease of 213000 tons. The total is 5607400 tons, a year-on-year decrease of 120000 tons.

At present, the raw material inventory of the spinning mill is 27.3 days, with a month on month increase of 1 day; the cotton yarn inventory of the spinning mill is 23.2 days, with a month on month decrease of 0.3 days; the cotton yarn inventory of the weaving mill is 13.1 days, with a month on month increase of 0.2 days; the grey fabric inventory of the weaving mill is 26.9 days, with a month on month increase of 0.1 days. The recent increase in orders led to the destocking of finished products in the grey cloth factory, which was transmitted upward to the yarn factory, releasing part of the inventory accumulated by the yarn factory.

From the perspective of the current domestic cotton fundamentals, the supply side is smooth, and there is no weather problem for the time being. It is also necessary to verify the specific changes in the planting area after sowing. As of March 2024, China's cotton imports have reached 2.15 million tons, an increase of 1.28 million tons year on year.

On the demand side, the peak season is less than expected, and the subsequent demand off-season. After another round of smooth decline, the import profit of American Cotton was successfully turned positive. To put it simply, there is high domestic supply, low demand, and profits still exist at the import side.