Monthly Report: Textile Market Recovery, Domestic Cotton Prices Rose (Aug. 2020)

In August, the traditional peak season of textile is approaching, the market has improved, the order of enterprises has increased, the domestic cotton price has continued to rise, the round of cotton reserves continue to complete the transaction, cotton commercial inventory decline. China Cotton Association predicts that the total production 2020/21 is 5,931,500 tons, with a year-on-year growth of 0.44%. Imports of 1.98 million tons, up 25.3% year on year; Consumption was 7.99 million tons, up 4% year on year.

1. The National Cotton Production Steady Slightly Increased

In August, the meteorological conditions in most cotton areas of the country were more suitable for cotton growth, with less occurrence of diseases and insect pests, and better growth. Most of Xinjiang in the batting period, steady increase in production; The meteorological conditions in the Yangtze River basin were conducive to the recovery and growth of cotton after the disaster. Most of the meteorological conditions in the Yellow River basin are conducive to the growth of cotton, the incidence of pests and diseases is relatively light, and the yield is basically the same as the previous period. According to the prediction of China Cotton Association, the total output of cotton in 2020 is 5.93 million tons, with a year-on-year growth of 0.44%, among which, the cotton output of Xinjiang is 5.244 million tons, with a year-on-year growth of 4.1%; Cotton output in the Yellow River basin was 386,000 tons, down 15.3% year on year. Output in the Yangtze River basin was 256,000 tons, down 28.9 percent year on year.

2. Domestic Cotton Prices Rose, Foreign Cotton Increase Less than Domestic

In August, the national cotton reserves transactions completed, textile enterprises slightly improved production, domestic cotton prices continue to rise. At the end of the month, China cotton price Index (CCIndex3128B) was 12,708 Yuan/ton, up 389 Yuan from the end of last month. The monthly average price was 12,476 Yuan/ton, up 320 Yuan month on month and down 1,058 yuan year on year. The difference between domestic and foreign cotton prices was 290 yuan more than that at the end of last month.

3. The Commercial Inventories continues to decline

Textile markets have recovered, companies are bidding aggressively for cotton reserves, and commercial inventories continue to fall. At the end of the month, China's commercial cotton stocks totaled about 2.45 million tons, down 14.46 percent month-on-month and 2.8 percent year-on-year. Due to the impact of the epidemic and the rise in highway freight rates, the export volume of cotton from Xinjiang continues to decline. According to statistics, the export volume of cotton from specialized warehouses in Xinjiang is 187,400 tons, 60,200 tons less than the previous month and 68,800 tons less than the same period last year.

4. Business Orders have Increased, Textile and Garments Exports Maintained a Positive Growth

In August, China's foreign trade exports continued to maintain positive growth. According to customs data, China's textile and garment exports reached US $30.93 billion, up 20.26% year-on-year, among which textile yarn, fabric and products reached US $14.72 billion, up 46.96%. Garment exports reached US $16.21 billion, up 3.23%. 1 - August textile clothing export total $187.41 billion, up 8.11% from a year earlier, compared with the previous 2.5% rally, the textile yarn, fabrics and products export $104.8 billion, up 33.4% from a year earlier, compared with the previous rebounded 2.1%, apparel and clothing accessories exports $82.61 billion, fell 12.9% year on year, a drop from the previous 3.7% narrowing.

China Cotton Supply and Demand Balance Sheet (Sep. 2020)      Million tons