In the first week after the Spring Festival, the international spot market transactions recovered slowly, and there were insufficient inquiries in most areas. Before the release of the USDA monthly report, textile mills took a wait-and-see attitude. The sluggish yarn market also affected factory purchases. Cotton merchants are looking forward to the market returning to life in the coming weeks. In a few months, cost-effective Australian cotton will be on the market and become the “main force” in market supply. Its sales situation will be a good reference.
Last week, international spot transactions were flat, with most demand concentrated on spot quotations, mainly US cotton, Brazilian cotton and Argentinian cotton. There are also some purchasing intentions for Australian cotton in the third quarter of this year and new flowers in 2023 based on prices. Judging from the spot transactions, only when cotton merchants can confirm shipment can the two parties reach a final agreement, and textile mills are willing to pay a high premium. Among them, Pakistan’s demand is the strongest because spot stocks are extremely low and demand in South Asia is very urgent. .
Elsewhere in Asia, Indonesia purchased Argentinian M-grade cotton with a basis of 1,100 points (March contract), which is much higher than what was previously acceptable. In addition to China, Australian cotton is very popular in the Asian market, mainly in the third quarter. The quotation basis in Indonesia is 1250-1300 points, and the loading period is July-September. In comparison, the basis of US GC 31-3-36 is 1,600 points, and the basis of West African cotton is 1,550 points, with the loading period from April to May. There are also transactions for Australian cotton SM 1-5/32 in 2023, with the basis difference around 1300 points, and the loading period is from May to July 2023.
From the perspective of the downstream market, international yarn quotations had mixed trends last week, and Chinese yarn prices rose. As downstream production fully resumed after the holiday, yarn mills worked hard to pass costs downstream. The yarn trend in South Asia is relatively weak. The rapid increase in January severely suppressed downstream demand, and the increase in energy prices also caused textile companies to lower their operating rates.
In the fourth quarter of 2021, U.S. apparel imports recovered strongly. Wholesalers and retailers are rebuilding inventories. Import volume increased by 23% year-on-year, and the overall level returned to before the epidemic. Imports of clothing from Turkey and Bangladesh increased by 49.4% and 49.2% respectively, Indonesia increased by 38%, and Vietnam only increased by 4.8% due to the epidemic blockade. With the recovery of demand in the United States and the gradual opening of the European market, the end consumption of textiles and clothing is expected to continue to recover, and the cotton consumption situation is stable and improving.
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