Market Dynamics: Multi Factors Lead To The "Burst" Of Cotton Inventory Outside The Port

        According to the statistics of some international cotton merchants and large and medium-sized cotton importers, the total cotton inventory of Qingdao, Zhangjiagang, Shanghai and other major ports in China has continued to rise slightly (bonded + non bonded cotton) since the middle and late May. However, the phenomenon of "bonded cotton warehousing growth is greater than that of imported cotton and bonded cotton outbound". Among them, the arrival and storage of Indian cotton in April / may 2020 / 21 and 2019 / 20 increased significantly, while that of American cotton and cotton in storage increased significantly The arrival volume of Brazil cotton and West Africa cotton remained relatively stable.

 

Some cotton related enterprises estimate that by the end of May, the total cotton inventory in China's ports may have reached 570000-580000 tons (about 500000-520000 tons at the end of April), of which the bonded + non bonded cotton stocks of Huangdao and Jiaozhou Bay ports are about 330000-350000 tons, accounting for more than 57% of the total cotton inventory outside the ports of China. American cotton, Brazilian cotton and Indian cotton are still firmly in the top three, but the gap between bonded and non bonded Indian cotton and Brazilian cotton and American cotton has continued to narrow since May.

 

The main reasons for the continuous increase of cotton stocks outside China's main ports and the "warehouse explosion" of warehouses are as follows:

 

1、 From March to June, according to the usual practice, the period of centralized shipment of American cotton, Brazilian cotton, Indian cotton, Australian cotton, etc. was postponed to the second and third quarters of 2021 due to the difficulties in stabilizing the new epidemic situation in 2020 / 21, soaring sea freight and shipping space;

 

2、 Since the middle of March, the epidemic situation in India, Pakistan, Bangladesh, Indonesia and other Southeast Asian countries has broken out again and out of control. Some ports have been suspended or closed, and exporters and international cotton merchants have transferred to China, Vietnam and other countries with better epidemic control, resulting in the arrival and storage volume of China obviously exceeding the expectation;

 

3、 Due to the serious shortage of 1% tariff cotton import quota, the uncertainty of the release period of 700000 tons sliding standard tax cotton import quota, the global epidemic situation, the large fluctuation of RMB exchange rate and other factors, cotton textile enterprises cautiously "overdraw" the cotton import quota of sliding rate tax in advance. Therefore, the recent cotton point price transaction of customs clearance is relatively active, while the bonded and ship cargo transactions are relatively cold, With the main ice contracts breaking 82 cents / pound and 80 cents / pound, textile enterprises and traders are likely to miss the opportunity to enter the market;

 

4、 Although ice's main contracts broke through 88 cents / pound, 85 cents / pound and 82 cents / pound, the foreign cotton basis of most international cotton merchants and trading enterprises remained stable and even increased, and the current decline was not synchronized, which caused buyers to wait and wait.