Why Do Textile Enterprises Purchase The Reserve Cotton Reserves?

In July 7th, the national cotton trading market announced the announcement on the sale of the national cotton reserves by the state organization, and subsequently announced the first day (July 10th) sale.

Quantity and library points.

So far, rumors of nearly 4 months of state reserve cotton sales finally opened in public bidding, calm.

The market will become lively again in 7 and August.

On the first day of sale, there was a total of 30285.2182 tons of reserve cotton resources.

Among them, 2012 tons of domestic cotton, 9704.7544 tons of imported cotton and 11541.6578 tons of imported cotton in 2012, and 9038.806 tons of domestic cotton in 2011.

On the basis of the announced reserve cotton storage point, domestic cotton is concentrated in Hebei, Henan, Hubei, Shandong, Shaanxi and other provinces, and 2012 of the imported cotton reserves are distributed in Hebei, Jiangsu, Shandong and Zhejiang provinces.

Before the national development and Reform Commission announced the price of cotton reserves, the industry was doubting that the reserve cotton had been stored in the warehouse for three or four years, and the price was even higher than the spot market. So where is the advantage of the reserve cotton? What exactly does the textile enterprise buy Cotton Reserves?

Difficult to meet the demand of textile enterprises

The detailed rules for the sale of reserve cotton are clear. The inspection items of the cotton storage wheel include: the quality of domestic cotton inspection mill, the color grade, the quality of imported cotton inspecting mill, the color grade, the length, the micron value, and other quality indicators are based on the notarization of warehousing or the results of Chinese commodity inspection.

Domestic cotton is sold in accordance with the official weight of notarization inspection, and imported cotton is sold according to the net weight inspection results issued by China Commodity Inspection.

For a few years, the quality degradation of the reserve cotton has been a matter of great concern to the textile enterprises. We all thought that the reserve cotton had been stored for three or four years. The color grade, the value of the horse clones and the strength of the fracture ratio should be inspected, and the quality and color grade of the mill should be inspected only.

A sample survey of the national cotton market monitoring system showed that as of July 7th, the average cotton inventory was 34.5 days.

As the market has been waiting for the landing of reserve cotton, the majority of spinning enterprises have maintained low inventories, and are required to replenishment after the detailed rules are issued.

One can explain the details, spinning enterprises can not help wondering, three or four years of cotton only public inspection mill quality, color level, after buying it can be used?

Ji Yijun, general manager of Nantong Shuang Hong Textile Co., Ltd. said that the quality of the cotton produced is the biggest concern for the enterprises.

At present, the amount of cotton stock in the enterprise is about one month. If the reserve cotton is out of storage, if the quality of cotton meets the production needs of the enterprise, the enterprise will definitely take part in the storage, otherwise it will be cautious.

Jiangsu, a textile enterprise related responsible person said that in the past cotton purchase and storage of mixed grade serious, good cotton, poor cotton all mixed together, resulting in the auction of cotton back to the store, can only hire someone to pick cotton, pick a few tons a day to join together, the reserve cotton out of the Treasury no longer heavy new public inspection, then it is likely to re appear in the past.

In addition, textile enterprises should pay attention to the auction. From the distribution of storage cotton warehouse, 2011 cotton concentrate in Hebei, Henan, Hubei, Shandong and Shaanxi. In 2012, domestic cotton is concentrated in Henan, Hubei, Jiangsu, Shandong and Shaanxi. In 2012, imported cotton was concentrated in Shaanxi.

Shandong, Zhejiang, the warehouse is more dispersed, which is conducive to the picking up of textile enterprises nearby, thus reducing pportation costs. However, Henan does not need to import reserve cotton for storage. It needs to be pported from Jiangsu or Hebei. At the same time, Shandong province is the largest consumer area. The number of storage in the 5 provinces is the least, not enough 20 thousand tons, and it needs to be pported from Hebei or Jiangsu area, so that the pportation cost may be raised to 200 yuan / ton.

Cotton price increase is more attractive.

Judging from the auction price of the reserve cotton resources released on the first day of the national cotton trading market, in July 10th, the minimum price of the reserve cotton was 11580 yuan / ton (2011 domestic cotton), and the highest price was 15240 yuan / ton (2012 cotton imports).

According to the quality of cotton, the price of cotton reserves is more attractive.

The quality of the reserve cotton is up and down by the cotton quality difference price list released by the China Cotton Association. The white cotton grade two premium is 400 yuan / ton, the first point of the dirty cotton grade is 200 yuan / ton, the low grade cotton grade two discount is 500 yuan / ton, the yellow cotton dyed cotton grade one is 700 yuan / ton, the cotton length 29mm is 250 yuan / ton, the 27mm discount is 300 yuan / ton.

Earlier, when the national development and Reform Commission announced the price and quantity of cotton reserves, some enterprises began to calculate which cotton would be more economical to buy.

It is generally believed that the interest of cotton in 2011 is higher than that of cotton in 2012 in terms of quality and price.

In this regard, professionals said that due to the large difference in quality of cotton stored in the state, it is suggested that enterprises involved in the paction should make detailed decisions before dealing with the paction method and the quality and reserve price of the national cotton reserves before making a decision.

In addition, compared to the 2015 reserve cotton sales rules and the 2013 reserve rules, it was found that the margin, purchase qualification and purchase amount in 2015 were also quite different from that in 2013.

The deposit reserve amount stipulated in the 2013 cotton reserve rules is 500 thousand yuan, while the reserve margin in 2015 is 300 thousand yuan. In addition, the sale of cotton reserves in 2015 has basically no restrictions on the qualifications of buyers and the number of bids.

The industry believes that this precisely illustrates the country's desire to reduce reserve cotton stocks.

After bidding for cotton reserves, the textile enterprises purchase cotton reserves from traders to a certain extent to alleviate the shortage of funds. Because the weight of each bales is larger, the spinning enterprises may not be able to digest the whole bundle of cotton, which is conducive to the purchase of smaller textile enterprises with demand.

In addition, because the cotton price information is more pparent now, the price of cotton purchased by the textile enterprises from traders will not be much higher than that of the auction.

Many enterprises have reflected that they are more willing to buy cotton from traders. The purchase of goods will be more secure than the direct auction of national cotton reserves, both quality and quantity can be checked in person.

The effect of reserve cotton wheel should be observed.

At present, there is a serious differentiation in the market regarding the storage of cotton reserves, and some textile companies say they will take part in the auction, while others say they will not consider it.

In this regard, a professional analysis, due to the current market positioning of different products, the quality of cotton required for spinning enterprises are also different. The reserve cotton stored in this warehouse may be more favored by the low and medium yarn spinning enterprises.

At present, under the influence of dumping and storage factors and the international economic environment, cotton prices in China's cotton market are falling, either in futures or in cash, making the difference between domestic and foreign cotton prices narrowed, thus weakening.

Pakistan and other foreign cotton yarn market competitiveness.

However, due to the high price difference of cotton prices between China and foreign countries in the past few years, most domestic cotton yarn enterprises are developing to high count yarn, especially those that produce high end bleached yarn.

Therefore, people in the industry predict that due to the impact of price, quality, outgoing expenses and formalities, the effect of the cotton rotation may not be very good, but the better quality should be exported quickly.

The purpose of the reserve cotton rotation is to improve the regulation mechanism of cotton reserves under the premise of maintaining the current market stability and not pressing the market, and orderly digest the state reserve cotton inventory, and gradually reduce the reserve scale to a reasonable level, so that China's cotton market will return to "normal track".

The turnover rate of reserve cotton is not just a data, it will provide a real basis for subsequent rounds of cotton reserves. It also indicates that the competition between cotton enterprises and cotton growers and planting units is more intense than in previous years when seed cotton is listed in 2015/2016.