The US Tariff Increases The Price Of The Cotton Market, And The Yarn Price Falls To A Foregone Conclusion.

According to the price monitoring of the business community, the average price of lint 3128B lint in the domestic spot market was 13689 yuan / ton as of August 6, 2019, which fell 4.42% from the same period last month, down 15.51% from last year. Trump's new tariff is unprepared. The Customs Tariff Commission said it would not rule out tariffs on US agricultural products that were newly sold after August 3rd. Chinese enterprises have suspended the purchase of US agricultural products.

In August 6th, the 1909 contract of zhengmian main contract closed at 12240 yuan / ton, compared with the previous trading day, the price dropped 235 yuan / ton, or 1.88%. On the previous day, Zheng cotton main force was down sharply, or 4%, and the market was generally empty.

As of August 5th, ICE's December cotton report was 58.48 cents / lb, a three year low, down 8.34 cents / pound compared with last month.

Trump's face changed tariffs, and cotton prices collapsed. At the end of June, China and the United States reached a consensus on the G20 summit, which will not increase new tariffs in the near future. In July 31st, the twelfth round of trade negotiations between China and the United States ended in Shanghai, and indicated that they would continue to hold talks in early September. But the next day, trump said it would impose a 10% tariff on products worth 300 billion dollars imported from China in September 1st. With the rapid development of Sino US trade relations and the panic of a slightly eased market, China also cancelled plans to purchase US agricultural products including cotton.

At the time of Sino US consultation, domestic cotton prices were adjusted at 14000 yuan / ton at the bottom of the stage, but the US side suddenly faced difficulties, and cotton prices were hard to stick to. In some areas, the market price fell by 400 yuan per ton per day. Reserve cotton transaction rate and transaction price fell sharply. In the face of uncertainty, the willingness to bargain was once again obliterated, and cotton prices entered a new round of exploration.

As for cotton yarn in China, as of August 6th, the average price of single yarn of 21S high quality knitted fabrics in Shandong area was 21340 yuan / ton, which fell 5.41% from last month, down 12.04% from the same period last year. The average price of the single yarn of 32S high quality knitted fabric is 22500 yuan / ton, down 3.27%, down 11.14% compared with the same period last year.

The Sino US trade dispute has regenerated, and the difficulties of cotton and downstream textile industry have intensified. The downstream orders have been shrinking and exports are facing challenges. According to the relevant data, in June, China's cotton exports decreased by 19.27%, down 10.32% compared to the same period last year.

Foreign related agencies analyzed the impact of this no tariff on clothing imports. Data showed that before the tariff was imposed, the price of Chinese cotton jeans was lower than most other producers. After the tariff was added, the price of Vietnam was 1% lower than that of China, while the tariffs were 8% higher than that of China. The trade stability pattern will be disrupted, and the competitiveness of Chinese clothing exports to the United States will be greatly reduced. On the other hand, the International Cotton Advisory Committee (ICAC) predicts that the global cotton consumption in 2019/20 is expected to grow by 1.7% and output by 6%.

Business analysts believe that the escalation of Sino US trade war has made the market more bearish in the future cotton market. The growth of global cotton consumption is not as high as the increase in output. The trade pattern is not smooth and supply pressure has become the two big mountain in the cotton textile market development. Cotton yarn price adjustment is relatively slow, cotton mill price adjustment frequency is low and more actual order bargaining, taking into account raw material prices plunge early inventory pressure, quotation or short-term stability. The long-term cost support is insufficient, the competitiveness of textile export orders market is declining, and the yarn price fall is a foregone conclusion.