Raw Materials Fell To Industrial Chain Capital Flight To Be Inflection Point

Since the outbreak of the new crown, demand for masks, protective clothing and other products has skyrocketed, leading to the entire non-woven industrial chain. The price of raw materials or finished products has increased several times or even tens of times before the epidemic. Driven by interests, enterprises in the industry began to increase production and expand their capacity, and enterprises outside the industry began to transform and switch production, and the overall development was blowout. The cotton spinning industry can only be ashamed to bow to the boom in the nonwoven industry. Since mid March, the "strong" yarn has no longer been able to sustain the enormous pressure and show a "cliff like" decline. As of April 16th, the domestic C32S average price was closed at 19218 yuan / ton, which continued to drop 118 yuan / ton compared with last week.

The "firmer" price of the previous yarn was mainly due to the delay in the resumption of production and remanufacturing of most enterprises after the outbreak of the outbreak, and the yarn quotation of the enterprises continued before the Spring Festival. This is rather a temporary delay in the process rather than a sharp fall in the market. At that time, the cost of raw materials for cotton was about 13000 yuan / ton, and a stagnant market plus a high cost, so the yarn fell at least 20 days. By the end of April, most of the cotton mills had resumed production, and low cost raw materials had been transferred to the spinning field. According to many textile enterprises, most of the cotton used for yarn is currently near the cost of 11000 yuan / ton, and the prices of upstream raw materials are gradually stabilizing. At the same time, the downstream consumer side is "unable to lie down", so the yarn price can not sustain under such a pressure and open up the down mode.

On the other hand, from the starting load of cotton spinning industry chain, as of April 16th, the load index of Chinese yarn and grey fabric was 51.6% and 50.2%, respectively, both of which exceeded half. The two stocks rose to 27.1 and 29.2 days, all in the 3 year high. On the one hand is huge capacity, on the one hand, the product is seriously unsalable, and the pressure on enterprises can be imagined. Due to the recent lack of external orders, the internal single is also extremely scarce, and the warehouse is likely to burst at any time. Many enterprises have increased the liquidity to reduce inventory, and the price war between enterprises has become increasingly fierce.

Compared with nearly half of the domestic opening rate, imported yarn has just entered a comprehensive shutdown. As of April 16th, the spot price of FCY Index C32S was 19938 yuan / ton, down 45 yuan / ton compared with the same period last week. India began a 21 day blockade in March 25th. In April 15th, Prime Minister Modi announced that the national blockade would be extended to May 3rd, and some industries could resume work after approval. According to the survey, in the early part of April, there were some employees staying in the factory in the northern part of India, and there was a production situation in some cotton mills. At that time, most of India still stopped working. Since the second week of April, the cotton mills in India, Uttar Pradesh, Gujarat Bong and Punjab have submitted applications to the government. A few cotton mills have resumed production, and the factories that have resumed production have switched to 1-5. Some factories have not resumed production due to the fact that workers are not in place and no orders have been made, even though they are allowed to start work. Some factories feedback that if there are no more new orders after completion of domestic sales and a small number of export orders, it may still be necessary to stop again.

From a macro perspective, as the new crown outbreak in January, the impact will be concentrated in the first quarter of 2020 GDP, the international rating agency, the S & P predicted that mainland China in the first quarter of 2020, GDP will shrink by 10% compared with the news released today by the Bureau of statistics, China's first quarter GDP of 206504 billion yuan, calculated at comparable prices, down 6.8% over the same period last year. Obviously, it is too pessimistic. But from another point of view, the current round of the epidemic is a global event, which will surely lead to a global slowdown. In this case, the state may be more concerned about people's livelihood and employment, rather than GDP, so in the short term, GDP will probably continue to fall. However, there are also financial institutions that believe that the fuse of this crisis is the new crown epidemic, rather than the financial systemic risk such as 2008. Once the epidemic is brought under control, the market will regain confidence and even have a retaliatory rebound.

Against this background, cotton prices have dropped by 20.47% since the beginning of January, and the price of cotton yarn has dropped by 6.52%. As cotton yarn has been transmitted downward from cotton prices, it has lagged behind and is not as good as cotton. Judging from the historical price, cotton is near the lowest price. Due to the support of planting costs, there is not much room for further downfall. But the late price of cotton yarn is really hard to say. After all, even if the epidemic inflection point is coming, it will take a long time to recover because of the recovery of downstream consumption. In view of this, many business owners no longer feel comfortable selling their products. Many have switched to other businesses: buying stocks, buying gold, and selling futures. It is reported that this year the new crowned outbreaks of this black swan, we can not only get out, but invest in other products. If the investment is right, the doubling of capital is not a dream.