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How will cotton yarn market perform after spinners restart?

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 Cotton yarn mills mostly resumed operation during Feb 10-14. How will cotton yarn market perform after Spring Festival holiday?

At present
1. Trading on cotton yarn market has not recovered completely and cotton yarn price keeps stable on the whole.
Downstream weavers and traders resume operation later than spinners in general, and with holding pre-holiday stockpiles, they are not eager to procure cotton yarn amid few fresh orders. Thus, cotton yarn trading seems quiet. Currently, cotton yarn mills are mainly delivering pre-holiday orders and new orders after Spring Festival holiday are mainly from regular customers. Besides, the snow in North China also curbs the delivery and in some regions the delivery even stops.

Cotton yarn price mostly keeps flat with that before Spring Festival holiday. only a few cotton yarn mills raise offers by 200-300yuan/mt tentatively, but no deal is done.

2. Worker recruitment in North China seems tolerable while that in South China is difficult.
Workers of most cotton yarn mills in North return to work and the salary does not increase in general. But in Guangdong and Zhejiang, the recruitment is heard a bit difficult.

Market outlook
Firstly, from the perspective of cotton, the inventory in traders is lower than past years and the price moves close to the cost of ginneries, so it has limited room to decline. It is traditional peak season in Mar and Apr. If the market improves, cotton yarn mills may purchase more cotton, pushing up cotton price, thus cotton price is likely to be volatile to strong.

Secondly, according to the imported cotton yarn ordered by traders, there will be a large amount of arrivals in late Feb to Mar. With low cost, traders will mostly enjoy 0-500yuan/mt profits, which will hits Chinese low-count cotton yarn.

In terms of downstream market, the orders taken before Spring Festival were also at a small amount and new orders to weavers are also scarce. If the result of China-US negotiation on trade war is negative, the picture of orders has large potential to turn out worse than last year. In addition, now the inventory of most weavers stays high. If the result is optimistic, cotton yarn market is likely to see prosperity later. Thus, eyes are suggested to China-US negotiation.

Besides, trading of ZCE cotton yarn futures recovers gradually, but whether it can witness the peak season in Mar-Apr will depend on China-US negotiation. As for the price, it has large potential to keep stable or turn strong slightly.

In 2018, cotton yarn futures experienced several peaks. In terms of price spread between cotton yarn spot and futures, factory warehouses can register receipts and lock the profits. In late May and late Aug 2018, cotton yarn mills gained 2,500yuan/mt at the utmost more through cotton yarn futures than cotton yarn spot. The arbitrage between different varieties can also contribute high benefits at some time.

In 2019, cotton yarn futures will continue to obtain more participants or the delivery rules will get improved. Cotton yarn mills can increase profits or lower risks through cotton yarn futures.

In conclusion, cotton yarn mills resume operation successively, but the trading has not recovered completely and cotton yarn price keeps flat with that before Spring Festival holiday. Eyes are suggested to the result of China-US negotiation on trade war, and cotton yarn price is likely to keep stable or volatile to strong. Cotton yarn mills also can sell at proper time to seek higher profits or lower risks.

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