Can state cotton auction timely help cotton yarn mills white core spandex

Apr is traditional peak season. Cotton yarn market saw tight supply and continuous rise of price in last Apr, while at present, the market demand weakens continuously and inventory of cotton yarn mills accumulates with dropping price despite strong cotton and lower-to-negative profits. In the evening on Apr 23, Ministry of Finance announced that the state cotton auction will be launched from May 5 and end on Sep 30. Thus will the state cotton auction be timely help to cotton yarn mills to turn from deficits to profit?

From above chart it can be seen that current spot profit of cotton yarn mills stays on the negative side and the losses hit high since 2018. And profit under cotton price one month ago also tends negative gradually from Apr. Actually it does. At present, cotton yarn mills suffer losses by producing conventional carded 32/40S and gain thinner profit by producing combed and 100% bleachable cotton yarn. Apart from the losses, inventory of cotton yarn mills keeps rising and mostly hovers around 20-30 days with higher at 1.5-2 months. Amid the pressure from high inventory and losses, cotton yarn mills hardly operate and some small ones have cut or suspended production. If the weakness continues, more spinners will cut or halt production.