Cotton yarn market weakens again upon plummeted ZCE cotton futures

ZCE cotton futures hit limit down again yesterday, beyond expectation. Amid the slump, cotton yarn sales weaken again, but the offers have not moved down yet. The market now is covered with heavy look-on mood.

1. Weakening signs of cotton yarn sales have shown up since last weekends.
In fact, the weakness of cotton yarn market is not attributed to yesterday’s slump of ZCE cotton futures. Favored by the restart of China-US negotiation on trade war, ZCE cotton futures soared last Monday, then cotton yarn sales improved immediately, yet centered on conventional carded ones rather than combed ones and high-count ones, which indicated that the improvement of cotton yarn sales mainly came from the speculative restocking of downstream weavers or traders upon the expectation of better orders and higher price later. However, in fact the support from rigid demand was soft. Downstream market also proved that through scarce new orders, high inventory hardly to be consumed and price dropping instead of rising. Then trading of cotton yarn started to soften, more obviously this Monday.

In conclusion, the previous improvement of cotton yarn market was owing to speculative restocking of downstream players upon expectation on better orders, rather than the procurement for rigid demand brought by actual orders. After a week-long verification, they found that the orders did not improve, and then reduced or stopped purchasing.