2022 International cotton textile market observation: raw material stocks gradually consumed, factory demand may pick up
Recently, with the Fed's continued strong interest rate hikes, the market recession worries further serious, cotton demand has fallen is indisputable, last week's dismal U.S. cotton exports is a good illustration.
Currently, global textile mills are experiencing a lack of demand and are purchasing in moderation according to need. This has been the case for months, from the initial over-purchasing that led to a steady increase in supply in the chain, slowing down raw material purchases significantly, to the more recent wider geopolitical and macroeconomic concerns that have further exacerbated the problem, all of which are real and have unwittingly forced textile mills to reduce production and take a wait-and-see approach to replenishment.
However, even in the midst of a global recession, there is an underlying demand for cotton, with global cotton consumption still exceeding 108 million bales during the economic crisis and 103 million bales during the New Crown epidemic. If textile mills have largely refrained from purchasing during the last three months of significant price volatility, or have only purchased the minimum amount of cotton, then it can be presumed that raw material stocks in mills are now falling, or are about to fall, and therefore textile mill replenishment will start to increase at some point in the near future. Therefore, although it is not realistic for countries to replenish their stocks on a large scale, it can be expected that once futures prices show signs of stabilization, the number of textile supply chains buying as they go will increase, when the increase in spot volume will provide more support for cotton prices.
In the long run, although the current market suffers from economic recession and consumption decline, coupled with the new flowers will soon be listed in large numbers, cotton prices bear greater downward pressure in the short term, but this year, the United States cotton supply has fallen sharply, the market supply later in the year is not abundant, and even some tension, so the fundamentals are expected to work later in the year.