Yarn prices were staying frozen at the start of the new week in China, as holiday mood was still prevailing and further freezing market operations. China’s cotton use is now expected declining this season, according to latest data from the US Department of Agriculture (USDA). The weakness in demand and a decrease of international cotton prices could pressure cotton yarn prices in China.
China’s market was still in holiday mood at the start of the week after being fully stopped for seven days.
Demand is expected very slowly returning to normal, as market participants will progressively come back to work.
As a possible sign of the coming trend, cotton yarn futures were this morning rising on Zhengzhou’s market.
The nearby contract has gained 285 Yuan per metric ton or 1.3% in two days, following a long period of stability.
Cotton prices have fallen on the international market after the US Department of Agriculture (USDA) has eventually updated its data following the end of the US government shutdown.
China’s cotton use has been lowered from the previous estimate in December, and it will eventually drop 1.2% in the current season, according to the USDA.
This is mostly due to the economic slowdown in China which is expected limiting demand for cotton yarns in the coming period.
The domestic Yarn market prices will also depend on the level of cotton fiber prices.
As a consequence, market participants will now wait for the conclusion of US-China trade negotiations.
Any agreement is expected resulting in China’s additional tariffs on US cotton being scrapped and import prices possibly rising.
On the other hand, the weakness of global demand may further pressure cotton price levels in the coming months.
Source: Emergingtextiles
