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Insight | Time: Feb 12 2020 10:35AM
Post-holiday cotton inventory in mills and mills' purchase willingness survey
 
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Some spinning mills have resumed operation on Feb 10. CCFGroup has made some survey on downstream mills’ cotton inventory and purchasing intension.
Cotton inventory in mills and purchase intension survey
Company Spinning scale (1,000 spindles) Restart or not Cotton inventory Purchase willingness Influencing factor
1 400 Yes 4 months No Relatively large cotton inventory
2 300 No 1 month No Restart time cannot be confirmed
3 200 Yes 1 and a half months Watching Slow recovery of production
4 200 Yes 40 days have intention to purchase Logistics has not recovered
5 180 No 3 months No Relatively large cotton inventory
6 150 No 2 months No Restart time cannot be confirmed, and the mill purchases cotton on need-to-basis
7 100 No 10 days Watching Watching
8 100 No 1 and a half months No Restart time cannot be confirmed
9 90 Yes 20 days Watching Waiting for the recovery of whole industrial chain and downstream purchase
10 80 Yes 2 months Watching Watching, having relatively large inventory
11 60 No 1 month Watching Watching
12 60 No 1 and a half months No Restart time cannot be confirmed
13 50 No 40 days No Waiting for the recovery of logistics
14 50 No 1 and a half months No Waiting for the production resumption
15 50 No 1 month have intention to purchase Waiting for the recovery of logistics
16 40 No 20 days No Restart time cannot be confirmed
17 40 No 1 month No Restart time cannot be confirmed
18 30 No 1 month No Relatively large cotton inventory
19 20 No 2 months No Purchase on need-to-basis
20 20 No 10 days No Capital restriction


Cotton inventory in mills and buying willingness: currently, cotton inventory in medium and large mills is mostly at 45 days to 60 days, some highly at three to four months. A few medium and large mills have relatively low cotton inventory, at about one month due to tight capital, and in small and medium mills, cotton inventory is mostly at 20 days to one month. Mills show no high buying interests on cotton at present. The major influencing factors show below.

1. Uncertain restart time and recovery of industrial chain: the majority of spinning mills has not resumed operation, and most mills are hard to confirm the restart time affected by the virus and local policies. Mills that have restarted production also concern about the recovery of overall industrial chain, and they show low buying interests on cotton, and hold cautious mood on late market.

2. Slow recovery of logistics: most mills reflect that logistics have not recovered. Therefore, the product and feedstock transportation remains a question. To avoid the capital occupation, most mills have no plan to purchase cotton temporarily.

3. Some mills purchase much cotton previously: due to the uncertain influences of virus on product sales, cotton inventory at 3 months and above is relatively high for medium and large mills, and cotton inventory at 45 days above is also high for small mills. Even cotton prices are low, mills are still not active to stockpile cotton, mostly purchasing on need-to-basis.

Conclusion: currently, cotton inventory in mills shows large differences. Cotton inventory in medium and large mills is mostly at 45 days to two months, and that in medium and small mills is mostly at 20 days to one month. The influencing factor on mills’ buying willingness remains the unrecovered downstream market. Mills that have resumed operation also worry about the industrial chain and the recovery of logistics.
[RISK DISCLAIMER] All opinions, news, analysis, prices or other information contained on this report is provided by analyst of Zhejiang Huarui Information Consulting Co., Ltd (CCFGroup) as general market commentary and does not constitute investment advice. CCFGroup will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.
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