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Research | Time: Mar 23 2021 4:08PM
Cause of soaring cotton linter and refined cotton and the trend of supply and demand
 
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Preface
After years of in-depth shuffle, cotton linter and refined cotton markets have sprung up this year, with prices rising sharply by around 1,500-2,000yuan/mt. Due to the substantial increase in feedstock cost, the price of downstream cellulose ether has also quoted up by 1,500-2,500yuan/mt, with some rising by 3,000yuan/mt. With the impact of the continued price decline of commodities after the beginning of Mar, fewer deals were concluded at high prices for cotton linter and refined cotton in early and mid-Mar. Market demand has slowed down and prices are falling from the peak.

This round of jumping price has attracted attention from market participants who have different options. Has the relationship between supply and demand of cotton linter and refined cotton has been reversed? Why did such sharp increase emerge? What is the motivation? Where will it go in the future? Let us analyze the relationship between production and demand from different perspectives such as monetary policy, cottonseed, cotton linter, cotton linter pulp, dissolving wood pulp, and refined cotton, also explore the possible future trends.

Content
I. Quantitative easing policy is the cornerstone of commodity price surge
1. Growth rate of currency and M2 increases
2. Required reserve ratio and benchmark interest rate stays low
3. Relation of major commodity price and M2 growth rate

II. Hiking paper pulp, dissolving wood pulp and cotton linter pulp creates the atmosphere of rising price
1. Long-term adjustment and through price decline lays the foundation for surge this year
2. Cottonseed stays high, driving force of surging paper pulp, dissolving pulp and cotton linter pulp

III. The marginal relationship between supply and demand is improving, supportive to price increase
IV. The future supply and demand direction
V. Conclusion

Chart
Chart 1. Money supply trend in Jan 2011-Feb 2021
Chart 2. Required reserve ratio trend of China since 1985
Chart 3. Interest rate of China since 2006
Chart 4. M2 and cotton linter price trend of China since 2008
Chart 5. M2 and cotton linter price trend of China since 2008 (1-year delayed)
Chart 6. Cotton linter and cotton linter pulp price trend of China
Chart 7. Dissolving pulp and refined cotton price trend of China since 2017
Chart 8. Cottonseed and cotton linter price trend of China
Chart 9. Paper pulp price trend
Chart 10. Cotton linter and cotton linter pulp price trend of China
Chart 11. Dissolving pulp and refined cotton price trend of China since 2018
Chart 12. Cotton linter output and yearly average price of China since 2010
Chart 13. Cotton linter market demand structure
Chart 14. Cotton linter supply and demand of China since 2016
Chart 15. Cotton linter pulp output of China since 2010
Chart 16. Dissolving pulp output of China since 2010
Chart 17. Supply proportion of different kinds of pulp
Chart 18. Dissolving pulp import of China since 2009

If you need the report, please contact us at:

T 86-571-83786653, 83786504
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Email: market@ccfgroup.com

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