资讯 1 10 英文网 307 Feature 548781 We are close to the bottom of the slide 2015-05-13 15:48:41 yangfang
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We are close to the bottom of the slide
2014-11-04

J. P. Jain  

 

In our last update about 3 weeks back, we had mentioned that we are close to the bottom of the slide which HAD started a few months back in anticipation of cotton fibre prices falling in response to China’s policy.


It seems the bottom has come and a mild pull back is in sight. It is pretty fool hardy to make a prediction in such volatile times, however would like to highlight the current status to enable all to take an informed decision.

  • Cotton prices in India, Pakistan and China have hit the bottom and in fact have rebounded a bit in India due to Govt support. Pakistan and China Govt policy on cotton is also providing support and has formed a base.
  • Chances of any fall in cotton prices in the 3 large yarn producing nations is minimal.
  • Pipeline inventory is at the lowest possible level. I. Its a well known fact that low inventory levels are the biggest reason for spurt in prices.
  • Typically yarn prices are upward from November to February due to good demand.
  • India domestic market is picking up from an all time low level, domestic demand is expected to grow by 8 to 10% which last year was just 3 – 4%
  • Pakistan import surplus has reduced due to energy crisis and there is improved domestic demand of yarn for value added exports in light of GSP benefit.
  • Global growth rates are as per expectations, there has been no change as such which would lead to a downward adjustment in consumption. Even retail sales figure etc don’t show any reduction in garment buying across the globe.
  • Spinners are losing money today, hence under immense pressure to increase prices at the slightest opportunity.
  • There has been good buying in China in the last one week and all mills have sold lot of yarns to CHINA  as Indian offered prices are lower than domestic prices and all need to beef up their pipeline – surprisingly a minor uptick in prices has also been noticed after a gap of 6 months.


Fundamental reasons for further fall in yarn prices are not there – all the factors which fuelled the fall are over. The only issue is the sentiment in the market, which is typical of any bear market – in a bearish market one only sees reasons to fuel the fALL. However turn arounds are imminent and we feel NOW IS THE TIME TO BUY.

 

Vice President (Marketing), TT Limited, India