资讯 1 10 英文网 283 Cotton News 558410 Policy incentives to restore market confidence 2016-03-25 19:38:10 yangfang
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Policy incentives to restore market confidence
2016-03-25

Speaking of the current market, most people are quite bearish. However, some consider it promising due to favorable policies.   

 

The earlier announcement of target price is just positive for the market, according to Mr. Zhao, from a cotton mill. The clear attitude from policymakers will help restore market confidence. While18, 600 RMB/ton was somewhat lower than those set in 2014 and 2015, it was still much higher than the current prices in the spot market. This reflects the intention of the government to guarantee the baseline income of farmers, acting as a stabilizer to the broad confidence in the market. 

 

The destocking of cotton reserves also reflected the concerns of the policy makers over the market. Yin Jian, Deputy Division Chief of Department of Economics and Trade under National Development and Reform Commission, introduced the relevant policies at an industrial meeting held lately. It went as follows: Firstly, Normalize the destocking of cotton reserves, in the expectation of maximal stabilization of the market expectation. The annual destocking of set amount of reserves will not only reduce inventories but also meet the market demand in the off season; Secondly, a pricing mechanism will set the floor price in line with real-time market conditions. The dynamic mechanism will better reflct market conditions and ensures greater stability of physical market. Thirdly, the delay in cotton auction and a priority for imported reserve in offer will allow cotton enterprises to sell their stock as much as possible and maintain a steady development of the industry.   

  

It is these favorable policies that induced change quietly. 1. The Zhengzhou cotton futures bounced back after hitting the bottom. All contracts rebounded to 10,300 RMB/ton or even higher. The nearby contract even moved close to t spots at the level of 11,000 RMB/ton; 2. Xinjiang cotton price stabilized. The pre-delivery quotations at Aksu station hit 12,100 RMB/ton or so for 3128-grade cotton, and 12,200 -12,300 RMB/ton for 2128 grades on the 24th. Cotton traders said that the hand- and machine-picked cotton have both been stable in the last few days, standing firmly at 12,000 RMB/ton. 3. inland cotton price only experienced a marginal change thanks to the urgency of some cotton producers to sell their products. T3128 was offered at 11800 and some high-quality styles rose to 12200 yuan per ton.         

  

One market observer said ‘it is notable that we have all gained our confidence.’ While current prices are inverted, and over 10 million tons of cotton reserves are still there, with policy incentives, along with the booming of cotton mills in the downstream, we still have hope for the year of 2016. Most of the downstream textile companies have recovered from earlier losses, or return to a breakeven threshold amid the decline of cotton prices. Their survival is everything comparable to the nirvana of the phoenix as they are getting through all these hard times.