Why does the State Reserve Bank's cotton price increase the market's response?

Editor's note: The state announced that the 2012 annual cotton temporary storage and storage price was 20,400 yuan/ton, which was 600 yuan/ton higher than last year, an increase of 3%. The increase in the domestic cotton purchase and storage price had a certain positive effect on the surface, but it was actually mixed. Obvious negative factors.

On March 1, the state announced the 2012 annual cotton temporary storage and storage price of 20,400 yuan/ton, an increase of 600 yuan/ton or a 3% increase over the previous year. On the surface, the increase in the storage and storage price is in the current downturn in the cotton market. A "good medicine" can at least break the speculation of the market disorder and give everyone a "centering pill," but in reality, the announcement of the policy of purchasing and storage has not aroused much of a wave in the cotton textile market, especially in the downstream gauze market. In the still-difficult market conditions, the overall reaction is still dull.

The author's analysis believes that the increase in domestic cotton purchasing and storage prices has a certain positive effect on the surface, but in reality it is accompanied by obvious negative factors.

First, the purchasing and storage prices in the new year have increased, but there is still a gap between expectations. "There is no airless wall in the world." One month ago, the market has been circulating the news that the purchase price of the State Reserve Cotton will increase. At that time, the market has at least 20,400 yuan/ton, 20,790 yuan/ton, and 21,000 yuan/tonne “revisions” of the three storage prices. At present, the country has officially confirmed 20,400 yuan. The purchase price per tonne, although not “situated,” has increased from 19,800 yuan/ton in 2011, but in fact, in recent years, the planting cost has increased by 10% to 20% and the income of cotton farmers has gradually declined. Obviously, the current purchase price of RMB 20,400/ton has only taken the next lower value, which is obviously different from the market expectation and has a large psychological gap. The author believes that the short-term good news, Zheng cotton may have a trend, but the continuation of the chase is not strong, it is recommended that timely, "see you soon."

Second, the existence of storage and storage prices will further widen the cost gap between domestic and foreign cotton consumption, and the downstream gauze market will be difficult to return. As we all know, after the official launch of 19,800 yuan/ton collection and storage on September 8, 2011, there has been endless debate on this policy. In spite of the sharp fall in international cotton prices, the domestic cotton price has remained stable at Diaoyutai and has remained at RMB 19,800/. Ton near the line. As of February 29, the accumulated sales of storage in 2011/2012 was 2.685 million tons. It is expected that by the end of the storage on March 31, the total storage volume will reach more than 3 million tons, accounting for 40 million tons of the total output for that year. More than %, although this policy has greatly eased the supply pressure caused by cotton production this year, but due to the purchase and storage of fixed-price transactions at 19,800 yuan/ton, it has virtually widened the price gap between cotton at home and abroad - domestic cotton At present, there are still thousands of dollars in price gaps between imported and imported cotton; and India, Pakistan, and other countries, three cotton prices 10,300 yuan to 12,500 yuan / ton to form a huge cotton gap of 8,000 yuan / ton.

In addition, the increase in cotton purchasing and storage prices will weaken the international competitiveness of China's cotton textile industry, resulting in an increase in exports to domestic sales. Due to the large differences in the cost of cotton used at home and abroad, the Chinese textile industry with a higher degree of foreign dependence faced a situation where the overseas market share with more price competitive advantage had reached the international market share. The crux of the current market is the low volume of downstream orders, rather than the level of upstream storage and storage prices, and the market is not overly excited.

Overall, due to weakened competitiveness of the textile market, business performance changed face, the current cotton textile market is far from the bull market in 2010, the short-term good still can not hide the long-term production and sales pressure, to a certain extent It may stabilize the enthusiasm of cotton farmers, but it will also deepen the contradiction between supply and demand in the upstream and downstream markets. It is recommended that textile companies should try their best to expand the domestic market while maintaining the export market. In the ten major construction projects that the country is committed to completing in the “Twelfth Five-Year Plan”, the country has been the first to adhere to the strategy of expanding domestic demand. Therefore, the increase in domestic cotton purchasing and storage prices is consistent with the country’s intention to promote domestic demand.

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