Cotton price fluctuations affect yarn profits, and high prices are good for the profits of head yarn enterprises
When cotton prices rise, most of them benefit the head yarn enterprises. On the one hand, the pricing of yarn sales orders is mostly determined by the spot price level, while the leading yarn enterprises have sufficient orders, strong bargaining power and relatively smooth price increase; On the other hand, abundant funds support the hoarding of raw materials, which can enjoy the dividends brought by the rise of cotton price and the consumption of low-cost inventory, or stabilize the gross profit margin to a certain extent.
The short-term cotton price may remain high and fluctuate, and the long-term focus may move down
In the short term, the international and Chinese cotton inventory consumption in the 21st / 22nd year is relatively low and is still in the de inventory stage; The overall consumption of the global terminal clothing market is still recovering, with a good growth rate, which can support the cotton price to maintain a high level. The downstream demand of China's cotton and yarn enterprises is under pressure recently, or it may run at a high level and weak level.
In the medium and long term, under the macro background of the expectation of future interest rate hikes and the continuation of international conflicts, cotton consumption may slow down with economic growth, while the supply side tends to be loose, the marginal benefit may weaken, the global cotton may turn to increase inventory, and the focus of cotton price may move down.
Focus on Tianhong textile, Bros Eastern Co.Ltd(601339) , Wuhu Fuchun Dye And Weave Co.Ltd(605189) , Huafu Fashion Co.Ltd(002042) . The short-term high cotton price shock trend continues, which is good for the head yarn enterprises with sufficient orders and price transmission ability; At the same time, with the transfer of some cotton textile orders to Southeast Asia, this trend may be good for yarn enterprises that have layout in Southeast Asia and other overseas regions and some adopt foreign cotton production.
Risk warning: the fluctuation of cotton and yarn prices and the narrowing of cotton yarn price difference affect the risk of product gross profit margin; Risk that the capacity release is less than expected and the capacity utilization rate is less than expected; Customer order demand fluctuation risk; RMB exchange rate fluctuation risk.
