How does cotton grey fabric market perform in Jun?

Cotton grey fabric orders took a turn for the better in mid to early-May, but then the orders became scant in late-May. Overall orders were bleak during the May. How does cotton grey fabric market perform in Jun?

Orders of fabrics for masks entered the final stage

In May, the fabric mills entered the accumulation cycle again after destocking, but due to the continuous backlog of inventory, it was urgent for the weavers to liquidate. Although Shanghai lifted its two-month lockdown that aimed to curb COVID-19 case, there were no large number of orders and buyers still replenished stocks on need-only basis. The market witnessed limited price inquiry and low enthusiasm of ordering. The origin-tracing of export orders persisted, and the fabric mills could only choose foreign cotton. Home textile orders returned flat again after a small recovery in early-May. In Jun, the downstream demand is still plain, and the weaver mainly purchased stocks amid rigid demand. Entering the dull season in June, the increase in orders and on-machine orders remain bleak. On Jun 2, the orders could last for 5.5 days production, down about half from the same period last year.

Slow pace in yarn inventory build-up  

Due to the scarcity of follow-up orders and the low willingness to replenish feedstock of the weavers, the production continued but they stocked up at their own price ideas.

More holidays, lower operating rate

Recently, many fabric plants reportedly say that sales are hardly seen, and the frequency and quantity of orders placed by regular customers are significantly lower than those in May. At the same time, there is more production of conventional varieties. Inventory burden continues, and the production willingness is low. Despite the end of the Dragon Boat Festival holidays, some fabric mills extended the holidays, and those that resumed production also controlled production and did not open all the machines.

Higher inventory but slow accumulation

Due to the weak sales ratio, the inventory continued to rise, the current inventory is higher than that of the same period in previous years. Moreover, June, July and August are the traditional slack season months, and the probability of improving domestic sales orders is very small. At the same time, the loss of export orders is also more serious, so the inventory burden continues in June. On the other hand, due to the high price fluctuation of feedstock, price cut for sales does not work obviously, and the inventory of the fabric mills is also difficult to digest.

In conclusion, orders do not recover much and the market remains subdued in Jun. At the same time, due to the lack of order support, the fabric mills continue to cut or halt production, and the operating rate keeps low. In terms of price, the price of cotton grey fabrics sustain stable to weak, and inventory moves up in June.