Holiday plans of Chinese cotton yarn mills for 2022 Spring Festival

Cotton yarn market has experienced sharp fluctuation in 2021. With 2022 Spring Festival coming, the work of cotton yarn mills gradually comes to an end and holiday plans are also released. According to CCFGroup's survey, the duration of this year's holiday lasts longer than past years.

1. Earlier holiday

The holiday-taking was more disperse in 2022 Spring Festival than that in 2021. In 2021, nearly 3/4 cotton yarn mills took holiday from four days prior to Chinese Lunar New Year or thereafter, but in 2022, it only took up 42%. On the other hand, only 4% of the cotton yarn mills under survey took holiday from ten days prior to 2021 Chinese Lunar New Year or earlier, compared with 23% in 2022. Therefore, more cotton yarn mills took holiday in 2022 Spring Festival much earlier than that in 2021.

2. Later restart

35% of the cotton yarn mills (including the part of no holiday) under survey restarted before the seventh day of the first month of Chinese lunar year in 2022, against over 70% in 2021, indicating a delay of restart in cotton yarn industry. About 22% of the cotton yarn mills planned to restart after the tenth day in 2022, from 13% in 2021, and the most of the mills will restart from the eighth or ninth day.

3. Longer holiday

About 29% of the cotton yarn mills under survey will take holiday for less than 10 days in 2022, down from 60% in 2021, and 32% over 15 days, much higher from 13% in 2021. Most mills will take a holiday of 10-15 days. Overall duration of the holiday in 2022 is longer than that in 2021. From perspective of average holiday duration in recent years, it is 13.3 days in 2022, 9.5 in 2021, 13.9 in 2020, 13.7 in 2019 and 12.2 in 2018. It can be found that the holiday duration in 2022 is longer from that in 2021, but almost flat with that in other years. Why?

According to CCFGroup, the major reason lies in huge losses of cotton yarn mills. And cotton yarn orders were adequate and had to be scheduled for production before 2021 Spring Festival, while in 2022, cotton yarn inventory has accumulated relatively high.

In Jan-Sep 2021, cotton yarn mills obtained great profits, but from Oct, the profits shrank quickly and then moved to the territory of losses. Currently, cotton yarn C32S still suffered prompt losses of nearly 3,000yuan/mt, about 1,000yuan/mt higher than the largest losses seen in Sep 2020 when many mills ran at a rate less than a half of normal level. Therefore, it is not surprising that cotton yarn mills prefer to take holiday earlier and prolong the holiday. Cotton price keeps rising at present, which booms the expectation of cotton yarn market participants, but it is still hard for the mills to profit from the losses. That’s why they choose to reduce production despite bullish anticipation to post-holiday market.