Recently, the prices of cotton and cotton yarn have rebounded. In addition, some foreign trade orders have been issued, and the overall market has warmed up. However, many spinning enterprises have given feedback that they are all small orders and insufficient quantities. According to a survey of cotton spinning enterprises of different sizes and types in cotton spinning areas along the Yangtze River in Anhui Province, the current price of cotton yarn has increased last week driven by the rise in domestic cotton futures prices. Cotton spinning mills have accelerated the stock removal, but the yarn prices are relatively stable this week, while the goods are weak again, last week's recovery seems to be a flash in the pan.

According to market understanding, some cotton yarn factories have improved recently, the early production restriction has been reduced, and the start-up level has been slightly improved. However, there are also some cotton mills with relatively single varieties. The recent delivery is still poor, the production restriction has been increased, and the industry starts fluctuating within a narrow range. However, the current comprehensive start-up level is still between 6-70%: among them, the start-up of large factories is still generally high, between 80% and full, and 6-70% for small and medium-sized enterprises, another small number of enterprises started 50% or slightly lower position, some are still in the continuation of the shutdown state. After New Year's Day, if some small factories continue to have poor delivery, there is no shortage of plans to further limit production or stop work ahead of schedule for holidays, and the industry's start-up level may face a new round of decline.

From the demand side, before New Year's Day, there are still just-in-demand and replenishment operations in the downstream. Some low-and medium-count yarn and needle spinning spring orders are in good condition, the inventory of enterprises is slightly reduced, and some varieties even need to be shipped in a single order when the supply is tight. However, some other varieties continue to be poorly delivered, and the overall level of industry demand has not reached the normal stock level in the past. After the festival, whether the industry demand can continue still needs to be observed, along with the off-season in-depth, part of the downstream early delisting, market demand support will gradually weaken.

According to the person in charge of a small factory, the return to the sluggish yarn market makes it difficult to digest the cotton yarn inventory accumulated in the early stage in the short term. Under the pressure of loss and capital, enterprises dare not continue to produce blindly. It is understood that at present, most small and medium-sized enterprises only have some small orders, which makes it difficult to maintain continuous production. Interval holidays are a common phenomenon. The more production, the more losses. Seeing that the yarn market is hopeless before the festival, some cotton mills have taken the lead in changing short holidays into long holidays, making it clear that they will resume work after the Spring Festival. Many enterprises are also considering taking the Spring Festival holiday from New Year's Day.

In addition, the impact of imported yarn has also brought certain pressure to the domestic market. According to feedback from several cotton yarn trading enterprises and weaving factories in Jiangsu, Shandong, Zhejiang and other places, it is expected that from December 2023 to February 2024, it is difficult for Pakistan and India's cotton yarn exports to China to cool down, and the year-on-year growth rate may continue to rise. Recently, Pakistan's cotton mills and exporters have a high probability of starting the rhythm of "reducing prices and selling goods". As the weaving mills only purchase a small amount of resources to replenish their stocks and have a strong price reduction, the buyer's market has expanded the losses of the cotton mills. In addition, new orders are still scarce. Under the condition of clear short-term market prospects, it is helpless for the cotton mills to start large-scale inventory removal and speed up the return of funds.

At the same time, under the condition that the export of clothing and other end products continues to be sluggish, Indian yarn mills take the export of cotton yarn, polyester-cotton blended yarn as a breakthrough to open up the dilemma, and increase the quotation to buyers from China, Bangladesh, Vietnam, Indonesia and other countries. Some yarn mills and exporters are making every effort to meet the export demand, and the momentum is very strong. The expectation that the RMB will continue to appreciate against the US dollar from December 2023 to February 2024 has also stimulated some cloth mills and traders to place orders/purchases for Pakistan and India in advance.

On the whole, the current downstream pure cotton yarn market has not changed much, the market lacks new drivers, the market is mainly stable, and the price is in a dilemma. Cotton gray cloth continued to trade, downstream traders, dyeing factory large orders are limited, mainly small and medium-sized orders. Some regional outlets have recently started to pay back money. Judging from the capital and order situation, enterprises will remain cautious about next year.