China Cotton Textile Association

It was reported that the United States Trade Representative (USTR) announced the next steps in the process of imposing an additional tariff of 10 percent on approximately $300 billion of Chinese imports. Further, as part of USTR’s public comment and hearing process, it was determined that the tariff should be delayed to December 15 for certain articles. Products in this group include, for example, cell phones, laptop computers, video game consoles, certain toys, computer monitors, and certain items of footwear and clothing. Vice-Premier Liu He spoke by phone with US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin on Tuesday evening at the request of the US, according to the Ministry of Commerce. The two parties agreed to call again in the next two weeks.

Affected by this bullish factor, the European and American stock markets rose, the offshore RMB increased sharply against the US dollar, the international short-term gold fell, and the international oil price surged sharply.

As for the polyester industrial chain, ZCE PTA futures Sep contract (TA1909) was firm overnight, closed 3.6% higher. In short run, affected by the unexpected shutdown of PTA units and rising operating rate in some polyester plants, supply and demand pattern slightly improved. Coupled with stimulus from Sino-US trade relationship and surging crude oil, PTA futures hiked. Upstream market stopped falling will be favorable for the mindset improvement of downstream players.

In view of the sales ratio of PFY in recent two days, sales ratio was mainly around 90% by P.M.3:00 on Monday and Tuesday. On one hand, feedstock purchased before has almost been used up, so downstream plants needed to restock. On the other hand, it indicated better mindset of downstream players. Sales ratio is expected to improve apparently today affected by eased Sino-US trade conflict, rising upstream feedstock market and the approach of new procurement cycle from downstream plants.

From the angle of demand factor, most downstream fabric mills did not witness better orders for conventional goods temporarily, mainly impacted by excessive capacity, huge stocks and feeble end-user demand. However, downstream players showed better mindset compared with before. Some plants intended to have bottom-fishing for unprofitable and low-priced PFY descriptions, especially FDY. Orders for some non-conventional varieties slightly improved, such as elastic fabric and knitted NR fabric. Sales of conventional fabric were hard to improve in short run, but the losses have narrowed. Warp knitting fabric was managed to be around cost line, and some conventional woven fabric was not profitable, but losses reduced. The US announced that the tariff addition on some Chinese goods will be delayed into Dec 15, so order rush may appear in some plants, while the strength needs further observation amid soft overseas demand. Generally, pressure on demand side remains big. After all, short-term mitigation of trade war and the delay of tariff addition on some goods will not alter sluggish demand. Domestic demand is supposed to improve in Aug and Sep by convention. Coupled with eased trade war, overseas demand may turn better, and marginal improvement is likely to emerge in the following one month. You can get more information about the downstream market from the Operation report of fabric mills in Zhejiang and Jiangsu. The latest version will be published after we visited downstream plants on Aug 14-15.