Cotton linter fails to extend bullish streak

After the Spring Festival, the textile market has shown relatively weak performance, with recent orders and sales falling short of expectations. Influenced by multiple factors, the cotton linter market has also failed to extent its bullish streak, with prices rising initially and then moving downward, completing a round of "roller coaster" fluctuations in a short period. Compared to previous years before and after the Spring Festival, is the current market strong or weak?

Following a continuous rise in cottonseed prices, boosted by costs and the resumption of production by downstream enterprises driven by inelastic demand, the price of cotton linter increased by around 200yuan/mt after the Spring Festival. However, this positive trend was short-lived. After mid-Feb, as cottonseed prices began to decline and downstream demand remained weak, cotton linter prices gradually weakened, currently falling back to levels seen before the Spring Festival, completing a small "roller coaster" cycle in less than a month.

It can be seen that over the past seven years, the price of cotton linter generally increased around the Spring Festival, except for a stability in 2020. Since the Spring Festival of this year, the price of cotton linter has risen by 30yuan/mt, with a cumulative increase of 220yuan/mt since New Year's Day. The overall increase is significantly lower than that of 2021-2024 but still stronger than the period from 2018 to 2020.

From another perspective, both cotton linter and cotton belong to agricultural products. As a cotton by-product, their price fluctuation trends are similar over the long term. In the short term, due to differences in supply and demand, they may not align, but significant fluctuations in cotton prices resonate with cotton linter prices. Historical data shows that the price of cotton linter can account for 20-50% of cotton prices. From 2015 till now, the average proportion over more than a decade has been nearly 30%. Currently, the price of cotton 3128 is 14,390yuan/mt, while cotton linter for industry-grade refined cotton is 4,890yuan/mt, with cotton linter price accounting for about 34% of cotton price, which is higher than the average level of the past decade.

In summary, the textile market has been mild after the holiday, with trends becoming increasingly flat. Although the cotton linter market has not maintained its previous strength, it has not yet fallen into a relatively pessimistic situation in the overall textile market. If there is no influence of black swan events, the market is expected to keep weak in the short run.