Spot Goods Price Fell to the “Bottom”, and Making Them in Dilemma to Purchase
Source: cncotton.com Date: 2006-11-01
Most of enterprises believed that there left little room for domestic spot price to fall, but still only a few jointed in the purchase. The reasons for such a contradictory phenomenon were that: first, capital, and second, confidence.
On October 26, a principal in a textile enterprise in Shandong expressed to CNCotton that, the delivered price in their company of grade-2 lint with a good quality was 12900 Yuan per ton, and he considered it basically acceptable. However, he believed that there still was a great chance for domestic spot price to fluctuate. When asked how much warehouse storage they still had, he admitted that it could only support the production of about one month, and during the past few months, the raw material warehouse storage had been in a declining situation. He said that the main constraint was a lack of purchase funds, so they did not want to spend the limited funds on raw material warehouse storage.
Coincidentally, a textile enterprise in Yangzhou, Jiangsu also faced with the capital dilemma. According to a principal of that enterprise who had just returned from Guangzhou, the situation at canton trade fair was not very satisfactory. It was estimated this year’s export situation was not optimistic, which was within their expectation. In addition, the country tightened the current liquidity, and problems of cash flow shortage emerged. Therefore, they would not increase their warehouse storage greatly, although in a short run, the domestic spot price would mainly face with horizontal adjustment, without great fluctuation.
