Last night, the Biden government took another move, causing the stock price of chip giant Nvidia to plummet.
According to Reuters, the United States has upgraded its ban on AI chip exports, and 13 Chinese GPU companies have been included in the physical list.
According to the report, a US official has stated that the US is about to take measures to prevent US chip manufacturers from circumventing government restrictions on selling semiconductors to China, as part of the Biden administration's upcoming action to prevent more artificial intelligence (AI) chip exports.
Reuters reported the details of the new regulation for the first time, which will be included in the comprehensive restrictions on the export of advanced chips and chip manufacturing equipment to China announced by the United States in October last year. Reuters quoted other insiders as saying that the updated regulations are expected to be released this week, but such schedules are often delayed.
Nvidia responded to a reporter from First Financial: "We comply with all applicable regulations and strive to provide thousands of application products that support different industries. Given the global demand for our products, we do not anticipate that the new regulations will have a substantial impact on our financial performance in the short term
According to Cailian News Agency, several domestic manufacturers stated last night that they had received information in advance, and many of them had already started stocking up in advance. Manufacturers such as Tencent and Baidu have also stated that they are currently "stocking up adequately".
Last night in the US stock market, NVIDIA plummeted 7.8%, marking its largest intraday decline since December 2022. The Philadelphia Semiconductor Index fell more than 2% during the day, with a total market value of $73 billion evaporated from US chip stocks. In terms of other important stocks, SLAB fell 4.3%, Intel, AMD, Broadcom, and Maywell Technology fell 2.7% -2.5%, Sijiaxun fell 1.5%, Qualcomm fell 1.4%, and Asmart fell 0.9%.
In addition, the "terrorist data" in September exceeded expectations significantly.
Last night, the US Census Bureau released retail sales data for September. Data shows that retail sales in the United States increased by 0.7% month on month in September, lower than the previous correction of 0.8%, but far exceeding market expectations of 0.3%, achieving the sixth consecutive month of growth. Strong retail data is an important driving force behind the US economic growth since the beginning of this year. Retail data is far stronger than expected, indicating that consumers are still continuing to consume, enhancing expectations for strong economic growth in the third quarter. Against the backdrop of stubbornly inflationary data in September, the sustained strength of consumer demand may trigger market expectations for a rebound in inflation, potentially prompting the Federal Reserve to raise interest rates again before the end of the year.
As of the close of this morning, the decline in chip stocks has narrowed, with the Philadelphia Semiconductor Index closing 0.8% lower. Intel fell 4% and closed 1.4% lower, while AMD fell 4.5% and closed 1.2% lower. Nvidia fell 4.7% to its lowest point in two weeks. Semiconductor equipment manufacturers' applied materials fell 3% and then rose by over 1%. Lam Research fell 3.7% and closed 0.1% lower, while KLA fell 3.7% and closed 1% lower.
After US retail data exceeded expectations, US bond yields surged across the board. The two-year US Treasury yield, which is more sensitive to monetary policy, rose as high as 14 basis points to 5.24%, setting a new 17 year high since 2006. The highest yield on 10-year US Treasury bonds rose by over 15 basis points to 4.86%, while the highest yield on 30-year bonds rose by 12 basis points to 4.99%, both reaching new highs since October 6th and approaching the highest level since 2007. The five-year US Treasury yield rose by nearly 18 basis points.
Cotton and cotton yarn are both working together to reach a new low in the current stage
Yesterday, both cotton and cotton yarn fell, both recording a drop of over 2%, both reaching new lows in their respective stages.
Starting from the third quarter, cotton has entered a period of oscillation and consolidation. "Li Xiaowei, an analyst at Yide Futures, said that some external demand has weakened and domestic demand is poor, while others have reduced production and cost support. The supply-demand contradiction is relatively mild, and cotton prices fluctuate and consolidate between 16500-18000 yuan/ton. After the start of the new year's production, the market is waiting for a breakthrough in the market and has reached a relatively maximum state of conflicting expectations before the production of new cotton in September.
The Futures Daily reporter learned that the peak season of the "nine gold and ten silver" season in China has already passed, but demand performance continues to be weak; On the supply side, although there has been a reduction in production of new cotton, ginning factories are generally cautious about purchasing new cotton, and the situation of seizing new cotton has significantly decreased.
Regarding this, Nan Hua Futures agricultural product analyst Bian Shuyang also explained that it is currently in the peak season of acquisition, but the centralized acquisition of Xinjiang cotton has not yet begun. Against the backdrop of stricter bank lending policies, it is expected that the enthusiasm of ginning factories for "rush to collect" may decrease. In addition, with continuous storage dumping and import quota issuance, cotton inventory has been significantly replenished, and strong support for cotton prices has weakened. At the same time, downstream demand has not significantly recovered, During the peak season, consumption fell short of expectations, and the phenomenon of cotton auctions from State Reserve has also increased recently, leading to a sustained weakening of the internal market.
It is understood that during the National Day holiday, northern Xinjiang machinery mining began one after another, and ginning factories maintained rational and cautious purchasing. However, cotton farmers had a strong reluctance to sell due to the significant year-on-year decrease in per mu yield and high costs. The fierce competition between the two did not set off the atmosphere of rush to harvest. Expectations were falsified and downstream industries had been under pressure for a long time. The improvement of the "Golden Nine Silver Ten" peak season was limited, and negative feedback continued to accumulate, leading to a weakening of the internal market.
In fact, with the launch of new flowers, the fundamentals of cotton have changed compared to the previous period. At present, mechanical harvesting is gradually underway, and cotton farmers in northern Xinjiang generally report a significant decrease in yield compared to the same period last year. Many cotton fields may produce no more than 400 kilograms per mu, while feedback from southern Xinjiang is slightly better. The market's expectation for yield has been lowered compared to August.
At present, it is a consensus in the market that the area of new cotton will decrease by 7-9% year-on-year due to the policy of changing cotton to grain. However, there are still significant differences among various institutions regarding the reduction in yield per unit. Some institutions believe that Xinjiang's cotton production may be less than 5 million tons, but due to the need to wait for large-scale harvests across Xinjiang to determine the final yield situation, and the expected production has been traded for a long time, the market is wait-and-see attitude towards this change and has not fully traded The Xinhu Agricultural Products Team stated.
In Bian Shuyang's view, the current focus of the cotton market is the acquisition of Xinjiang cotton in the new year. Due to the impact of early weather conditions, the overall growth progress of Xinjiang cotton this year is slow, and the centralized harvesting time has been delayed. Against the backdrop of a year-on-year reduction in production, cotton farmers have a strong mentality of being reluctant to sell, but with the recent price decline, the wait-and-see sentiment of the ginning factory has also increased, and the game between the two is still in a stalemate stage. Bian Shuyang said that in comparison, the focus of the cotton yarn market is that the high inventory cotton yarn held by downstream traders is still in the destocking stage.
In terms of seed cotton acquisition, the expected recovery has fallen through, and the ginning factory currently has no hedging opportunities. Maintain a calm acquisition, while cotton farmers have a strong overall reluctance to sell due to planting costs and a decrease in per mu yield, resulting in a stalemate in the acquisition. At present, the machine harvested cotton in northern Xinjiang ranges from 7.6-8.1 yuan/kg. As the weather gets colder, cotton farmers speed up their harvest. At the same time, the potential temperature drop and snowfall in the later stage pose a threat to the early picked Chicken rolls cotton with more moisture, or will cause it to mildew. Cotton farmers gradually speed up their sales.
In the early stage, due to the strong bullish sentiment in the market, traders sought to purchase cotton yarn at low prices, but downstream sales remained sluggish, with peak season demand falling and yarn inventory constantly accumulating. Currently, traders have reduced prices and sold off, resulting in weak cotton yarn prices and squeezing out orders from textile enterprises, resulting in continuous losses and tight orders for immediate spinning by cotton mills, putting greater operational pressure on them, "he said.
At present, the operating rate of the fabric factory has slightly decreased compared to before the holiday, cotton yarn inventory continues to be depleted, grey fabric inventory continues to accumulate, and there has been no improvement in terminal consumption. According to the statistics of the General Administration of Customs, the export of textile and clothing reached 26.2 billion US dollars, a decrease of 6.5%, and a decrease of 6% month on month. With downstream enterprises struggling to operate smoothly, poor terminal consumption, and cotton yarn traders continuously reducing prices and selling off, demand brings negative feedback and marginal increase.
From the perspective of downstream cotton yarn, there has been some improvement in downstream chemical fiber fabrics recently, but cotton fabrics have performed relatively average. Considering that Xinjiang's spinning profit is still 600 yuan/ton, the yarn end has slightly replenished inventory, the operating rate has maintained, and the inventory of finished products has increased. The operating rate of fabric factories has slightly decreased compared to before the National Day holiday, and the willingness to replenish raw materials is weak, with the main focus on finished products going to inventory. Overseas orders have not improved yet, and domestic orders have not exceeded expectations, with average purchasing power. Overall, the table shows that It is currently weaker than the first half of the year Wang Qiyao, the head of soft commodities at Zijin Tianfeng Futures, said.
In the medium term, downstream demand is poor, and textile companies are operating in a reverse order, with negative feedback increasing marginal. Cotton yarn channels have high inventory and certain cost advantages, gradually selling out to pressure them. Under the policy of issuing additional quotas, the volume of imported cotton is expected to gradually increase, while dumping continues to stack up with the listing of new cotton. The supply increase and inventory tension have been alleviated, and Zheng cotton may be operating weakly, "said the agricultural product team of Xinhu Futures, The market needs to pay attention to the direction of the game between ginners and cotton farmers.
The cotton price gradually changes from "strong inside and weak outside" to "weak inside and strong outside"
It is worth mentioning that after the start of the new cotton acquisition, the internal market turned into a trading reality, while the external market still had the expectations of US cotton production reduction and global demand and trade recovery given in the USDA balance sheet. The cotton internal and external market expectations shifted from "strong inside and weak outside" to "weak inside and strong outside".
From an expected perspective, the bullish expectations for early trading on the market did not fully materialize at the beginning of the acquisition season, which is different from the rush to pick up new cotton in the previous two production seasons. The downstream of this production season has shown a cautious attitude towards purchasing new cotton, and the driving force for further upward futures prices has not emerged, "said Hu Linxuan, an analyst at Guohai Liangshi Futures.
The focus of the real end market of the industrial chain is on the accumulation of cotton yarn in downstream ginning factories and the slow procurement of cotton yarn raw materials in weaving factories. This is mainly due to the poor performance of terminal fixed points, which leads to slow product inventory removal and ultimately leads to cautious upstream procurement of raw materials. Therefore, the internal market has shifted from strong trading expectations to weak trading reality, and futures prices have also shifted from strength to weakness.
The drought situation in Texas, the main cotton producing area in the United States, has been long-standing, which is also the main reason for its continuous decline in production. In the summer of Asia, under the influence of El Ni ñ o, major cotton producing countries have experienced severe drought, and the reduction in production in cotton producing countries led by India has further intensified. Li Xiaowei said that the international market has always been expecting a reduction in production.
The changes in demand are relatively more pessimistic. The gap in domestic cotton demand still exists, but the dependence on the United States is decreasing, and demand and imports from other countries are rapidly increasing. The weight of the impact of financial pricing centers in Europe and America on Zheng cotton will also be lowered, and Zheng cotton may emerge from a more independent market. Li Xiaowei believes that in the context of clear production cuts and pessimistic demand abroad, international cotton prices on the one hand depend on the landing of their production cuts, On the other hand, it will be more disturbed by macroeconomic pressure.
Recently, the US Department of Agriculture released its October supply and demand report, which showed a relatively small adjustment in global cotton supply and demand, with an overall neutral impact. From different major producing countries, US cotton production is at a low level for many years, providing some support for its prices. Brazil has a significant increase in production, and exports are expected to increase significantly compared to the previous year, making up for the risks brought about by the US cotton production reduction. "Cao Kai, senior analyst at CIC Anxin Futures, said that on the demand side, The demand for American cotton is still weak, and the annual signing progress is at a low level for many years. It is expected that American cotton will still struggle to break free from the trend of large-scale fluctuations. Recently, the price difference between domestic and foreign cotton has been narrowing, and it is difficult for American cotton to bring positive support to Zheng cotton in the short term.
In the eyes of industry insiders, since the bottom of cotton prices hit at the end of last year, the strength of Zheng cotton has been significantly greater than that of American cotton, and the price difference between domestic and foreign cotton is expected to continue to shrink.
From the perspective of supply and demand balance during the production season, the reduction in cotton production in countries such as China and the United States has left global cotton production still in a period of decline, leading to a decrease in inventory consumption compared to the same period last year. In addition, there are still expectations of global demand and trade recovery, and there is still limited space below US cotton. Zheng cotton also has support. Hu Linxuan believes that the sustainability of cotton variety weakness is limited, and inventory depletion will accelerate when the industrial chain enters the peak season, After the easing of the demand side issues that are currently plaguing the market, the market's focus may return to the issue of production reduction on the supply side.
From the fundamental perspective of cotton and cotton yarn, the continuous weak demand has led to increasing pressure on the entire industry, and there may be a process of quantitative to qualitative changes in the later stage. This is also one of the main reasons why the market is not optimistic about cotton prices and cotton yarn prices. Cao Kai said that the failure of peak season demand has led to the accumulation of downstream pressure, gradually weakening cotton consumption. In the medium term, it is still difficult to see a significant improvement in demand, especially external demand.
In the short term, Xinjiang spinning still has profits and there is a purchasing power, while yarn inventory is too high and orders are weak, which still shows weakness. In Wang Qiyao's view, there is still support for cotton near 16500 yuan/ton in the short term. After the goods are fully transferred to the yarn end, pay attention to orders and the financial situation of cotton yarn traders. If the yarn end explodes and there is a large amount of selling, then there will be a significant drop in prices in the later stage. Considering that the acquisition has not yet been carried out on a large scale, the acquisition price and the final Xinjiang cotton production have not yet landed, and there are still variables
Looking ahead to the future, the mid-term cotton trend may be weak, but it is difficult to see a deep decline. In Cao Kai's view, the positive impact of new cotton production reduction and new cotton costs is gradually weakening. The supply side is not short of cotton due to rotation and imports, and the demand performance in peak seasons is weak. Therefore, the mid-term cotton price is not optimistic, and the market transaction logic may gradually shift from the supply of new cotton to demand.
In Li Xiaowei's view, new supply is about to come to fruition, and production reduction is less than expected. The market may bear more pressure than expected, and downstream will not provide more support to the market, but it is more likely to become a drag. At present, cotton is still in the early stages of acquisition, and the current acquisition price cannot represent the mainstream price. We need to wait for the large-scale acquisition starting later this month to see the representative market acquisition price and cost support, "he said.
