Morning Insight: July 15，2026

Morning Insight:July 15, 2026 LinlinGaoCertification：Z0002332gaolinlin@gtht.comYu Chen WuCertification：Z0024232wuyuchen@gtht.com Main Body Cotton:Reserve auction policy announced; market remains relativelystable. Focus on actual auction results, auction duration, and thedomestic–international cotton price spread. The long-anticipated state cotton reserve auction policy was officiallyannounced on the afternoon of July 13, with auctions scheduled to beginon July 20. The total auction volume and duration have not yet beendisclosed. As the market had largely pricedin the policy beforehand, theimmediate price reaction has been relatively muted. In the near term, old-crop supply is expected to become more abundant.With uncertainty still surrounding the new crop, the futures curve islikely to exhibit a more pronounced near-month weakness versus deferred-month strength, while spot premiums (basis)may also face downsidepressure. Looking ahead, the outright direction of both cotton futures and spotprices will depend on the actual auction participation, transactionvolumes, and the duration of the reserve sales, as well as developmentsin the international cotton market. Given thestill-constructive outlookfor domestic cotton consumption in the new marketing year and the factthat the new crop is currently in a critical growing stage, downsidepressure on Zhengzhou cotton futures is expected to remain limited in theshort term. Ifoverseas cotton futures rally sharply, Zhengzhou cottonfutures are likely to follow. However, if the reserve auction extends foran extended period, it could cap upside momentum, particularly when thenew crop enters the market in large volumes, at whichpoint cotton prices may come under renewed pressure. Strategy: Monitor opportunities to trade a narrowing of the domestic–international cotton price spread after the spread widens. Styrene:Short-term outlook remains constructive; focus on widening EB–BZmargins. Geopolitical risks continue to support naphtha prices, keepingfeedstock costs elevated. Tight benzene (BZ) inventories are sustainingstrong benzene prices and squeezing downstream margins, triggeringincreasingly evident negative feedback instyrene and caprolactamproduction. Following the previous compression in the BZ–EB spread,Jingbo has begun shutting down styrene capacity, while Xinpura is alsofacing feedstock supply risks. At the same time, firm ethylene pricescontinue to provide upward cost support, creating room for EB–BZ marginexpansion. On the demand side, restocking activity in PS has improvedrecently, EPS demand remains supported by essential replenishment, whileABS purchasing interest is still relatively weak. Overall downstreamdemand remains stable. In the caprolactam sector, low feedstockinventories and difficulty sourcing benzene have started to generatenegative feedback. In the near term, the EB–BZ margin remains the keyspread to monitor. Open Interest Source：iFind, GUOTAIJUNAN FUTURESResearch Source：iFind, GUOTAIJUNAN FUTURESResearch Source：iFind, GUOTAIJUNAN FUTURESResearch Source：iFind, GUOTAIJUNAN FUTURESResearch News Highlights: 1. New energy vehicles (NEVs) accounted for 49.42 percent of all newlyregistered automobiles in China in the first half (H1) of 2026, up 4.45percentage points from the same period last year, according to datareleased by the Ministry of Public Security on Tuesday. From January to June, traffic authorities under the ministry registeredmore than 5.19 million NEVs and 10.51 million automobiles in total, aswell as 5.11 million motorbikes, the ministry said. By the end of June, China had 476 million vehicles, including 371 millionautomobiles, and 567 million licensed drivers, with 533 million of thembeing automobile drivers. NEVs totaled 48.97 million, accounting for 13.19 percent of allautomobiles in China, while 68.77 percent of the NEVs were pure electricvehicles. (Source: Xinhua) 2. The People's Bank of China on Tuesday announced that it will carry outa 1.4-trillion-yuan (about 205.91 billion U.S. dollars) outright reverserepo operation on Wednesday to maintain ample liquidity in the bankingsystem. The operation will be carried out with a fixed quantity through interest-rate bidding, with winning bids determined at multiple price levels andfeaturing a maturity period of six months. As 900 billion yuan of six-month outright reverse repos are due to maturein July, this means Wednesday's outright reverse repo operationrepresents an increased rollover. Outright reverse repo operations, a tool the central bank introduced inOctober 2024 to manage liquidity in the national banking system, areconducted once each month with a tenor of no more than one year. These operations have enriched the country's monetary policy toolkit,complementing previous measures such as temporary repos, temporaryreverse repos, and the buying and selling of treasury bonds. (Source:Xinhua) 3. China's foreign trade in yuan-denominated terms grew 16.9 percent yea