China's cotton demand & prices to rebound

30 Mar '12

2 min read

Demand for cotton in China, the world's largest consumer of cotton, is likely to bounce back this year, which while instigating a rise in imports of the commodity, would also restrain the prices from falling further.

Persuaded by recovery in the domestic textile industry, China's cotton consumption is expected to grow over last year's estimated 9 million tons to around 9.58 million tons this year.

Around 40 percent of the world's cotton exports are towards China, which is expected to import 18.5 million bales of cotton this season, which will be a year-on-year rise of 54 percent. This quantity will be the highest volume of cotton imported by China in the last six years.

Record global output and projections of slow economic growth have caused cotton prices in New York to plummet by 57 percent from historic highs of March 2011. But now, the Chinese textile industry has started showing signs of recovery, with several textile units beginning to operate at full capacity, which has resulted in a fall in their cotton yarn inventories.

As a result, China's cotton demand is sure to perk up during the current year, which would slowly reduce the gap between cotton prices in China and global cotton prices, according to market analysts.

As revealed by the customs statistics, China's cotton imports soared by 64 percent year-on-year to 942,400 tons during the initial two months of the current year.

The rise in Chinese cotton imports is mainly attributed to the Chinese Government's policy of diverting local supplies for creation of state reserves, which is expected to represent one-fourth of world's overall stockpiles by July this year.

Fibre2fashion News Desk - China

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