Home / Knowledge / News / Textiles / China's cotton purchase policy faces dilemma
China's cotton purchase policy faces dilemma
Aug '12
A dilemma exists in Chinese cotton purchase policy as the Government’s procurement of cotton for state reserves would increase prices of cotton in domestic market, while the Government’s issuance of additional import quotas would lead to a decrease in prices of domestic cotton.
Since July 4, when the Chinese cotton 328 price index hit a bottom, the index has continuously increased by 274 Yuan/ton to reach 18,430 Yuan/ton at present. However, this price is about 2,000 Yuan/ton less than the price of 20,400 Yuan/ton announced by the Government for its cotton purchase for state reserves beginning next month.
Cotton futures prices have also risen gradually and currently the most active contract CF1301 is at 19,500 Yuan/ton. This price is about 900 Yuan/ton lower than the price finalized for state purchase and storage of cotton.
Since there is no upper limit for quantity of cotton for state purchase, the price gap between spot price of cotton in domestic market and the state reserve price will narrow down, once the Government starts procurement for state reserves early next month.
In the first seven months of cotton season 2011-12, the price gap between state purchase price and cotton 328 price index was lower than 800 Yuan/ton. Normally, the price difference was in the range of 200-600 Yuan/ton.
In 2011-12 cotton season, the Government purchased large amount of cotton for state reserves and hence, the availability of high quality cotton in domestic market is low.
On the other hand, there is large pile up of imported cotton at warehouses near ports. Owing to limited import quota, these stocks are unable to reach the market, thus creating a situation of tight supply in domestic market.
Hence, to ease the situation of tight supply, China may issue additional quota for cotton imports, which would dent cotton prices in spot market.

Fibre2fashion News Desk - China

Must ReadView All

Union textiles minister Smriti Irani addressing at the Texprocil Annual Export Awards. Courtesy: PIB

Textiles | On 22nd Oct 2016

Govt to extend special package to home textiles segment

The Central government is likely to extend the recently approved Rs...

Reebok Liquid Speed Grey. Courtesy: Business Wire

Apparel/Garments | On 22nd Oct 2016

Reebok’s Liquid Factory brings sneaker creation to US

Reebok, a pioneer in the sporting goods industry, has brought sneaker ...

Courtesy: GHCL

Textiles | On 22nd Oct 2016

GHCL to invest Rs 67.25 crore in textile division

Chemicals and textiles firm GHCL will invest Rs 67.25 crore in its...

Interviews View All

Ajay Ghariwala
Luthra Group

We are ready to adopt or follow every opportunity

Karan Suratwala
Key Textile Accessories Private Limited

Chinese imports are destroying the supply chain

Rahuul Jashnani

‘Online economy has changed the whole dynamics of buying habits.’

Mohammad Hassan
Biax Fiberfilm

About one in every 20 patients picks up an infection while hospitalised....

Mark Paterson
Technical Absorbents Ltd

Mark Paterson, R&D manager of Technical Absorbents Ltd talks about Super...

Eamonn Tighe
Nature Works LLC

Eamonn Tighe, Fibres and Nonwovens - Business Development Manager of...

Judy Frater
Somaiya Kala Vidya

Among the many honours showered on Frater, including Fulbright and Ford...

Igor Chapurin

"Now we can see the Russian trend in international fashion. And Russian...

Wendell Rodricks
Wendell Rodricks

"We should not compare India and the West. There are things we do that...

Press Release

Press Release

Letter to Editor

Letter to Editor

RSS Feed

RSS Feed

Submit your press release on


Letter To Editor

(Max. 8000 char.)

Search Companies

October 2016

October 2016

Subscribe today and get the latest update on Textiles, Fashion, Apparel and so on.


Browse Our Archives


Advanced Search