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China to hold cotton reserves; may not impact imports
Oct '12
There will be no impact on exports of cotton from India or Pakistan, despite the Chinese government deciding not to sell cotton from the huge reserves it has created in the previous cotton year as part of its state cotton reserves, was the opinion of experts from the cotton industry in Pakistan and India.  

National Development & Reform Commission (NDRC) – an apex economic decision body of the Chinese government has announced that China will not liquidate its state reserves cotton in the new cotton season. “It will also issue cotton import quotas on low tariffs totaling to 894,000 tons”, NDRC said. 

From September 2011 to March 2012, the Chinese Government procured 3.22 million tons of cotton for its state reserves. In addition, one million tons of cotton was imported and added to state reserves, which already had 300,000 tons of cotton from previous season. Thus, by March-end, China had a mammoth 4.52 million tons of cotton in its state reserves.

“The decision of the government implies that it encourages textile mills to import low-priced cotton from overseas markets as well as take care of interests of its cotton farmers”, a top source in the Indian Textile Commissioners office informed fibre2fashion.

“Cotton exports to China are very low currently as they are trying to source low-priced cotton from overseas markets. However cotton exports to other countries are begetting 81 US cents / pound, while Chinese importers are demanding at 71 cents / pound.

“Secondly, current demand from Chinese cotton textile units is also very low, due to the slowdown in demand from its traditional markets like the EU and US. Thirdly, cotton yarn exports are on the rise as costs of spinning yarn are going up and it is cheaper for China to import yarn. So, I do not foresee any hike in demand in the immediate future, he wound up by saying.

The newly appointed President of the Pakistan Ginners Association – Mr Mahesh Kumar was of the opinion that cotton coarse yarn exports to China are climbing which has meant more consumption of cotton in Pakistan. So, he expects that if yarn export trends continue in the same manner, the cotton produced in Pakistan will be consumed in the country itself.

“Secondly, exports to China have fallen in the last cotton season. Thirdly, currently cotton prices in Pakistan are higher than those ruling in global markets. Last but not the least, the quality of cotton currently arriving in the markets is not of such a good quality, which again is not good enough for exports”, he said.

Mr Vishwanathan, Secretary of the Indian Cotton Federation says, “Consumption of cotton has gone down in China and at the same time, Indian cotton prices are ruling higher. So, cotton exports to China have already slowed down. If crop arrivals increase and prices fall in December or January, we can expect cotton exports to revive to China.”

Fibre2fashion News Desk - India

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