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Strained textile trade weakens cotton demand
09
Jul '08
As the Chinese textile industry is weakening noticeably, demand for cotton is also dropping significantly. Besides, growth rate of domestic cotton yarn output has declined considerably.

According to the statistics from the State Development and Reform Commission, national yarn output completed 1.9 million tons in May, a year-on-year increase of 12.8 percent.

From January to May this year, national yarn production registered 8.34 million tons, a rise of 11.6 percent from the same time last year, but the growth-rate decreased by 9 percentage points.

From September 2007 to May this year, China's total yarn output fetched 15.45 million tons, up 11.7 percent as compared to corresponding period last year, but down 8.6 percentage points in growth pace.

Cotton imports have dropped. Domestic cotton production has been stabilized in past two years. According to data provided by the US Department of Agriculture, 2007 cotton output was 7.72 million tons, while domestic consumption was over 11 million tons.

Though shortfall was more than 330 million tons, China imported about 2.46 million tons of cotton last year.

According to Customs statistics, cotton imports were 240,000 tons in May, lower than the average level of 275,000 tons in last three years. January-May imports stood at 1.03 million tons, which is also less than the average level of 1.2 million tons in recent three years.

At present domestic textile industry is in a difficult period of transition. It sets to weaken domestic cotton consumption, but not enough to change the current situation of basic supply and demand state. This only slows down the growth rate of consumption.

The spot market trend reveals that cotton trade is slightly moving towards stability. As of July 2, domestic cotton price index for grade 328 was quoted at 13,859 yuan per ton, hike of 9 yuan per ton compared with early March, and 13 yuan per ton more than that in same time last month.

On the whole, the slump of textile industry has inhibited the rise in cotton price and thus domestic cotton rate is expected to mark fluctuating trend for a fairly long period.

Fibre2fashion News Desk - China

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