Overall textile industry has been facing major problems since the beginning of this year, and cotton sector has not remained untouched.
Cotton producers are finding it hard to grab big orders and thus inventories are huge. Due to lack of demand and crunch in international trade the average price of cotton has also plunged to just 14000 yuan per ton.
In order to support the domestic cotton and textile industry, this June, Chinese Government decided to give an allowance of about 400 yuan per ton to the cotton made in Sinkiang Province. It also announced support to Chinese cotton enterprises through bank loans.
Besides, Government increased the export rebate rate of some textile products from 11 to 13 percent, effective since August 1, 2008.
However, it seems that these steps have not proved to be big help for the industry. Cotton trade situation is still unchanged, forcing the prices drop further.
Industry insiders explain that clothing manufacturers are in a rut and have no finance to make any cotton purchases.
Another concern of cotton producers is that apart from the existent inventories, new cotton is expected in the market, soon.
Fibre2fashion News Desk - China