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Gap between imported & domestic cotton price grows
Oct '08
In September, due to the difficulties faced by the textile industry, domestic cotton price continued to fall.

Landed mill price for domestic standard class averaged at 13,130 Yuan/ton in September, down 592 Yuan or 4.3 percent from the previous month. October contracts at the National Cotton Exchange averaged at 12,949 Yuan/ton, down 568 Yuan or 4.2 percent from the previous month.

While in Zhengzhou cotton futures market, November contract averaged at 13,019 Yuan/ton, down 550 Yuan or 4.1 percent from the previous month.

September was impacted by the U.S. financial crisis due to which market confidence suffered a serious setback. Funds fled from futures markets and international commodity futures prices also fell across the board.

In New York, October contract of cotton futures averaged at 60.92 cents/lb, down 6.23 cents / lb or 9.3 percent from the previous month. In major Asian ports, CIF price at main ports was 77.10 cents/lb, down 1.44 cents/lb or 1.8 percent from the previous month.

If based on calculation of 1 percent tariff, the import price gets converted into 13,645 Yuan/ton, 515 Yuan higher than domestic market price, the price spread enlarged by 298 Yuan/ton compared to last month.

If based on floating tariff, the landing price gets translated to 14,069 Yuan/ton, 939 Yuan higher than domestic market price, with the gap in prices compared to last month rising by 438 Yuan/ton.

For cotton imports, China implements tariff quota system, that is, to cotton imports with quota restrictive volume are applied to one percent tariff rate, cotton imports outside quota restrictive volume are applied to a floating tariff rate.

According to 2008 tariff adjustment issued by the Tariff Policy Commission of the State Council, 2008, floating tariff for cotton imports outside quota restrictive volume is 5 - 40 percent,

Any cotton imports, on which tariff imposed is less than 5 percent, will be levied a additional specific duty of 0.57 Yuan/kg.

Fibre2fashion News Desk - China

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