Govt may increase cotton auction sales to alleviate shortage

14 Aug '09

2 min read

Early this year, China issued 894,000 tons of cotton import quotas under tariff rate of 1 percent. In June, the Government once again issued 400,000 tons of import quotas for export processing companies based on floating tariff policy.

The National Development and Reform Commission said, in the first six months of this year, China's cotton imports fell 41 percent to 755,000 tons. In the 10 month as of June, China imported 1.2 million tons of cotton, a decrease of 41 percent year-on-year.

China's cotton market has begun to show a tight situation. The state bought 2.7 million tons of cotton last year as reserves, out of which it has sold 1.16 million tons of cotton through auction out of 1.52 million tons allocated for the auctions.

However, this allocation may not prove to be enough to alleviate supply shortage, while the remaining import quotas cannot meet market demand in the second half of this year.

The Chinese government may increase sales of cotton reserves by 300,000-600,000 tons in addition to 1.5 million tons that has already been allocated for the auctions, instead of allowing more cotton imports.

In July, China had 2.5 million tons of cotton stocks. The Government usually keeps 2 million tons of cotton stocks under any circumstances; therefore the Government has no more cotton to sell.

New cotton will be harvested in late August, but sales of large volume will only start in mid-September and this year there are expectations that cotton output may fall to 7.5 million tons against 7.8 million tons in the previous season.

Fibre2fashion News Desk - China

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