Rumours are circulating in the Chinese cotton markets that, the state will release very soon, 600,000 tons of state cotton reserves purchased in cotton season 2008-09 and as per experts, the opening price for cotton auction will be 165,000 Yuan per ton and the maximum trade price will be limited at 18,000 Yuan / ton.
The actions are expected to last till around National Day (October 1) and daily sales volumes are expected to touch 15,000 tons. As October is the time when new cotton comes into the market, experts aver that, 16,500 Yuan / ton could be the intersection price of old and new cotton.
According to market sources, after this release of cotton reserves, national cotton reserves will only have 1.2 million tons left. China will import large quantity of cotton from overseas markets, which will give support to cotton price in 2011, so new cotton is unlikely to fall below 16,500 Yuan per ton.
Recently, international cotton traders have already signed contracts for cotton shipment between October to January for American, Brazilian and West African cotton. However, domestic companies' worry that US cotton can not be shipped out by the end of December.
Some cotton textile factories holding import quotas hope the state will start releasing cotton reserves as soon as possible, as it will not only suppress the galloping domestic cotton price, but can also facilitate reasonable integration of new and old cotton prices.
At present, weak downstream market has become a major drag on cotton market, the spread between cotton and viscose staple fiber as well as polyester staple fiber remains large, downstream textile industry continues to wait and see the development of the situation.
Fibre2fashion News Desk - China
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