Cotton piles up at Chinese customs as quota exhausts

31 Jul '12

2 min read

Several warehouses that stock cotton are fully occupied at Chinese ports as more than 500,000 tons of imported cotton has not received clearance from Customs due to exhaustion of quotas.

A dozen cotton warehouses in Qingdao Free Trade Zone were fully occupied as on July 26. The storage cost, which normally prevails around 0.7-0.8 Yuan/ton, has gone up to 2 Yuan/ton.

The price gap between imported cotton and Xinjiang cotton had gone up to 5504 Yuan/ton this season. This attracted a large number of traders to hoard imported cotton in expectation of making profits by reselling their stock to domestic users.

However, the traders were kept off from making profits due to exhaustion of cotton import quotas and have been forced to stock imported cotton in warehouses.

On July 26, the cotton quota was being traded at around 4,000 Yuan/ton in the market, while the price gap between imported and Xinjiang cotton had narrowed down to 4618 Yuan/ton.

Industry insiders say it is very rare that imported cotton gets piled up at ports.

So far, the Chinese Government has issued cotton quotas for a total of 2.5 million tons of cotton. Since all the already issued quotas have got exhausted, over 500,000 tons of imported cotton could not get customs clearance, as they do not have quotas.

Fibre2fashion News Desk - China

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