China's cotton inventory will gradually decline: Analysts

27 Feb '14

2 min read

China’s cotton stocks are currently at historically high levels, but they are expected to gradually decline and reach normal level after 2020, according to market analysts.

In recent years, China’s cotton consumption has grown at an average annual rate of 11 percent, and the country currently consumes about 39 percent of the world cotton production.

In future, with the recovery of both domestic and export economies, the demand for cotton would grow along with the consumer demand for textiles. However, the growth rate would be much lower compared to the growth rate seen over a decade ago.

As China’s population continues to grow, the demand for textiles and clothing will also increase. But, owing to the increase in cost of production, a portion of the Chinese textile industry would shift to India, Pakistan, Vietnam and other countries. Hence, China’s cotton consumption should be around 9 million tons in 2020.

In recent years, the rise in demand for cotton has led to an increase in cotton imports by China. From 2000 to 2011, China’s cotton imports soared from 47,000 tons to 3.364 million tons, which is a 70-fold increase.

Looking at the supply and demand situation, China is likely to continue to import cotton in future. However, the cotton market regulation policy, which led to a sharp rise in cotton imports since 2012, is likely to change, resulting in gradual digestion of the cotton stocks, and after 2020, Chinese cotton stocks would come down to normal level.

Meanwhile, owing to an increase in labour costs, imports of cotton yarn would also increase in future, according to analysts.

Fibre2fashion News Desk - India

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