Cotton industry outlook for 2007

05 Feb '07

2 min read

On January 30, at the analysis forum on cotton situation, purchase & sale, marketing in 2007, provided brief insight of the situation for 2007.

Giving an outlook of the cotton situation in 2007, Zhulanfen, Vice President, China Cotton Textile Industry Association, explained following points in detail:

1. The textile industry's production capacity is expected to maintain its rapid growth, being driven by market demand both at home and abroad.

2. Exports of cotton products will continue to maintain escalating trend. However, development of export volume and value will be affected by exchange rates and cotton consumption costs. Demand for cotton products in domestic market will keep on rising.

3. The revaluation of RMB is a double-edged sword. On one hand, it could hike the price of exported goods, and on the other may reduce export profit. After the revaluation, cotton yarn price will probably increase. If the appreciation stood at 7.443, cotton yarn price would gain 11.1 percent. Meanwhile, the price gap between import and export would be widened and weaken the competitiveness of China-made yarn in domestic and international markets. Take exchange rate of 7.443 for example again, the price gap between imported and exported carded cotton yarn would reach 42 percent.

4. The cost impact of new slide tax on cotton mills should be further observed, including the benefits to be reflected in RMB appreciation.

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