The annual import quota release is the most affecting moment to cotton spinning enterprises. Although China achieved good cotton harvest in 2006, rigid demand gap still makes import quota very important, particularly, when there is greater price difference between local growth and overseas cotton.
How big will be the cotton shortfall in the current year? It still has no precise figures, but cotton consumption could be roughly estimated. In 2006 China's yarn output reached 17.4 million tons, representing a growth rate of over 20 percent.
Facing trade frictions, lowered export tax rebate rate, RMB revaluation and other unfavorable factors, the growth rate is expected to fall in 2007.
Based on conservative estimates of 10 percent growth rate in 2007, yarn production will be more than 19 million tons, so cotton usage will be more than 12.5 million tons. Though final inventories are yet to be determined, compared with 6.7 million tons of cotton output in 2006, supply-demand gap is bound to exist.
Cotton import quota release this year is later than last year. The additional 1.5 million tons of preferential tariff quotas issued in January last year effectively stabilized cotton prices. Since the release of 894,000 tons of tariff quotas, it has not been any fresh movement.
In an analysis meeting of cotton situation recently held, the State Development and Reform Commission officials said, there has not a clear-cut plan yet as when torelease additional cotton import quotas for the New Year, at present, it would not be considered until March.
Fibre2fashion, News Desk - China
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