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Domestic cotton market stable

12 Mar '07
2 min read

Analysis of the market shows that there would be no large purchase activities during the 20 days after the spring festival. Due to a number of scales, textile enterprises had prepared enough raw material for almost 1-2 months before the spring festival. The small procurement in spot market now is done by small factories, which is difficult to influence the market.

With regard to funding, during the two weeks after the festival, sales and cash return in textile market are less, but all expenditures are larger, in particular the payment for the cotton purchased before the festival should be settled, which also affects factories to further build up their stock.

Regarding price, cotton market had a slight rebound before the festival, up about 200 yuan per ton mainly for cotton with less foreign fibers. Spot market price is expected to have small rise mainly driven by cost.

From the analysis on macro-state, first, according to National Statistics Bureau, China's cotton production reached 6.73 million tons in 2006, a year-on-year increase of 17.8 percent, yarn output amounted 17.4 million tons, an increase of 20 percent. The two sectors have kept synchronous growth, which would not break the steady progress of cotton situation.

Secondly, the focus of the national macro-control will continue to promote the sales of domestic growth, especially the sales of Xinjiang cotton, as well as speed up fund return.

From the above analysis, domestic market is unlikely to face large fluctuations in near future. At present, domestic textile enterprises import less cotton and so foreign cotton has less impact on domestic growth.

The market is controllable. But if focused consumption of domestic cotton is excessive, all the remaining space will be left to cotton imports to fill up, and international market price will be open to ups and downs.

Fibre2fashion, News Desk - China

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