Speeding cotton sale in Henan Province troubles middlemen
29
Mar '08
Mar '08
Starting from March 18, cotton yarn sale of Chinese textile enterprises has increased which has in turn encouraged the volume of cotton sale in Henan Province. So far, local entrepreneurs have sold about 42 tons of cotton lint.
Since prices for raw materials haven't gone up in the recent times, only textile enterprises having enough funds are willing to buy cotton so as to sell it actively later on.
While the present cost of cotton lint is 13,200 yuan per ton, the real price is 13,400 yuan per ton which means that entrepreneurs can still make a profit of 200 yuan a ton.
However, the steady sale of cotton can be a growing concern for the middlemen for whom the cost of cotton lint stands at 13,800.
Most of these middlemen have taken a loan from the Chinese Agriculture Development Bank and must therefore return 50 percent of the borrowed sum at the end of March. However, if they sell their stock at this point, they are likely to suffer a heavy loss since the current price is relatively low compared to the prices at which they were produced.
Since prices for raw materials haven't gone up in the recent times, only textile enterprises having enough funds are willing to buy cotton so as to sell it actively later on.
While the present cost of cotton lint is 13,200 yuan per ton, the real price is 13,400 yuan per ton which means that entrepreneurs can still make a profit of 200 yuan a ton.
However, the steady sale of cotton can be a growing concern for the middlemen for whom the cost of cotton lint stands at 13,800.
Most of these middlemen have taken a loan from the Chinese Agriculture Development Bank and must therefore return 50 percent of the borrowed sum at the end of March. However, if they sell their stock at this point, they are likely to suffer a heavy loss since the current price is relatively low compared to the prices at which they were produced.
Fibre2fashion News Desk - China
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