China cotton imports drop by over a quarter in June
today Jul 15, 2015
Chinese cotton imports dropped nearly 26 percent in June from the year before as relatively high international prices and a lack of quotas for shipments curbed appetite for overseas purchases.
The world's top consumer of the fibre imported 161,800 tonnes in June, meaning the total for the first six months of the year plunged 33 percent from the same period in 2014 to 933,900 tonnes.
Beijing has been trying to boost consumption of locally-grown cotton, with traders saying it has only issued 894,000 tonnes of import quotas this year - the minimum required under WTO commitments.
They added that most of those quotas, used by the government to protect its cotton farmers, had already been used up.
Overseas cotton is also relatively expensive, traders said.
"The price differential between domestic and international prices kept narrowing; even for mills with quota availability, imported cotton didn't look so attractive anymore," said Switzerland-based trading firm Reinhart in its weekly market report.
Chinese prices are under pressure from significant leftover commercial stocks as well as sales of state reserve cotton, which kicked off last week, adding supply to the market.
Zhengzhou futures also fell sharply following last week's stock market rout, and have hardly picked up, despite government measures to calm investors.
At the same time, purchasing by India's government-backed Cotton Corporation of India (CCI) has propped up the prices of Indian fibre, while U.S. cotton has mostly been sold out.
"As long as CCI's activity holds the global price relatively firm, I don't think import activity in China will happen in a very aggressive manner," said a trade source who declined to be identified.
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