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China Cotton-Yarn Output Falling on East Asia, ICAC Adviser Says

March 19 (Bloomberg) -- Cotton-yarn production is migrating to East Asia from China, which has become less competitive, according to Armelle Gruere, a consultant to the Washington-based International Cotton Advisory Committee.

While China is still the main cotton consumer, using about 40 percent of world production, its consumption of the fiber peaked “several years ago,” Gruere said in an interview on the sidelines of a commodity-industry meeting in Geneva.

“They’re buying a lot more yarn, cotton consumption in China is declining,” Gruere said. “They’ve become less competitive in yarn production, some capacity is migrating.”

China rebuilt its cotton stocks over the past two years and holds about half of the world’s stockpiles, according to Gruere. She said the country considers its national cotton reserves an official secret.

The lack of transparency on China’s stocks creates “a lot of uncertainty” in the cotton market, Gruere said.

Many countries don’t provide estimates for their cotton stocks, and less than 5 percent of the data used by the ICAC to draw up inventory estimates are from official data, Gruere said in a presentation at the meeting organized by the United Nations Conference on Trade and Development.

Countries which have stock estimates available include the U.S., Egypt and Brazil, according to Gruere, a statistician who previously worked for the ICAC.

“Many governments are not interested in developing a cotton balance sheet,” Gruere said. “Not all governments agree that transparency is beneficial to their interest.”

The ICAC, established in September 1939, provides statistics on production, consumption, trade and stocks and represents industry, according to its website.

To contact the reporter on this story: Rudy Ruitenberg in Paris at rruitenberg@bloomberg.net

To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net

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