China Curbing Cotton Imports as Top User Buying More Yarnby
Chinese imports seen slumping 33% to 1.2 million tons: ICAC
Asian nation moving away from less profitable cotton spinning
China, the world’s largest cotton user, will import less fiber this year and that will be bearish for global prices, according to the International Cotton Advisory Committee.
Overseas purchases will tumble 33 percent to 1.2 million tons in the year started August from 1.8 million tons a year earlier, the committee estimates. The Asian nation will instead increase imports of cotton yarn from countries including Vietnam and India, Rebecca Pandolph, a statistician at the committee known as ICAC, said in an interview in Mumbai on Monday.
“I don’t think it is likely that China will ever come back to the market with imports in large quantities as it did in the past,” Pandolph said. “The anticipated drop in imports is visible in significantly lower imports in recent months. A drop in imports by China will have a bearish effect on global cotton prices in 2015-16.”
Cotton has gained 6.6 percent this year to withstand a rout in commodities from copper to crude oil and nickel as an economic slowdown in China erodes demand for raw materials. Global cotton prices will average about 70 cents a pound in 2015-16 and trade in a range of 61 cents to 82 cents, Lorena Ruiz, an economist at the committee, told an industry conference in Mumbai on Tuesday.
Cotton futures for March delivery on ICE Futures U.S. in New York traded 0.5 percent lower at 64.27 cents a pound by 2:20 p.m. in Mumbai on Tuesday.
“Prices are not doing better as consumption is not increasing as expected on lower economic growth globally,” Ruiz said. “We were expecting cotton consumption to increase.”
China’s cotton imports dropped 49 percent to 42,100 tons in October from a year earlier, according to industry website Cncotton.com. Barclays Plc said in September China may stop importing cotton by 2018, and may become a net exporter the following year as the nation’s textile industry shrinks amid foreign competition and cheap polyester prices.
With consumption slowing, world cotton imports are forecast to decline by 3 percent to 7.4 million tons in 2015-16, a fourth straight decline after peaking at 9.8 million tons in 2011-12, the committee estimates. Still, imports are rising in countries including Vietnam as more spinning mills are opened with investment from some Chinese companies, Pandolph said.