Himfr Report: China's Cotton Market

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• USA - English

BEIJING, July 8 /PRNewswire-Asia/ -- Himfr.com, one of China's leading B2B search platforms with more than 30 B2B industry websites to its name, reports on the recent rise in China's cotton prices.

Textile enterprises have ample stock of cotton -- enough supply to support the fabrication of new cotton products for a long period of time.

Many textile enterprises purchase cotton when the price is low, and currently, for large- and medium-sized enterprises, inventory is sufficient. There are some large-scale textile enterprises that have 6-months worth of cotton stocked, which can support enterprises until the end of September. This is sufficient to prove the full resource capacity of China's domestic cotton industry.

Adverse weather effects can delay the sowing of cotton in many areas, but this does not mean that there has been a poor cotton harvest. As the cotton growth cycle is longer, it has a stronger capacity to resist natural disasters. Due to climate in China experienced over the past two years, some cotton growing areas have switched to early-maturing cotton. There has also been a strengthening in cotton farm management, and China's cotton harvest is expected to benefit with a substantial harvest. At present there is a pre- arranged state cotton quota of 0.6 million tons. At the same time, the state is adopting regulatory policies to ensure cotton market supply.

RMB appreciation's negative impact of the textile industry cannot be ignored. According to studies, with every 1% appreciation of RMB, the textile industry's sales fall 2% - 6%, damaging exports considerably.

Currently, domestic cotton supply is balanced. The international economic situation and China's macroeconomic regulations and controls are the main factors limiting a continued rise in cotton prices. Although current cotton prices have risen to a near peak state, most businesses are simply waiting to see the trend in cotton pricing for the future. If RMB appreciation is significant, it will not be favorable for cotton and downstream textile industry development.

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