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China : Cotton prices stand on an even keel |
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2004-8-3
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After the slump that the industry witnessed over the last few months, the Chinese cotton prices has now reached a ‘stable and reasonable’ level, claimed an industry observer.
According to Gao Fang, secretary-general of the China Cotton Association (CCA) the run would continue till the yearend.
“The price has become stable and stood at 13,500-13,900 yuan (US$1,630-1,680) a ton in late July, a reasonable level that reflects the interaction of supply and demand," she said.
This is in stark contrast to 17,700 yuan (US$2,140) in February, when it reached a peak.
A combination of factors like government control of excessive lending to the textile industry, imports of international cotton and expectations of a good harvest in August led to the continual fall in the prices, Gao said.
About the current prices, she said that they would be acceptable to both cotton growers and users.
It has been reported that the Chinese Government will loosen up credit lending controls to textile companies, in a bid to prevent cotton prices from falling too low before the new crop is harvested in September and October.
Gao stated that if the prices fall then the cotton growers would be the losers. She predicted that China would produce some 6 million tons of cotton this year, approximately 1.2 million more than the previous year.
China has already signed contracts to buy up to 1.9 million tons of cotton since September, which is up to 76 per cent of low-duty import quotas (2.5 million tons in total) for this year, she said.
More and more enterprises may bring in low-tariff cotton imports this year, a great improvement for further integration with the global market, Gao said.
Industry majors like the China National Textiles Import and Export Corporation, have already established good credit in the international markets. |
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