Trump got himself into trouble for “inciting” the riots in Congress. As the countdown to his term entered, he was already too busy to take care of himself, but he was still staging his “final madness” against China.
Trump (file photo)
According to Reuters , January 14, Reuters morning report, the United States Customs and Border Protection stated that the United States will ban the import of all cotton and tomato products from China’s western Xinjiang region. The ban applies to cotton yarn, clothing and textiles made from cotton grown in Xinjiang, as well as tomato-based food and seeds from the region. U.S. Customs and Border Protection officials said in a news release that the ban, known as a “withhold release order” (WRO), also applies to products processed or manufactured in third countries.
Screenshot of Reuters report
China is one of the world’s largest cotton producers. According to the National Bureau of Statistics of China, Xinjiang produced 5 million tons of cotton in 2019 , accounting for about 85% of China’s total output.
In the past year, the Trump administration has pressured U.S. companies with business ties to Xinjiang to monitor their respective operations, citing forced labor issues. supply chain.
The U.S. Customs and Border Protection (CBP), which is affiliated with the Department of Homeland Security, issued an announcement on the 13th that it will detain cotton and tomato products produced in the Xinjiang region at all ports of entry in the United States. This A “temporary detention order” applies to raw fibers, clothing, textiles made from cotton grown in Xinjiang, as well as canned tomatoes, sauces, rice dumplings and other tomato products from Xinjiang, even if the related goods are processed or manufactured in a third country .
Acting Deputy Secretary of Homeland Security Ken Cuccinelli claimed at a press conference that the “withholding order” It sent a signal to importers that the Department of Homeland Security will not tolerate any form of “forced labor” and companies should remove Xinjiang products from the supply chain. U.S. Customs officials also emphasized in a conference call on the 13th that “temporarily After the “Withholding Order” was promulgated, most of the responsibility fell on importers and consumers, urging them to carefully study their own supply chains before purchasing goods from China.
It is understood that a certain product is suspected to be made with forced Labor production customs officials can issue withholding orders to agents to block shipments from certain suppliers at U.S. ports. Intercepted shipments will be subject to investigation into their production methods and may be subject to hefty fines.
Reuters stated that this is the latest tough move taken by the Trump administration against China in the last days of his term. This economic sanction will make it more difficult to ease Sino-US relations after President-elect Biden takes office.
US media ABC News reported that this is the fourth “temporary detention order” issued by US Customs this year. Xinjiang accounted for 8 of the 13 “temporary detention orders” issued by US Customs in 2020. The department estimates that about $9 billion worth of cotton products were imported into the United States from China last year.
In a statement, the American Apparel and Footwear Association, the National Retail Federation, the National Retail Industry Leadership Association, and the American Fashion Industry Association requested that the US Customs share the information they use to make decisions. The decision also requires the agency to share evidence of their enforcement actions.
The New York Times believes that it is difficult for American clothing and food manufacturers to ensure that their supply chains do not contain raw materials from Xinjiang. The American Workers Rights Association estimates that U.S. brands and retailers import more than 1.5 billion pieces of clothing using Xinjiang fabrics each year, representing more than $20 billion in retail sales.
According to reports, some independent audit institutions have stated that they will no longer help companies audit their supply chains in Xinjiang. Companies monitoring their own supply chains also face the challenge of tracking Xinjiang cotton, which is often mixed with raw materials from other parts of China before being spun into yarn.
Before the United States issued the “Xinjiang ban” this time, the United Kingdom and Canada also said that they would issue similar “bans.” Zhao Lijian, spokesperson of the Ministry of Foreign Affairs of China, questioned at the press conference on the 13th that the British and Canadian Turning a deaf ear to the facts and truth that China has repeatedly clarified, but introducing so-called “measures” against other countries based on lies and false information, how serious is such a foreign policy?
In response to the U.S. ban on the import of all cotton and tomato products from Xinjiang, China’s Ministry of Commerce stated that this is a gross interference in China’s internal affairs, and it firmly opposes this and “strongly urges” relevant countries to immediately stop their wrong practices. .
MoFCOM spokesperson Gao Feng also stated at a regular press conference on Thursday that China will take all necessary measures to resolutely safeguard the legitimate rights and interests of Chinese companies.
BanHow much impact will the order have on the cotton market?
Xiong Tao, a futures analyst at Bank of China International, told reporters that there was news before the U.S. Xinjiang cotton ban because the U.S. presidential election has been put on hold. At present, the impact on cotton prices is no longer as great as before. However, in the medium to long term, this move will accelerate the transfer of the textile industry to Southeast Asia, and China will increase its purchase of foreign cotton.
“In the future, it is more likely that my country will reduce U.S. cotton imports as a countermeasure. U.S. cotton is currently under great pressure, and cotton and cotton yarn outside the United States will have a premium. This year’s cotton acquisition and processing in Xinjiang is coming to an end, and there is a rush to harvest in the early stage. The acquisition cost of seed cotton is relatively high. Domestic and foreign consumption recovered rapidly after the epidemic, and the country launched Xinjiang cotton rotation, which has certain support for cotton prices. In terms of specific operations, compared with most commodities, cotton prices have not increased much and their valuations are not high. , the probability of a sharp decline is unlikely.” Xiong Tao added.
CITIC Futures Analyst Wu Xinyang also believes that this news has attracted market attention in mid-September. The sanctions at that time triggered a decline in the cotton market. Later, news came that the sanctions were shelved, and cotton prices rebounded. Judging from the feedback from the midstream and downstream cotton spinning industries, the market’s concerns about this have once again intensified. Coupled with the improved cost performance of imported yarns, the demand for imported yarns has also expanded recently, squeezing the market for Xinjiang cotton products to a certain extent. In terms of policy, the country also intends to protect Xinjiang cotton through purchase and storage policies. If sanctions are implemented or the scope of sanctions is expanded, the purchase and storage intensity is expected to increase. However, the current high price difference between domestic and foreign cotton has caused the purchase and storage mechanism to initiate circuit breaker measures, and there has been no progress in the purchase and storage activities that started on December 1.
Some market participants who did not want to be named said that the United States has restricted the use of Xinjiang cotton in imported textiles for some time and has had a greater impact on the market. It is reported that some large multinational companies have requested not to use Xinjiang cotton in their orders to avoid later uncertainties. This will inevitably have a negative impact on cotton consumption in Xinjiang, and this impact will not be eliminated in the short term. It is recommended that companies prepare for the response as soon as possible.
Looking ahead to the market outlook, Wu Xinyang said that cotton is currently mostly oscillating. New cotton cost support, the space below is limited. In addition, the pressure on warehouse receipts has not yet been released. Once the futures price is too high and the basis is appropriate, hedging pressure may appear. Coupled with the current decline in cotton textile prices, which has compressed profits, downstream acceptance of high cotton prices is temporarily limited. In the long term, the gradually improving macro picture has laid the foundation for the recovery of orders in the later period, and it is recommended to buy on dips.
“The phenomenon of rush buying of seed cotton in Xinjiang cotton has been particularly obvious this year, leading to high prices of seed cotton. At present, domestic cotton prices are high, and purchase and storage cannot be carried out as scheduled, which has also seriously damaged the competitiveness of downstream textile enterprises. At present, Downstream consumption has weakened, new cotton hedging pressure has increased, and there is greater pressure on the short-term market. However, we are not pessimistic about the long-term cotton price trend. We recommend that processing companies take advantage of the trend to hedge, and textile companies can increase their purchases at low prices.” market players said. </p
