Four reasons caused my country’s cotton imports to continue to surge in October

According to statistics from the General Administration of Customs, my country imported a total of 129,500 tons of cotton in October 2022, a year-on-year increase of 46% and a mont…

According to statistics from the General Administration of Customs, my country imported a total of 129,500 tons of cotton in October 2022, a year-on-year increase of 46% and a month-on-month increase of 107%. Among them, the import volume of Brazilian cotton increased significantly, and the import volume of Australian cotton also increased significantly. Following the year-on-year growth of 24.52% and 19.4% in cotton imports in August and September respectively, the substantial growth in foreign cotton imports in October was expected, but the magnitude of the year-on-year increase was unexpected.

In sharp contrast to the strong rebound in cotton imports in October, China’s cotton yarn imports in October were approximately 60,000 tons, a month-on-month decrease of approximately 30,000 tons, and a year-on-year decrease of approximately 56.0%. Following the total import volume of cotton yarn in my country in July, August, and September After falling by 63.3%, 59.41%, and 52.55% year-on-year respectively, they plummeted again. According to statistics from relevant Indian departments, India exported 26,200 tons of cotton yarn (under HS:5205) in September, a month-on-month decrease of 19.38%, and a year-on-year decrease of 77.63%; of which only 2,200 tons were exported to China, a year-on-year decrease of 96.44%, accounting for 3.75% .

Why did my country’s cotton imports continue to advance rapidly in October? Industry analysis is mainly affected by the following factors:

First, ICE fell sharply, attracting Chinese buyers to sign contracts to import foreign cotton. ICE cotton futures fell sharply in October, with bulls holding on to the key point of 70 cents/pound. The domestic and foreign cotton price inversion narrowed sharply to around 1,500 yuan/ton. Therefore, not only a large number of ON-CALL point price contracts were traded, but also some Chinese cotton prices were traded. Textile companies and traders entered the market to buy bottoms in the 70-80 cents/pound range of ICE’s main contract, and bonded cotton and cargo transactions were more active than in August/September.

Second, the competitiveness of southern hemisphere cotton such as Brazilian cotton and Australian cotton has improved. Taking into account that not only the production of US cotton in 2022/23 has dropped significantly due to weather reasons, but also the grade, quality and other indicators may not meet expectations. In addition, since July, a large amount of cotton from the southern hemisphere has been on the market intensively. Australian cotton and Brazilian cotton are shipped/bonded cotton. The quotations continue to fall (superimposed on the sharp fall of ICE in October), and the price/performance ratio becomes more and more outstanding; coupled with the “Golden Nine and Silver Ten” period in the textile and clothing industry, a certain amount of export traceability orders have arrived. Therefore, Chinese textile enterprises and traders have to make arrangements and expand foreign cotton. import.

Third, Sino-US relations have eased and become warmer. Since October, high-level meetings and exchanges between China and the United States have increased, and trade relations have recovered. China has increased inquiries and imports of U.S. agricultural products (including cotton), and cotton-using companies have moderately increased purchases of U.S. cotton in 2021/22. .

Fourth, some companies intensively use sliding tariffs and 1% tariff cotton import quotas. The additional 400,000 tons of sliding quasi-tariff import quotas issued in 2022 cannot be extended and will be used before the end of December at the latest. Considering the time for shipment, transportation, delivery, etc., cotton spinning enterprises and traders who hold quotas should hurry up to purchase foreign cotton and digest it. quota. Of course, since the price reduction of bonded and shipping dates for cotton yarn in India, Pakistan, Vietnam and other origins in October is significantly lower than that of foreign cotton, for medium and long-term export orders, companies are more inclined to import cotton for spinning, weaving, and garments. Delivery after delivery to achieve the purpose of reducing costs and increasing profits.

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Author: clsrich