The Market in China: Cotton Spot Price Stable, Yarn Imports Up

Although the spot price of cotton is holding relatively steady in China, many textile companies are importing cotton yarn rather than the raw fiber itself.
The cotton spot price in China has been stable for the last week, and with buyers and sellers both holding their ground, the volume of market transactions was rather small, according to the China National Cotton information center (CNCIC).
On June 22, the CNCotton B Index for average price of standard lint cotton in the eastern provinces was $1.38/lb, holding steady since last week, and reflecting a decrease of 44 cents/lb (24.4%) from last year. The average selling price of standard lint cotton in Xinjiang was $1.40/lb, also the same as last week, and a decrease of 51 cents/lb (26.6%) from the same time last year.
The settling price of Zhengzhou Commodity Exchange (ZCE) cotton futures contract for September 2012 was $1.38/lb, a drop of 0.7 cents/lb (0.6%) from last week, reflecting a decrease of 51 cents/lb (26.9%) from the same period last year. The average price of the China National Commodity Exchange (CNCE) E-forward contract for September 2012 was $1.37/lb, a drop of 0.6 cents/lb (0.4%) from last week. It decreased by 44.4 cents/lb (24.4%) from last year.
In May, China imported 125,000 tons of cotton yarn, a jump of nearly 13% from April and 141% from May 2011, according to Galaxy Futures. Cotton yarn exports in May were also on the rise, totaling 45,800 tons – up 12.2% from April and 35.2% from May 2011. It’s likely China will continue to import yarn due to the large gap between foreign and domestic cotton prices – and the fact that there are no quotas for yarn imports, as there are for cotton.
Nonetheless, the amount of cotton yarn produced domestically dwarfs the amount that’s imported, so while the ratio might shift slightly in favor of higher import numbers, it will likely remain a small percentage of the market.