Cotton spinning orders tends to transferred to Southeast Asia (China)

Customs data show that in the first four months by 2012, China imported a total of 430,000 tons of cotton yarn, an increase of 40% Y/Y.The imports increased in the number of cotton textile, yet exports fell significantly. On the one hand reflects the international market demand remains sluggish which makes exports difficult, on the other hand is mainly affected by the impact of domestic high-priced cotton, the price advantage of China’s cotton textile exports continue to be weakened, demand for cotton imports enhanced.

In terms of price, domestic and foreign cotton prices are still going downward, resulting from the lack of market demand, the price of the downstream textile products vulnerable, both import and export of cotton cloth prices presented negative growth.

Evaluating from the former four months’ export data, we can see the international market is still depressed, the negative growth trend of cotton textile exports since last year has not changed, last year, China’s annual exports of cotton yarn, cotton fabrics fell by 18.7% and 10.6% year-on-year, the downstream products, China’s exports of cotton bedding down 21.1%. Last year, cotton textile trade between China’s mainland and the main import and export markets declined rapidly. China’s cotton textile market share in Europe and the United States and other developed economies presents the trend of reducing.

Since December 2010, the inversion pattern of the domestic and international cotton prices continued till June last year. As of late June 2011, the domestic cotton prices higher than international, and the price difference gradually expanded, the biggest difference over 4000 Yuan / ton.

The expanding of difference between internal and external prices of raw materials brought the pressure of high cost of raw materials to China’s cotton textile enterprises, the number of business orders plummeted, small and medium sized enterprises, due to absence of orders, now have limited production or even shut down. At the same time, China’s cotton textiles in the low-end market have lost its low price advantage, countries in Southeast Asia, with its raw material and processing cost advantage, compete for international market share against China.

High domestic cotton prices make cotton-consuming enterprises urgently demanding for the international cotton, however, subject to quota restrictions, enterprises turn to imports of international cotton yarn instead of cotton, so the demand for China’s textile enterprises in low-end cotton yarn cloth dependent more on imports.