ICAC - Cotton yarn imports by China increase

The International Cotton Advisory Committee (ICAC) has said that a geographical shift in cotton mill use from China to other Asian countries is currently underway but estimating its actual extent will take time when cotton consumption figures in other countries are available, according to a statement on Friday.

The ICAC said that cotton yarn imports by China have increased significantly since the beginning of 2012.

The ICAC Secretariat estimates that cotton mill use will increase in 2012-13 in India, Pakistan, Bangladesh, Uzbekistan, Indonesia, Vietnam and Thailand.

However, global economic growth is expected to remain slow, affecting retail purchases of textile products, it said, adding that global cotton mill use is also influenced by the weakening spinning sector in China.

High local cotton prices against the rest of the world have hurt the profitability of Chinese spinning mills.

According to the ICAC, general outlook for cotton supply and use for 2012-13 is bleak: global cotton production and mill use are forecast at 25.9 million tons and 23.4 million tons, respectively, resulting in an oversupply of 2.4 million tons.

Despite sharp fall in cotton prices in 2011-12, global production is projected down by only five percent this season, it said. Cotton plantings did not drop much due to above-average prices at the planting stage, government policies and favourable weather in some major producing countries.

Global cotton mill use could increase by three percent in 2012-13, boosted by lower cotton prices, it said.

After an unexpected jump in 2011-12, global cotton trade is expected to fall by 21 percent to 7.7 million tons this season due to lower Chinese demand, according to the ICAC. However, imports by the rest of the world could rebound by 18 percent.

Exports from most large exporting countries will decline, in particular in India due to increased domestic consumption, it said.

The ICAC also said that global stocks are expected to reach a record 16.4 million tons in 2012-13, up by 17 percent from last season. In contrast to last season, most of the increase will take place outside China, it added.