Chinese Millers To Turn To Pakistan As Lint Prices Are High In China

The exports of cotton yarn and raw cloth increased by 34 percent and 13 percent to $1.2 billion and $1.5 billion, respectively during six months (July to January) of 2012 as against the same period of 2011.

Domestic cotton prices in China are high so millers in China are mainly relying on cheaper imports from Pakistan and regional producers, said fibre experts.

The demand for cotton yarn and raw cloth from Pakistan will remain strong in coming months, as quality is higher with cheap international prices of these commodities.

If the textile sector gets regular power and gas supply and focus on reducing energy costs, reduced finance costs and expected benefits inflows due to Generalised System of Preferences (GSP) plus status are expected to increase the profitability of the textile sector.

The country is in a position to export more than 2.5 million bales worth $450 million, as the domestic prices of lint are comparatively lower than the international price, they maintained.

Active purchases by China, the largest importer will support New York cotton prices besides domestic prices.

Chinese textile mills consume an average of about 700,000 tonnes of cotton a month.

With cotton prices at 18-month high fortunes of the textile industry in Pakistan are getting better and better, said a member of Sindh Agriculture Forum.

Chinese consumption is expected to remain at approximately 36 million bales, which is 1.0 million bales more than the February 2013’s estimates.

Such factors are contributing to better prospects for enhanced exports of textile products and made-ups besides cotton yarn from the country.

According to US Department of Agriculture report, forecasting increase in cotton consumption and imports by China, cotton prices in international market are on a steady rise.

In line with international prices, domestic cotton prices have also increased to Rs 7,300 per maund at local market against FY12’s average Rs 6,250 per maund.

According to International Cotton Advisory Committee, world production will exceed consumption again in 2012-13, leading to rising stocks and global cotton stocks could expand by 11 percent to 14.5 million tonnes in 2012-13.

India will sell cotton to local buyers from government stockpiles, joining China as the world’s top two consumers try to cushion domestic textile mills against soaring costs.

Domestic prices in China are 50 percent above world prices, while in India they are roughly at par, against a usual discount of around 5.0 to 7.0 cents per pound.

China’s stockpiling is expected to gulp up more than half the world’s cotton surplus even though it should be a record by the end of the crop year in July, according to the US Department of Agriculture (USDA).

USDA expects an annual rise of 4.0 percent in cotton consumption in the year to July 2013.

India will also turn to imports, which could jump about two-thirds in 2012-13, according to the Confederation of Indian Textile Industries.

Pakistan received more than 12.84 million bales till the fortnight that ended on March 15, 2013, which is 640,000 cotton bales or 5.0 percent more as compared with 12.20 million bales during the same period in 2012.

Till March 15, 2013 textile sector made purchases for around 11.61 million bales, private sector exporters purchased around 328,950 bales and total stocks were slightly more than 899,000 bales.