Chinese cotton imports reached an all-time low in September, as large domestic inventories reduced reliance on foreign supplies, at a time when economic slowdown is weighing on demand. China’s cotton imports in September declined 59 per cent year-on-year.
This is the lowest monthly import since records began in 2005, and the second month of record low imports in a row. Chinese imports for the first nine months of the year fell 42 per cent. Chinese cotton demand has been hit by a range of factors, including massive domestic stocks, a weaker industrial sector, and competition from synthetic fibers, which have become cheaper as a result of low petrochemical prices.
Chinese inventories accumulated as a result of government price support policies, which encouraged rising domestic production, while mills favoured cheaper imported cotton. The end of the price support policy left the government with ample stocks, while mills turned to domestic supplies, which were now priced at closer to international levels.
Chinese cotton imports are expected to fall to a 13-year low over the 2015/16 season. But there are concerns about the quality of Chinese cotton stocks. Large quantities of cotton have been kept in bales for several years. This can cause the fiber to become brittle and difficult to spin. And this leaves the door open for imports.
