China cotton index may remain stable in coming months: TexPro

17 May '21

2 min read

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The China cotton is expected to remain above 16,000 RMB per ton or experience a slight drop in the coming months. The index was on the rise from the beginning of 2021, increasing from 15,276.85 RMB per ton in January 2021 to 15,947.87 RMB per ton in March 2021 at 4.39 per cent. It dropped by 2.39 per cent to reach 15,566.36 RMB per ton in April 2021.

The index recovered again in May, increasing by 3.32 per cent to reach 16,083.50 RMB per ton, according to Fibre2Fashion’s market analysis tool TexPro.

The cotton index increased in January due to the hot cotton yarn market, and arbitragers purchasing on-call cotton for hedging. In February and March 2021, it rose again due to an increase in the rate of vaccination in the US and the optimistic anticipation of the United States Department of Agriculture (USDA) supply and demand report. The prices of Chinese commodity and textile feedstock increased overall after the Chinese New Year holiday owing to an increase in crude oil prices and ICE cotton futures.

On April 7, 2021, there were rumours about allocation of 2 million tons of cotton quotas, including 7 lakh ton each for processing trade and market circulation and 6 lakh ton for state reserves. Cotton prices remained low in the first half of April due to the impending delivery in the month. Sales stabilised in mid-April and by the end of April, some of the large spinning mills had procured on-call cotton.

Some spinning mills reloaded feedstock before the Labour Day holiday and as the cotton inventory remained low in some of them, the sales improved slightly. The demand remained high after the holiday which supported the China Cotton Index in May 2021. The demand of the cotton is expected to remain stable to slightly lower than the current demand in the upcoming period owing to the evolution of the US-China trade relationship.

Fibre2Fashion News Desk (KD)

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