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China spins out more demand
for cotton
ZHENGZHOU - Experts predict
that China's market demand for cotton will reach
7.9 million tons in 2005, leaving a market gap
of 1.7 million tons to be filled by imports, still
lower than the 1.98 million tons imported in 2004.
The country already ranks No 1 globally in cotton
production and consumption.
Since the
1990s, with exceptions in 1993 and 1999, China's
cotton output has fluctuated between 4 million and
5 million tons. Investigations show that the
cotton growing area in China was between 83
million and 86 million mu (around 5.5 million to
5.7 million hectares) in 2004, an increase of 6
million to 9 million mu, or 10%, over 2003.
After comprehensively analyzing China's
cotton growing area, per unit area yield and
progress of cotton picking, the State Cotton
Market Monitoring Center predicted that China's
cotton output may have exceeded 6.2 million tons
in 2004, equal to the output of 6.26 million tons
in 1984 and up 27% as compared with output of 4.87
million tons in 2003.
China's cotton
output boasts of a high commodity rate and is
mainly supplied to the cotton-spinning industry.
Therefore, development of the cotton-spinning
industry has constituted the basic pattern of
China's market demand for cotton. As for
consumption, coastal and metropolitan cities are
the main consumers, and the leading
cotton-consuming provinces are Jiangsu, Shandong,
Henan, Hubei and Zhejiang.
China's market
demand for cotton has grown steadily in the past
10 years. Since China became a member of the World
Trade Organization, its advantages in textile and
garment production have become outstanding and
exports have been increasing year by year.
China now has 70 million spindles,
engaging 17 million workers, with annual yarn
output reaching 10 million tons, which in turn
requires 6.5 million tons of raw cotton. If
military and civil consumption is added, China's
annual demand for cotton stands above 7 million
tons.
China's cotton consumption kept
growing in 2004, with cotton yarn and cloth output
increasing sharply. Experts predict that as
textile enterprises develop rapidly in China, the
country's annual consumption of cotton will keep
increasing.
In fact, China's
cotton-spinning output has reported high-speed
growth for six years running, with yarn output
exceeding 10 million tons for the first time in
2003. Statistics provided by the National Bureau
of Statistics show that China's yarn output topped
1.025 million tons in November 2004, up 6.3%
month-on-month and 23.7% year-on-year. Yarn output
in the first 11 months of 2004 came to 9.82
million tons, up 16.8% year-on-year. Experts
predict that China's yarn output will maintain a
growth of more than 10% in 2005.
For
cloth, China produced 14.3 billion meters of cloth
in 2003, up 21% year-on-year. Cotton output was
1.358 billion meters in October 2004 and 1.414
billion meters in November, up 4.1% month-on-month
and 24.5% year-on-year, hitting a record high.
Total cotton cloth output from January to November
2004 was 13.594 billion meters, up 18.2%
year-on-year.
Since 2001, the value of
China's textile and garment exports has grown at a
two-digit number annually. The latest statistics
provided by the General Administration of Customs
show that the export volume of textiles and
garments was US$8.779 billion in November last
year.
Export volume of textiles in the
first 11 months of 2004 was $30.305 billion, up
25.9% year-on-year; and that of garments, $56.053
billion, up 19.5%. Total textile and garment
exports for the whole of 2004 are expected to
exceed $90 billion. With export quotas abolished
in 2005, more textile production capacity in China
will be brought into full play. Thus China may
expect a considerable growth for textile and
garment exports in 2005, which in turn will boost
cotton consumption.
China's spinning yarn
output is expected to grow 10% in 2005. As a
result, domestic market demand for cotton is
expected to be 7.9 million tons this year.
Inventory-to-consumption ratio is an
important indicator that is used to analyze the
price trend of commodities. The bigger the
indicator is, the lower the prices of commodities;
the smaller the indicator is, the lower the prices
of commodities. China's inventory/consumption
ratio of cotton has remained below the warning
line of 30% for years. This means that the
country's cotton market has been in a tight
situation in recent years.
There are also
experts pointing out many uncertainties that may
influence the price trend of cotton in China in
2005:
First, the textile quota system is set to be
abolished in 2005. However, foreign countries may
also adopt other means to restrict textile imports
from China, such as anti-dumping, clearance
barriers, intellectual property right barriers,
technical barriers and environmental protection
barriers. Foreseeing this, the Chinese government
has introduced restrictive measures on its own
initiative: imposing export tariffs on some
textiles on January 1.
Second, the increase of interest rates will
produce a certain effect on cotton production and
the daily operation of cotton textile enterprises.
Third, the state cotton purchase and reserve
policies will help stabilize cotton prices on the
domestic market. The State Development and Reform
Commission, the Ministry of Finance and the China
Agricultural Development Bank jointly issued a
notice on November 1, 2004, saying the state
purchase and storage of new cotton picked in 2004
would start on November 9, with the amount
temporarily set at 300,000 tons. The ceiling
purchase price for standard cotton is 11,500 yuan
(US$1,391) per ton.
China's total output
of cotton cloth was 15.298 billion meters in 2004,
up 20.82% year-on-year, according to the National
Bureau of Statistics. According to the statistics,
China produced 1.647 billion meters of cotton
cloth in December 2004, up 16.48% month-on-month
or 41.62% year-on-year, hitting a new high in
recent years. Shandong province in east China
ranked first in the country with its cotton cloth
output of 587 million meters in 2004, up 15.85%
over the previous year.
The latest
statistics also show that the country's total
output of yarn was 10.95 million tons in 2004, up
18.36% year-on-year. China produced 1.13 million
tons of yarn in December 2004, up 9.1%
month-on-month or up 34.43% year-on-year. Shandong
province again ranked first in the country with
its yarn output of 298,200 tons in 2004, up 74%
over the previous year.
(Asia
Pulse/XIC) |
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