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US Cotton Exports To China Are Only Expected To Be 60% Cotton Textile Industry Needs To Be Renewed.

2019/6/21 10:41:00 58

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"By the adverse effects of Sino US trade negotiations, the US exports cotton to China only 60% of what we expected." During the Chinese cotton day held by the CCI, the Gary Adams, President of the national cotton Federation, told the media.

When the US cotton briefly missed the Chinese market, cotton from Brazil and Australia took the lead in entering the Chinese market. After that, India's cotton exports to China continued to grow.

In order to restore the US cotton exports to China as soon as possible, CCI issued the code of trust for sustainable development of cotton in the United States, indicating its willingness to promote sustainable development and traceability of cotton production through new Spin Technical means to improve product quality and so on, to maintain China's huge market.

"From the perspective of cotton procurement, we should pursue sustainable development in Asia as a whole in China." Mao Kailin, director of CCI China and Northeast Asia, said: "we are actually helping Chinese companies to enhance their competitiveness and provide their products and products to the world. brand Only by doing so can we lose the important market of China.

US cotton exports under pressure

In fact, the impact of trade negotiations is not only on the volume of trade between the two countries, but also in the price volatility.

In the past 10 to 12 months, the price of cotton in the United States has also declined. In the 12 months ended June 19, 2019, New York futures Exchange cotton futures prices have fallen by nearly 25%. Although the US government subsidized 6 bales of cotton per packet, it was a drop in the bucket compared with the price drop.

"As the cotton trade association of the United States, we really hope to continue urging the two governments to further dialogue on trade frictions, to end trade frictions as soon as possible, and to restore the cotton trade between the two countries to a normal level as soon as possible." Gary Adams said.

He said that in the summer of last year, the price of New York futures market was the highest, and the global demand for cotton was also very optimistic. However, after the United States adopted new trade measures, the market was not very optimistic, and also had a combined effect, so the entire supply chain was also affected.

An important part of this is the export of cotton to China. According to CCI's data, American cotton exports are much larger than domestic consumption, and export volume is 3-4 times that of consumption. Gary Adams also said that in 2019, the planting area of cotton in the United States was unchanged from last year, and output is expected to rise.

"It is estimated that the supply of US cotton for export will reach the highest level since 2007." He said, therefore, as the world's largest cotton supplier, the decline in exports to China forced the United States to seek additional markets in other markets, among which the fastest growth in imports of cotton was Vietnam.

Similarly, according to CCI data, as of May 23, 2019, Vietnam imported 2 million 717 thousand tons of cotton in the United States, ranking the first among all the countries importing American cotton, and China ranked 1 million 326 thousand in second packages. In addition, Bangladesh's imports of US cotton also showed a rapid upward trend.

It is worth mentioning that Vietnam's 70% cotton yarn companies are Chinese companies, that is, although cotton exports to Vietnam, the Chinese are still using it.

In addition to seeking other countries to supplement the Chinese market, CCI hopes to make an issue on sustainable development and cotton traceability, with more advanced cotton spinning technology, so as to enhance the position of US cotton in the hearts of Chinese customers and ensure its competitive advantage with other countries' cotton varieties.

Transformation of China's cotton textile industry

However, the main pressure faced by many Chinese cotton spinning enterprises is not the quality of raw materials, but also the pressure of operation.

According to the data provided by Zhuo Chuang, from the price trend of cotton and cotton yarn in China, there was a steady and favorable situation before mid April, but then there was an obvious cliff fall.

The key event was Trump's decision to impose tariffs on 200 billion dollars worth of Chinese products, including cotton products, including cotton yarn.

However, in the Sino US trade, the share of intermediate goods such as cotton yarn is not large, but in June Trump threatened an additional tariff of 325 billion US dollars, including clothing.

Although the subsequent Trump statement did not decide to levy taxes on this part of the product, many orders were affected by the unknown signal, and the market environment suddenly changed, which made many enterprises unprepared.

"Before the Qingming Festival, the domestic market environment is good, plus we will carry out a replenishment, so the price is good." A domestic businessman told reporters, "but after Trump announced the Levy of tariffs, domestic prices fell very fast."

However, in addition to external environmental factors, China's cotton textile industry is facing many difficult problems, the most serious of which is overcapacity.

As we all know, China is the largest cotton producing country in the world, and the industry is also a labor-intensive industry. The cost of human labor accounts for a huge proportion of total cost, and many Chinese enterprises seek spanformation after the demographic dividend is gradually disappearing. The direction of cross border spanformation is Southeast Asia, and the direction of domestic spanformation is to spanfer from other provinces to Xinjiang.

As mentioned above, 70% of the Vietnamese cotton yarn enterprises come from China, showing the attractiveness of Southeast Asia's low labor costs to Chinese enterprises, while Xinjiang's advantage lies in policy.

At present, the spinning mill in Xinjiang has Wei Qiao textile (6 million spindles / year), Tianhong textile (4 million spindles / year) and Ruyi textile (2 million spindles / year), and the cotton spinning industry of Xinjiang autonomous region has risen rapidly, becoming the fastest expansion area of China's production capacity in recent years.

"In the first two years, the Xinjiang Autonomous Region government took the initiative to guide the spinning mills to build factories in the past, attracting many enterprises." Liu Jie, an information analyst at Zhuo Chuang, told reporters that "there are subsidy policies in terms of construction, spanportation and manpower."

However, the rapid expansion of new capacity has made the pressure on domestic overcapacity to become even more severe. The Xinjiang Autonomous Region government has strictly controlled the disorderly development of cotton spinning industry in 2018. The pressure of overcapacity plus the disappearance of demographic dividend has become an urgent problem for the whole industry in the future.