Australian Cotton Exports To China May Hit Bottom And Rebound In 2020

According to customs statistics, in 2020, American cotton accounted for 45% of China's total cotton imports, followed by Brazilian cotton and Indian cotton, accounting for 29% and 12% respectively; while in 2019, the proportion of Brazil cotton and Australian cotton, the top two in terms of import volume, dropped sharply. In particular, the medium and high-quality Australian cotton was gradually away from the Chinese market, which was not paid attention to or even ignored by textile enterprises and traders.

According to the feedback from several international cotton merchants and Australian cotton export enterprises, the inquiry and transaction of Australian cotton in shipping, bonded and customs clearance from January to February 2021 is still relatively cold, which is in sharp contrast to the active stage of Indian and Brazilian cotton.

There are three reasons for the industry analysis: first, it is difficult to repair the Sino Australian relations due to the continuous destruction of Australia; second, in 2020, Australia's cotton output is only about 600000 bales, and the proportion of high-quality and high index cotton is lower than that of previous years; third, the price of Australian cotton in 2020 is significantly higher than that of American cotton and Brazilian cotton (the basis difference of Australian cotton once reached 22-23 cents / pound, but now it is falling) To 13-15 cents / pound).

Nevertheless, the author believes that Australian cotton exports to China are expected to stabilize and rebound in 2021, and the proportion of Australian cotton exports to China's total cotton imports is expected to rise again. The reasons are as follows:

First, with Biden in the White House, the confrontation between China and the United States in trade, politics, military and other fields is expected to ease, and Sino Australian relations are expected to break ice with the warming of Sino US relations; second, the total cotton output of Australia is expected to reach about 2.6 million bales in 2020 / 21 (a big increase of nearly 2 million bales compared with the previous year), and the grade and quality are relatively ideal, and the cotton mills in Vietnam, Bangladesh and other countries purchase low index cotton Third, with the rapid recovery of global economy, trade and transportation, Chinese textile enterprises' consumption demand for high-quality and high-grade cotton continued to rise. On the one hand, China's domestic long staple cotton price is high, and the supply is tight; Australian cotton is weak, but 1-3 / 16 and above indicators can still partially replace long staple cotton with cotton spinning high count yarn; on the other hand, the US government's import ban on Xinjiang cotton products has not been lifted; moreover, as of 2020 / 21, American cotton is gradually "oversold", and Brazil's cotton planting area and output forecast are sluggish Fourth, the price gap between Australian cotton, American cotton and Brazilian cotton has been narrowing.

According to the survey, the net weight "buy it now" prices of M 1-1 / 8 and M 1-3 / 16 in Qingdao, Zhangjiagang and other ports are 17500-17700 yuan / T and 18000-18100 yuan / T, respectively; while the net weight basis of US cotton 31-437 of the same quality and grade is quoted at 17350-17450 yuan / T; the price difference of M 1-1 / 8 Brazilian cotton is 16600-16700 yuan / T, and the price difference continues to narrow compared with previous months.