Foreign Trade News: India'S Order Situation Worsens, Duty Free Import Cotton Postpones

On July 5, the Indian government announced that it would extend the period of duty-free cotton imports by one month to October 31 (the original tariff exemption period was from April 14 to September 30), because of the lack of seasonal rains and rains, which led to the lagging of new cotton planting progress in some areas.

In this regard, several cotton yarn enterprises in Gujarat, Maharashtra and other places said that even if the cotton import tariff exemption period was extended to October 31, it was still not enough, and the time was still short, which was not conducive to the imports of Australian cotton, Brazilian cotton and American cotton, and hoped to continue to postpone the tariff exemption period until the end of November or even the end of December.

According to industry insiders, despite the sharp drop in ice futures, Indian domestic S-6 / J34 / mcu5 spot prices are high consolidation, cotton processing enterprises and traders have a strong sense of price support, which leads to the increasing price difference between domestic and foreign cotton, and the enthusiasm of cotton mills suffering from high domestic cotton prices to sign up for import of foreign cotton is high. In addition, due to the low cotton supply in the northern part of India, it is expected that the cotton harvest in the northern part of India will be significantly delayed due to the low cotton supply in 2021-2022 (due to the shortage of cotton supply in the northern part of India, which is expected to slow down the cotton harvest in 2021-25).

At the same time, since the second quarter of 2022, Indian mills and traders have mainly purchased Australian cotton, Brazilian cotton and a small number of American cotton in 2021. However, Australia suffered from heavy rainfall for a long time in May, which not only significantly damaged the quality of new cotton and decreased the yield per unit area, but also significantly delayed seed cotton harvesting, processing, transportation and port shipping for about two months, At present, the main port cargo of East Asia and Australia cotton is concentrated in August, September, October and November. Therefore, the extension of the duty-free import period of India on October 31 may lead to the failure of many Australian cotton contracts (it is difficult for Australian cotton to arrive in Hong Kong in time before the end of October), while the situation of Brazilian cotton is similar, and the shipping time is concentrated in September / October / December, which makes it difficult for Indian mills to import cotton.

In addition, since March / April 2022, due to the high cotton price and rapid rise, most of India's cotton mills' orders have deteriorated and the inventory pressure has been increasing. Such as southern India, Gujarat and other places, the operating rate of cotton mills has dropped to about 50%; Extending the period of duty-free imported cotton once again will help the mill to reduce operating costs and improve the export competitiveness of cotton yarn and grey cloth.