Origin Africa Magazine 2nd Edition

Cotton
China is such a key market for
cotton, but in 2015/16 season its role
has changed. In the past 5 years,
China accounted for 27% of world
production but this has deceased
to 24%, for the first time exceeded
by India. Equally China’s mill use
decreased in 2015/16 from 34% to
30% of global consumption. With
a decrease in China’s mill use, China
needs less cotton so is importing
less. In 2015/16 China is expected
to account for only 14% of global
imports (down from 38%). For the
first time Vietnam has become the
world’s largest importer of cotton.
However, it should be noted that
a significant amount of Vietnam’s
spinning boom is the result of
Chinese investment.
Changes in China’s cotton policy
have worldwide consequences. For
the last 5 years, China’s domestic
cotton price has been about 40%
higher that the world market, making
it hard for spinners to compete.
The high guaranteed price to
Chinese farmers made it hard for
Chinese spinners to buy domestic
cotton so much of Chinese cotton
was purchased by the Chinese
government and is now held in
Chinese reserves as stock. With
high priced Chinese cotton and a
large duty on imported cotton, many
spinners have closed or moved their
operation abroad. Also, with Chines
cotton policy it was cheaper for many
companies to import yarn rather than
spin it themselves.
In early 2016, Chinese cotton policy
was revised with an announcement
that Chinese cotton reserves would
be auctioned off, with an estimated
2 million MT to be auctioned in May
2016.
12 JUNE / JULY 2016