China’s imports of cotton are poised to tumble for a second year as government restrictions on the trade force textile mills to boost purchases of yarn as a substitute.
The CHART OF THE DAY shows the country imported 182,590 metric tons of yarn last month, exceeding cotton shipments for the first time in nine years, according to customs data. The trend will continue next year as mills in the world’s biggest user grapple with limited and more expensive local supply, said Yu Lijuan, an analyst at Jinshi Futures Co. in Urumqi.
Cotton in New York has tumbled 64 percent from the record
$2.197 a pound in 2011 as global production exceeded demand for a fourth year. Prices in China have been on average 74 percent more expensive in the past year as the government hoarded fiber and imposed quotas on imports to aid farmers.
“Made-in-China yarn no longer makes economic sense,” Yu said. “China will still be the world’s largest textile maker so it will increasingly rely on foreign yarn.”
The U.S., India and Australia are the biggest shippers of cotton to China, while India, Pakistan and Bangladesh are the biggest exporters of yarn to the country, according to cncotton.com.
The nation will have 12.6 million tons of cotton stockpiled by July 31, 62 percent of the global inventory and more than the country’s annual requirement, according to U.S. Department of Agriculture estimates.