China'S Textile Mills May Suffer High Cotton Prices In 2012

Next year, cotton factories in China may face higher cotton prices, because the government continues to buy cotton and cotton from the market.

Imported cotton

"We have no choice but to accept higher prices," said deputy general manager of one of the top 10 textile companies in China.

Their company is still consuming cotton purchased at high cotton prices.

As of Friday, the government bought 1 million 620 thousand tons of cotton from cotton growers. Analysts expect that the government's cotton purchasing power will reach 250-300 tons, accounting for 35-42% of cotton output estimated by the NDRC in 2011.

The government's cotton purchase price reached 19800 yuan (3100 US dollars) / ton, and some analysts said that the government could not sell cotton without obtaining profits of 2000-3000 yuan / ton.

China has issued 894 thousand tons of annual cotton import quotas, with tariff level reaching 1%.

In addition, the quotas for sliding cotton tariff quotas for cotton with uncertain amounts are from 5-40%.

Last week, the government adjusted the calculation method of sliding tariffs in 2012.

According to the new calculation method, New York cotton quotation is less than 50 cents / pound or above 100 cents / pound, import cost will not change.

However, if the quota is between 50-100 cents / pound, the cost of imports will increase by 512 yuan / ton, according to the calculation of industrial websites.

According to this new calculation method, the government hopes to reduce the impact of low global cotton prices on local prices.

Shrinking textile demand and higher planting costs have also depressed cotton farmers' interest and made them reluctant to grow cotton.