October 22, 2012

China issues more cotton import quotas to textile mills

China is aiding textile mills by issuing an additional 400,000 tonnes of cotton import quotas.

Mills have been pushing the government to boost import quotas for supplies from abroad, where prices can be as much as 40% lower than domestic prices.

The new quota volume would bring total import quotas issued this year to about 2.8 million tonnes, including one million tonnes issued in May.

Some textile mills have already been allocated new quotas, which were only issued to mills which export their products. Most of the quotas will be used for the customs clearance of cotton stockpiled at bonded warehouses. Right now, supplies in the domestic market are quite tight, said the trader with an international trading house.

Traders have estimated that around 700,000 tonnes to 800,000 tonnes of cotton is stored in bonded warehouses at major ports in the country. The government is also considering selling off its cotton reserves from September to boost supplies in the domestic market and make room for stocking the new harvest due next month.

The government holds about 4.4 million tonnes of cotton reserves, including 3.13 million tonnes stockpiled from the 2011 harvest.