According to customs statistics, China imported 280,000 tons of cotton in March 2021, 10,000 tons less than that in February, down about 3 percent, but 80,000 tons more than that in the same period in 2020, up 40 percent year-on-year. Since 2020/2021 (2020.9-2021.3), China has imported about 1.94 million tons of cotton, an increase of 90 percent year-on-year, among which cotton from the United States, Brazil, India and West Africa rank top, while cotton imports from Central Asia (mainly Uzbekistan) continue to decline significantly, and sporadic imports from Greece, Mexico, Argentina and other producing areas.

Some cotton-related enterprises said that although the cotton import base was relatively low due to the COVID-19 pandemic in the first half of 2020 and the cotton consumption recovered rapidly due to the large-scale vaccination of the vaccine worldwide, it is still surprising that China’s cotton import has increased by more than 90 percent year-on-year since 2020/2021. It is considering that China imported 970,000 tons of cotton in the first quarter of 2021, with a year-on-year increase of only 59 percent, the growth time of cotton import is mainly concentrated in September 2020 to December 2020.

 

Why the increase in cotton imports in 2020/2021? Industry analysis is as follows:

 

First, China has been actively purchasing cotton from the U.S. in accordance with the first-stage trade agreement signed by China and the U.S. since 2020. In addition, due to the outbreak of the pandemic, the processing, delivery and transportation of some U.S. cotton contracts have been delayed. Therefore, the implementation peak of US cotton contracts in 2020/2021 reached after August;

 

Second, ICE futures have been rising in the past year since April 1, 2020. Chinese cotton spinning enterprises and traders have increased bargain-hunting, and the deliveries are mostly concentrated from September 2020 to February 2021;

 

Third, in October 2020, the state issued an additional 400,000 tons of processing trade sliding scale duty import quota, which can be extended to the end of February 2021; in addition, the 1 percent tariff quota in 2020 of some textile enterprises was concentrated from October 2020 to February 2021, and the quota is relatively sufficient, the cotton price is attractive, and the downstream domestic and foreign sales orders increase, which lead to the increase of foreign cotton imports;

 

Fourth, after the Spring Festival, domestic cotton prices rose sharply under the surge in energy, chemical and other futures, the rise soon left ICE and foreign cotton spot behind, the internal and external cotton price difference from the lowest 881 yuan/ton expanded to 1,500-2,000 yuan/ton (exceeded 2,000 yuan/ton in early December 2020), the competitiveness of foreign cotton significantly improved;

 

Fifth, Xinjiang cotton restrictions have caused some export-oriented enterprises and processing agents increase the signing and purchasing of foreign cotton and yarn in order to avoid the risk of performance.