Cotton Imports Fell By 43% In August 2019. Why?

According to customs statistics, China imported 90 thousand tons of cotton in August 2019, down 43.7% compared to the same period last year, down 43.7% in the annulus, while in July, China's cotton imports grew by 19.15% over the same period last year, and the annulus growth rate was 3.84%. In August, the import volume could be described as "big dive and big shrinkage", which made many cotton traders, cotton textile enterprises and investment institutions very surprised.

2018/19 (2018.9-2019.8) accumulated 2 million 30 thousand tons of cotton in China, an increase of 53% over the same period last year. In 2019, 1-8 tons of cotton imported 1 million 430 thousand tons, an increase of 45.4% over the same period last year. In addition to the very poor import performance in August, import growth was strong in other months.

Why did cotton import suddenly shift and plunge in August? The author analyzes and summarizes the following points:

First, the RMB accelerated depreciation in August, and the cost of imported cotton increased significantly. In August, the RMB Offshore and offshore exchange rates both set a new low in 11 years, and the cumulative depreciation rate exceeded 4%. The exchange rate was so wide and volatile that the enthusiasm of cotton mills and traders to import quickly cooled and cooled.

Second, in August, Sino US trade negotiations gathered together, and US cotton imports were blocked again in 2018/19. In August, the Sino US trade negotiations were basically shelved, and Trump was not eager to solve the Sino US trade issue, which had a very significant impact on cotton import trade.

Third, regardless of the spot or port bonded 2018/19 Brazil, India, West Africa, Central Asia cotton, quality and grade continued to decline (slightly better quality of the United States and cotton), and the actual demand matching of textile enterprises declined. From the survey point of view, 8/9 months for 2018/19 cotton and M, SLM class, and 1-3/32, 1-1/16 accounted for a significant increase, spinning 40S and cotton yarn with some difficulties;

4. In 2019, 1% cotton import quotas in the tariff were consumed in large quantities. In June, the quasi tariff quotas were not very easy to use. (the price of external cotton after customs clearance was higher than that of the inland bank 2018/19 300-500 yuan / ton in Xinjiang). Therefore, cotton traders in Qingdao and Zhangjiagang have been transferred or involved in the reserve cotton and Xinjiang cotton business.

Since May, the export orders for the EU and the United States have declined continuously since May, and the orders for the use of American cotton, Australian cotton and India cotton have been reduced.