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Insight | Time: Jul 31 2020 8:50AM
Any opportunity for cotton linter market in H2 2020?
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The restart of cottonseed oil and delinting plants was delayed much after Chinese Lunar New Year because of the COVID-19 outbreak. The plants gradually resumed operation in mid-to-late February and cotton linter output was limited. Coupled with cost support from cottonseed, cotton linter price dropped after rising, but then climbed again in the first half of year.

Both supply and demand of cotton linter have been shrinking this year. Downstream demand reduced when cotton linter output decreased, especially sharp decline of cotton linter for staple-grade CLP, but the supply was still loose by the supplement of imported cotton linter and beginning stocks. The price fell sharply after rising and then increased again, which was mainly pushed up by hiking cottonseed.

The cottonseed oil plants and the delinting plants postponed the resumption of production amid the pandemic and most plants restarted from mid or late February, so the cotton linter output gradually recovered. In the third quarter, due to the high price and limited supply of cottonseed as well as the transition period between new and old cotton linter, more cotton linter processing plant will be shut and the output will be greatly reduced. After the new cottonseeds come to the market at the end of the third quarter, it is expected that the output of cotton linter will greatly increase in the fourth quarter.

Cotton linter is the major source of cotton linter pulp and refined cotton. Cotton linter pulp is squeezed by dissolving pulp and the quantity is shrinking. However, refined cotton lacks strong momentum and it still relies on the expansion of new areas by specialty chemicals in the future. Cotton linter supply and demand tends to decrease in the second half of 2020, but the variable of pandemic and geopolitical factors may still arouse unpredictable changes.
[RISK DISCLAIMER] All opinions, news, analysis, prices or other information contained on this report is provided by analyst of Zhejiang Huarui Information Consulting Co., Ltd (CCFGroup) as general market commentary and does not constitute investment advice. CCFGroup will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.
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