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Insight | Time: Feb 11 2020 2:10PM
Cotton linter import of China recovers in 2019 but increasingly divided
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Cotton linter import of China improved notably in 2019 with hotspots emerging frequently. Major characters and market changes are briefly analyzed as below:

According to customs data, cotton linter import of China totaled 88.2kt in 2019, up 68% on yearly basis, but still lower than that before 2017 and far below the peak in 2016. The import of Mar hit the highest of 13.462kt within the year and that of Jul was the lowest at 2.395kt, with monthly average volume of 7.348kt.

According to historic data, cotton linter import volume has negative correlation with its production. The output of cotton linter in 2016 hit the lowest level of past years while the import in the same period reached the peak. In 2019, the output decreased on yearly basis while import increased significantly.

The import price averaged at $342.25/mt in 2019, down 27.7% on the year, lingering around more than 10-year low, which was just a little higher than that of 2015. The low price was mainly caused by changes of origins, especially the imbalance between supply and demand in China. Big price spread between Chinese and import market was the important reason of rising import volume in 2019. The import price in Feb hit the highest of $412.6/mt and that in Jun was the lowest around $285.96/mt, with average monthly price of $346.6/mt.

India, Turkey and Turkmenistan were still the largest origins of imported cotton linter, especially the largest increase of Turkey's share. The percentage of Turkmenistan, Kazakhstan and Brazil also grew substantially, but that of the US declined markedly due to Sino-US trade frictions. China imported 2.195kt of cotton linter from the US, down 57.4% on yearly basis. The percentage of US linters declined by 7.3% on the year to 2.5%. The proportion of Uzbekistan and Tanzania also decreased notably.

Shandong, Jiangsu and Anhui continued to rank the top three places of the destinations. Shandong took up half of total share, while Anhui saw the largest decline, which was followed by Hunan, Fujian and Beijing.

The economic situation both at home and abroad was complicated in 2019 and China's import market changed a lot under the background of escalating Sino-US trade friction in particular. Although the import volume increased sharply in 2019, the import price still lingered around historic low level, coupled with big changes of origins and destinations. In 2020, staple-grade cotton linter pulp mills are running with low operating rates or have stopped production, so cotton linter demand will concentrate in refined cotton, specialty pulp and filament-grade cotton linter pulp. The import market is expected to be further divided in the new year.
[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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