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Insight | Time: Jul 31 2019 4:39PM
Cotton linter import market structure changes in Jun
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Cotton linter imports of China have been warming up this year. The volume in the first half of 2019 has reached the whole-year volume of 2018, but the import price is generally low, so there are different views on the import market.

Cottonseed price keeps firm amid less supply in China. Most delinting plants are closed and cottonseed oil plants are running with lower operating rates, so cotton linter output is limited. Moreover, it is the transition period of supply and the gap is mainly filled by old and imported cotton linter. According to customs data, cotton linter import of China totals 7,137.5 tons in Jun, down 25.2% m-o-m but up 37.9% y-o-y.

Cotton linter import of China amounts to 51.8kt in the first half of 2019, which is almost the whole-year volume of 2018 because abnormal reduction of imports last year and huge spread between Chinese and imported cotton linter this year spur the demand for imports.

Origins of imported cotton linter obviously change in Jun. Turkey significantly exceeds India and leaps up to top due to import resources and price-performance ratio as the volume reaches 3,968.3 tons, taking up 56% of total. India is relegated to the second place as the volume reaches 1,855 tons, occupying 26% of total. The volume of other regions is dispersed with the percentage for each below 10%. China imposed additional tariff of 25% on US cotton linter since Jul 6, 2018 due to Sino-US trade friction, leading to huge fluctuation of US cotton linter imports. There are imports in May, but the volume in Jun retreats to zero again.

Cotton linter import of China in Jun declines month on month due to less downstream demand, coupled with evident changes of origins, the import price falls sharply, which is $286/mt in Jun, down 23% m-o-m and down 41.5% y-o-y, equivalent to 2,250yuan/mt.

The import origins are relatively dispersed and demand is scattered in Jun. Shandong continues to take the leading position by occupying 31% of total, which is followed by Henan (28%) and Jiangsu (19%). It is noteworthy that Xinjiang as China’s cotton linter cluster witnesses recovery of imports this year.

Cotton linter output is limited in the transition period and the supply gap is mainly filled by Chinese old linters and imported linters, but cotton linter pulp and refined cotton market resumes slowly and demand is hard to improve. Coupled with the influence of Sino-US trade friction, US high-quality cotton linter is hard to enter Chinese market, so Chinese buyers are still looking for low-priced sources. Origins of imported cotton linter become multiple and import price lingers at low level, so cotton linter import market still has opportunities before new arrivals of cotton linter in Sep-Oct.
[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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