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Insight | Time: Mar 26 2020 10:28AM
Impact of cotton linter import under India's lockdown
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Indian Prime Minister Narendra Modi said on Mar 24 that the government would impose a nationwide lockdown from midnight for 21 days to stem the spread of the coronavirus.

India has been China's major origin of imported cotton linter for years as the import accounts for almost 50% of total volume. China's cotton linter import will be obviously affected by the lockdown of India and the influence will depend on the control and duration of the pandemic. According to customs data, China totally imported 88.2kt of cotton linter in 2019, including 36.9kt of Indian linters, taking up almost 42% of total.

It is the relative peak of cotton linter imports during Mar-Apr in the first half of year and around Aug in the second half of year. Cotton linter import of China totaled 23.5kt in Jan-Jun, 2019 and 13.4kt for the rest of year. Therefore, the lockdown of India for 21 days will lead to reducing imports from India. The arrival to China will also be delayed coupled with supply disruption risk.

It can be seen that Indian cotton linter occupied smaller percentage of 30% in 2011 and took up the largest proportion of 50.1% in 2013, averaging around 40% during 2011-2019. The quantity in 2018 was the smallest and there was a peak in 2015, averaging 54.8kt during 2011-2019.

Cotton linter output of China decreased sharply in 2016, while more linters were imported during the period as Indian linters accounted for more than 10% of China's total production. As to other years, the share of Indian linters was mostly around 5-6%.

At least 53 countries have declared national emergency over coronavirus and more and more countries have announced lockdown of city or nationwide lockdown, so the import and export markets are faced with huge uncertainties due to increasing risks of order cancellation or rejection of goods by customers. The supply chain faces the risk of disruption and foreign trade enterprises are under big pressure.

The lockdown of India will affect China's cotton linter import market as the imports from India will decrease in the short term and arrival to China will be postponed with increasing uncertainties, but the import volume does not occupy big percentage in China's production, so the influence could be within control. The medium-term condition still depends on the development of pandemic. All in all, cotton linter price is expected to be stable to stronger when cottonseed keeps relatively firm and cotton linter imports are reducing.
[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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