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China Cotton Price, Import Policy
And Consignment Trade
TCEM
目
录
www.icotton.cn
China’s Cotton Price in 2007
Domestic Supply & Demand Data
Unfavorable Environment for China Textile Industry
The Influence of RMB appreciation
Cotton Net Gap change from Rigidity to Flexibility
Sliding Import Duties Affect the Price
China Cotton Price
www.icotton.cn
Domestic Supply & Demand Data
 In 2006 China enjoyed a cotton harvest
with plantation 79.97mil. mu and 6.73
million tons output 。(Data from NBS -- National
Bureau of Statistics of China ).
 In 2007 cotton plantation is 81.7 million mu
which is 2.2% higher than that of in 2006.
Output will be 7.07mil.tons in early
September this year.
China Cotton Price
www.icotton.cn
Cotton production in Main Areas
0 7 P la n ta tion
（1 0 ,0 0 0 m u ）
0 6 P la n ta tion
（1 0 ,0 0 0 m u ）
p lu s/ m iu s
（±% ）
X izJ ia n g
2004
1950
2.8%
250
250
0%
S h an D on g
1430
1395
2.5%
110
103
7%
H eN a n
1218
1200
1.5%
85
83
2%
H eiB ei
950
935
1.6%
65
64
2%
H u B ei
602
608
-1.0%
48
46
4%
AnH ui
587
562
4.4%
39
36
8%
J ia n gS u
518
520
-0.4%
35
38
-8%
H u N an
230
203
13.1%
23
21
10%
T o ta l
7539
7373
2.2%
655
641
2%
0 7 o u tp u t 0 6 o u tp u t
p lu s/ m iu s
（±% ）
China Cotton Price
www.icotton.cn
Cotton production in 2007
Plantation in Main Provinces
2500
1500
07Plantation(10,000
mu)
1000
06Plantation(10,000
mu)
500
n
Na
gS
an
Ji
Main Provinces
Hu
u
i
An
Hu
i
Hu
Be
i
He
Be
n
Na
He
ng
Do
an
Sh
nJ
ia
ng
0
Xi
Plantation
2000
China Cotton Price
www.icotton.cn
Cotton production in 2007
Output in the Main Provinces
300
2007
Output(10,00
0mt）
200
2006
Output(10,00
0mt）
150
100
50
n
Na
gS
an
Main Provinces
Hu
u
i
Ji
An
Hu
i
Hu
Be
i
He
Be
n
Na
He
ng
Do
an
Sh
nJ
ia
ng
0
Xi
Output
250
China Cotton Price
www.icotton.cn
China cotton consumption
 in the second quarter, the GDP growth in
the first half of 2007 is 11.9%, and the
annual GDP growth is expected to be 10%.
For the past 4 years, the growth has been
holding 9% and up.
 China’s per capital consumption of fabric
also shown a rapid upward. In the past
three years, the increase is 15% per annum
and will maintain the strong growth.
China Cotton Price
www.icotton.cn
China cotton consumption
 For 2006-07 is 10.88 million tons, while for
the 2007-08, the predicted cotton
consumption will be 11.75 million tons. 。
 In 2006, China’s yarn production is 17.22
million tons. By the end of July in 2007 , the
yarn production is 17.33 million tons.
China Cotton Price
www.icotton.cn
Unfavorable Environment for China
Textile Industry
 above 95% are non-stated-owned
enterprises in textile industry, one of the
most market-oriented industries in China.
 increase of domestic labor costs, the raise
of raw material price and the decrease of
the tax-return for textile export, the profits
margin of the textile industry is extruded
further.
China Cotton Price
www.icotton.cn
Un-favorable Environment for China
Textile Industry
 created a lot of trade surplus benefiting
from the good quality and cheaper price,
 and now are suffering from tense trade
frictions and technical barriers caused by
this trade gap.
Unfavorable Environment for China
Textile Industry
www.icotton.cn
The Influence of RMB appreciation
 China’s cotton & textile industry chains in main
three elements: raw cotton—yarn & fabrics —
apparel and textile. Products are distributed to two
markets: for export and for domestic demand.
 China’s textile industries export related ratio is up
to 53%.
 Any block in the industry chain will affect the
benefits and efficiency of the whole industry. The
slowdown in exports will have a direct and strong
effect on the market demand for cotton.
Unfavorable Environment for China
Textile Industry
www.icotton.cn
The Influence of RMB appreciation
 Up till August 31, 2007, the cumulative
RMB appreciation had reached 3.365%,
exceeding 3.349%-- the annual increases
of 2006.
 Taking into consideration the one-time
adjustment at the start of the reform in
2005, the appreciation is higher ,i. e
9.557%. the corresponding for 2006 is
5.525%.
Unfavorable Environment for China
Textile Industry
www.icotton.cn
The Influence of RMB appreciation
 RMB Appreciation will weaken the labor
comparative advantage in textile industry
which is the most critical points in China
textile exports.
 The appreciation of RMB can further
enhance the higher value-added products,
accelerate industry re-construction.
Unfavorable Environment for China
Textile Industry
www.icotton.cn
Lower Tax Rebates for Textile
 Export tax rebates for textiles was lowered
from 11% to 9%, for garments from 13% to
11% from July 1st ,2007.
 let market itself to select textile enterprises,
to optimize the allocation of the resources.
Unfavorable Environment for China
Textile Industry
www.icotton.cn
Lower Tax Rebates for Textile
 There will be a remarkable change on
China’s export textiles’ orientation,
expediting the export of high value-added
products.
 The state aims to transform China textiles
industry from Huge to Strong.
China Cotton Price
www.icotton.cn
Cotton Net Gap transit from Rigidity to
Flexibility
 confronted with ever severe market situation. Some
small-sized textile mills are shutdown, and the large and
medium-sized are keeping operating rate around 7080% due to the large inventory.
 Lower production and higher yarn counts comes out
lower cotton consumption in volume. China domestic
cotton supply gap will be affected more by the markets
nationally and internationally
China Cotton Price
www.icotton.cn
 China national reserves sound
stronger in the supervision
 During July 16th – Aug. 22nd in 2007, China had auctioned
300,000mts of commercial and reserve cottons.
 Since 2003, China had invested 10 more new warehouse giving
600,000mts. more spaces to national reserves.
 China remain 3.27mil.mts of cotton stock in 2006/07 and 2.996mil
mts for 2007/08.
China Cotton Price
www.icotton.cn
China Cotton Price
 Influenced by rapid micro-economy growth, higher of
CPI , planting cost, other crops prices new crops price
will be higher than that of 2006.
 But the price can not go higher than mills can accept as
the commodity price finally needs to be confirmed by the
consumers, and China textile industry are now
compressed in and out.
Import Policy for Cotton
www.icotton.cn
Principles for Sliding Duty Policy on
Imported Cotton
 Use proper preferential temporary tax to
increase import.
 To make the imported cotton price similar
to domestic cotton price by the adjustment
on import duties.
Import Policy for Cotton
www.icotton.cn
Sliding Duty Policy on Imported Cotton

On Jan. 1st , 2007 China amend the sliding duty ratio
slightly to reveal the difference of the quality, reduce the
risk of custom supervision.
 Ratio range from 6% - 40% compare with 5% - 40% in
2006
 Duties are lower than last year for the price lower than
usd 0.575/lb and higher than that for usd 0.66/lb.
Import Policy for Cotton
www.icotton.cn
Amendment Sliding Duty Policy in 2007
Consignment Trade in China
www.icotton.cn
General Situation of Consignment
 Tianjin Cotton Exchange Market and ECOM
first start to sell the imported cotton on
consignment terms in free trade zone in China
at the end of 2003.
 International cotton dealers positively quickly
suit themselves to the business custom in
China.
Consignment Trade in China
www.icotton.cn
General Situation of Consignment
 The average volume in consignment is
abt.400,000mts per month in 2007.
 And sales abt. 20% - 43% of China total
imports according to different month.
 And percentage is higher in mid of the
year .
Consignment Trade in China
www.icotton.cn
The Good part for the consignor
 raise the rate of profit
 take the preemptive opportunities.
 popularize imported cotton
Consignment Trade in China
www.icotton.cn
The Good part for the Chinese mills




Have prompt delivery
Accelerate funds flow
Reduce price risks
Avoid quality uncertainty
Tianjin Cotton Exchange Market
www.icotton.cn
Physical market for imported cotton in
China
 TCEM aims to serve market participants in
China and abroad alike by taking advantages
of the geographical position and preferential
policies of BinHai New Area
Tianjin Cotton Exchange Market
www.icotton.cn
 Cover the 70 percent of China
domestic cotton consumer areas
 Have established branch markets in
Zhangjiagang Free Trade Zone,
 Qingdao FTZ
 Guangzhou Huangpu FTZ,
Tianjin Cotton Exchange Market
www.icotton.cn
Logistics Service , Inspection Centers,
 To cooperate betted with CIQ, TCEM has
established Cotton Inspection Centers in the
above areas. The center is equipped with
USTER HVI
 TCEM will invest more in constructing the
warehouses in the 4 base ports
Tianjin Cotton Exchange Market
www.icotton.cn
Financial assistance, Information net
 Loans with warehouse receipts to the
consignors and Chinese buyers .
 Update our website from tjcotton to
international cotton in China -ICOTTON.CN
TCEM