Lately, domestic cotton spot price in Shandong, Anhui, Henan and other areas increased drastically.
Experts believe that inadequate supply over increased procurement before Chinese New Year is main reason behind decline of cotton spot price.
Simple analysis of cotton market based on favorable and unfavorable factors is given below:-
Favorable factors:
1. According to state monitoring system of cotton market, on January 18, 2007, national sales of new cotton were 2.71 million tons, an increase of 39.69 percent.
2. Since January, domestic cotton price has remained stable and price gap between cotton and yarn has reduced compared to December.
3. As Spring Festival is approaching, small and medium-sized textile enterprises are likely to increase their stocks, resulting in hike of cash sales.
4. Till now, state has issued tariff quota of 894,000 tons and has not issued additional cotton quota.
Adverse factors:
1. According to state monitoring system of cotton market, China imported 6.04 million tons of lint cotton in 2006, an increase of 13.53 percent.
2. In December 2006, imports of cotton stood at 240,300 tons, 85,300 tons higher than November and 107,200 tons less than same period last year.
3. On January 1, 2007, cotton purchase price index fell from 12616 yuan per ton to 12562 yuan per ton on January 18.
4. Since January 2007, price of polyester staple fiber is continuously declining. Similarly, price gap between polyester staple fiber and standard level cotton have reached more than 2000 yuan per ton.
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