Chinese textile companies show great interest in Australian cotton farm

Keith De Lacy, the president of Cubbie Station, the biggest cotton farm and irrigator in Australia, currently show his supporting Chinese takeover of this farm, however, he asks for remaining the local management.

Chinese textiles giant Shandong Ruyi has lodged an application with the Foreign Investment Review Board to buy Cubbie, the 96,000ha southern Queensland station placed into voluntary administration in 2009.

Mr Loh, Shanghai-based cotton trader, told that China was the world's largest producer, consumer and importer of cotton. In the 2011-12 season, China produced 7.3 million tonnes of cotton and consumed 8.7 million tonnes.

Wang Yuhui, president of two successful Chinese textile companies, said that while his operations had no concrete plans to buy or invest in cotton farms in Australia, it was something he was considering.

"This is a good choice for whole-chain manufacturing," Mr Wang, president of Hebei Spring Textiles and Hebei Xindadong Textiles Printing and Dyeing, said through a translator.

"We don't have exactly a plan; we just think about it and consider it. But lots of Chinese mills may be very interested."

His mills process more than 26,000 tonnes of cotton each year, of which 15,000 tonnes are imported from Australia.

He said textiles companies aimed for the "whole-chain" system, which meant they controlled the cotton from when it was grown to when it was transformed into garments and marketed.

Mr Wang said he believed it was cheaper to grow cotton in Australia, where it was picked by machines, than in China, where it was picked by hand.

"The quality of Australian cotton is really good, especially with not any contamination (because it is machine-picked)," he said.

"The cost of labour in China is increasing and in Australia the farm is very big and the production is centralised.

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Peru Lifted Anti-Dumping Duties On Chinese Fabrics

The South American country of Peru has removed anti-dumping duties on Chinese blended fabrics, including rayon-viscose and cotton-fiber fabrics, among others.

The duties have removed with effect from May 26, 2012, according to a statement issued by the National Institute for the Defense of Competition and Intellectual Property Pretction.

The Peruvian Anti-Dumping and Subsidies Commission had imposed anti-dumping duties on Chinese blended fabrics in 2009. Subsequently, the Commission ordered a review of the levy in March this year.

In 2010,the Peru-China Free Trade Agreement (FTA) came into effect, which has greatly improved bilateral trade between  the two countries.

Hope this move can promote the cooperation between Peru and China.

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Global Cotton Output Increase in August Estimates

The U.S. 2012/13 cotton supply and demand estimates include larger production and ending stocks compared with last month.  Domestic mill use is unchanged.

Exports remain forecast at 12.1 million bales, despite the larger supply, due to reduced import demand by China.  Ending stocks are now forecast at 5.5 million bales, equal to 35 percent of total use.  The range for the marketing year average price received by producers is narrowed 1 cent on each end to 61 to 79 cents per pound.

Beginning stocks are raised nearly 2.0 million bales in China as a result of adjustments to 2011/12 which both increase imports and reduce consumption.  The higher China stocks are partially offset by lower beginning stocks in Australia, Malaysia, Pakistan, and others, resulting in a net global increase of 1.1 million bales.

World production is raised 300,000 bales, as increases for the United States, China, Burkina Faso, and Mali are partially offset by lower production for India, Brazil, Argentina, and others.  World consumption is reduced 820,000 bales, due mainly to reductions for China and Pakistan.  World trade is reduced slightly, as lower imports by China are partially offset by small increases for several countries.

World stocks are raised to 74.7 million bales, including an increase of nearly 2.4 million bales in stocks held by China; lesser increases for the United States, Pakistan, and Uzbekistan are about offset by decreases for India, Australia, and Brazil.

Projected China stocks of 34.2 million bales account for 46 percent of the world stocks forecast, and assume a net increase in China’s national cotton reserve of about 20 percent during 2012/13.

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China textile is facing severe challenge

China is losing her competitive advantage in textile business.

Firstly, material prices, especially for cotton, are much higer than that of abroad, usually 3000 - 4000 RMB more per ton than imported cotton. This causes production cost raise a lot.

Secondly, labor cost is more and more expensive now, for a normal textile worker, their salary now is over 2000 RMB, which is about 4 times of Bangladesh, Pakistan, India, and some other developing textile big countries, they are building up more capacity in textile manufacturing.

Thirdly, the electicity price also raised a lot, even the Government take actions to restrict electricity use, which all influence a lot for the production scale. Because of the production cost raised a lot, now bigger importers from U.S.A, European countries are turning to Vietnam, Indonesia, India and some other countries.

China is losing her advantage day by day!

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China May Not Allow Cotton Imports Beyond Limit

This year, though China’s cotton cultivation acreage has reduced compared to last year, the output is far better than that reaped by same time last year. Hence, the country’s cotton output, unless marred by floods in autumn affecting the crop, is expected to be enough to meet the domestic demand, CCA said, citing a report from the Cotton Research Institute of the Chinese Academy of Agricultural Sciences.

During the first half of the current year, domestic cotton was priced around 5,248 yuan or US$ 824 per ton higher than the price of imported cotton, and hence several textile producers were prompted to import cotton. This built a pressure on domestic stocks, the report stated.

This year, price of new cotton is likely to keep at around 20,400 yuan per ton. However, factors like mounting stocks, possibilities of a fall in cotton production in the US and weak demand prompted by global economic slump, would not allow it to escalate further, the report said.

It also hinted that to maintain the enthusiasm of the cotton growers, the Government would continue with its policy of stockpiling domestic cotton. The Government has already announced the new procurement price of 20,400 yuan per ton, an increase of approximately three percent over last year’s price of 19,800 yuan per ton.

As per the CCA’s predictions, the country’s cotton output for the current year is likely to surpass the Government’s target of 6.99 million tons, which is already about six percent higher than last year.

The annual cotton import quota fixed by the Chinese Government is 894,000 tons, which attract one percent preferential tariff under the World Trade Organization rules.

China is likely to reap bumper cotton output this year, and as such, to reduce pressure on domestic cotton stocks, the Government may not allow cotton imports beyond the limit set for the current year, the CCA has said. Depending on domestic demand, the Government can allow additional imports, but the same would be subjected to a tariff of about 5-40 percent.

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