China Cotton Price Monthly Report - April, 2014

In April, reserve cotton release price was lowered to 17,250 Yuan per ton, which encouraged mills and increased reserve cotton transaction volume. Since 4th April, CC Index included reserve transaction price into domestic cotton price collection range, and affected by this, CC Index decreased to less than 18,000 Yuan per ton by then end of the month.
As reserve release price reduced, its share of usage by mills increased apparently. Since 4th April, CC Index included the reserve sales price into its price collection. By the end of April, CC Index 3128B settled at 17,518 Yuan per ton, 1,888 Yuan down over the end of March, the monthly average price is 18,437 Yuan per ton, 1,003 Yuan down over the month.
The main influential factors to domestic cotton price in April include:
1.Reserve release policy change.
During the beginning of the month, mills were quite active at buying the reserve cotton due to its price decline, while the reserve transaction declined gradually affected by money shortage and market outlook. By 30th April, reserve cotton release auction totaled 4.29 million tons and 1.38 million tons were sold finally by transaction percentage of 32.2%, including domestic cotton auction of 4.19 million tons, with 1.29 million tons sold by transaction percentage of 30.8%.
2.Domestic lint is rare in market.
As reserve trade increases, domestic lint market is getting more and more sluggish with very few transactions and lowered prices. By the end of April, the spot price was almost the same as reserve cotton transaction price.
3.Mills purchase was cautious and import cotton yarn stock reduced.
As domestic cotton market went downward, cotton yarn price declined too. With negative opinion on market outlook, mills are very cautious at buying. In April, import cotton yarn port arrival declined, the port stock reduced and the price climbed up, though still quite competitive compared with domestic cotton yarn.
4.Declined international cotton price narrowed down the price gap home and abroad.
Affected by Chinese reserve cotton price reduction, international cotton price moved downward. Monthly average price of ICE nearby contracts in April is 91.09 cent/lb., 0.52 cent down over the month. Cotlook A has monthly average price of 94.12 cent/lb., 2.83 cent down over the month. As for China import cotton price, FC Index has monthly average price of 97.06 cent/lb., 1.96 cent down over the month, which is 15,201 Yuan per ton under 1% tariff, and 16,158 Yuan per ton under sliding duties, 3,236 Yuan and 2,279 Yuan less than domestic equivalent cotton, the price gap narrowed by 762 Yuan and 842 Yuan separately.Monitored by: Beijing Cotton Outlook Information Consulting limited Company
Monitoring Subject: 100 cotton textile companies in 18 major cotton production or consuming provinces