China has slowed down its cotton imports as the price difference between its domestic cotton and the imported cotton have narrowed significantly.
International cotton prices stayed at a fairly high level since the beginning of 2014, even as China's domestic cotton prices continued to decline, especially after the base price of reserve release cotton was lowered in April. The price gap between its domestic cotton and imported cotton is down to 2,000 Yuan per ton under 1% tariff and about 1,000 Yuan under sliding duty. The narrowed price gap and sluggish demand has reduced cotton imports largely.
According to China's customs statistics, in April, China imported 224,400 tonnes of cotton, 2,300 tonne more over the month and 47.9% down Y/Y; the average import price was US$ 2,087/tonne, US$ 25 up over March, 7.5% up Y/Y. The cumulative import of the first eight months of 2013/14 season was 2,109,200 tonnes, 33.4% down Y/Y; during the first four months of 2014, China's cotton imports were 9,850,000 ton, 45.2% down Y/Y.
By mid-May, cotton crop in China was coming along fine, with most growing the third true leaf and some the fifth true leaf. Reserve cotton release transaction has been declining continually. By the middle of May, 91,900 tonnes of cotton was sold and daily transaction was 18,000 tonne, nearly 30% down over the week. By May 16, reserve cotton release totalled 1,627,000 tonnes, 30.6% of the transaction percentage, including 1,524,000 tonnes of domestic cotton and 103,000 tonnes of imported cotton.