Bangladesh, Vietnam to push global cotton demand up next year

Dhaka,  Sun,  20 August 2017
Published : 04 Aug 2017, 17:34:08
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Bangladesh, Vietnam to push global cotton demand up next year

Bangladesh, Vietnam to push global cotton demand up next year
The global demand for cotton next year is expected to inch up three per cent over this year as yarn-spinning mills in Bangladesh and Vietnam up their production and China continues on a steady course as the world’s largest textile manufacturer, the USDA reports. 

In the last four years, global demand has grown between 1.o per cent and 1.5 per cent a year.

With supply outpacing demand, cotton prices are expected to remain at around the 70-cents-a-pound mark in the near future and perhaps fall later in the year. 

Last year, cotton went as high as 82 cents a pound. “In the last couple of years, prices have remained softer,” said Karin Malmstrom, director, Cotton Council International, for China and Northeast Asia, who recently gave a webinar on the cotton supply-chain situation. 

“Since last year, the prices have remained firm, which is not a bad thing. In the last few years, the cotton market had a huge roller coaster, which makes it hard to plan and make commitments.”

China, the world’s largest cotton consumer and the second-largest cotton producer, has gradually been selling off its huge stock of cotton it started warehousing in 2011 to support its farmers with premium prices. 

At that time, world cotton prices eventually hit $2.27 a pound, the highest it had been since the US Civil War.

But cotton can’t be hoarded forever because it starts to deteriorate after a few years. So in late 2013, China started selling off its vast reserves, which peaked at 68 million bales and is now down to about 40 million bales, but that is still about twice the annual production seen in the United States. 

“We see this as a stabilizing factor,” Malmstrom said. “In the past, we’ve had two different balance sheets—one for China and one for the rest of the world. In the next couple of years, we may be working off of one balance sheet.”

Chinese textile factories have been buying up this older cotton and mixing it with new cotton to improve the cotton reserves’ quality, said Meyer of the USDA.

Even with millions of cotton bales sitting in warehouses, China is expected to up its cotton harvest next year—primarily in the western Chinese province of Xinjiang—by 5 percent to 8.0 per cent.

With China supplying most of its own cotton in the last few years, the two biggest export markets for US cotton have been Bangladesh and Vietnam as those countries increase yarn production.

“About 80 per cent of the spinning capacity in Vietnam has Chinese investment or is Chinese-owned,” Malmstrom said.

 “The large companies in Vietnam spin that cotton into yarn and export it back to China.”

Chinese investors entered the Vietnamese market because they expected Vietnam would become a member of the Trans-Pacific Partnership, a free-trade pact between the United States and 11 other Pacific Rim countries. 

That would have made it possible to export yarn and even fabric from Vietnam to the United States free of duty.

But even though the United States dropped out of the Trans-Pacific Partnership, China is still strong in Vietnam because China is the largest textile producer in the world and will continue to be for some time, according to a report by https://www.apparelnews.net/news.

 
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