China, the world's top buyer and consumer of cotton, will not issue additional import quotas for 2012 as part of a drive to support local farmers just as the new crop is coming to market, a senior official said on Tuesday. Imported cotton arriving at Chinese ports is around 15,000 yuan ($2,400) per tonne, cheaper than local cotton, which is priced at between 18,500 yuan ($2,900) and 19,000 yuan ($3,000) a tonne in major consumption areas.
By stopping imports, and stockpiling cotton, the government is trying to stabilise domestic cotton prices, Zhang Xianbin, a department director of China's top planning body, was cited as saying by an industry website. "Currently we are not considering any imports and will not issue any import quotas for the rest of the year," Zhang, an official at the National Development and Reform Commission (NDRC), told a cotton conference, according to www.cottonchina.org.
He said the government would decide on next year's import quotas at a later date, adding that the authorities were committed to supporting the local industry. In the 2011/12 year, the government bought 3.13 million tonnes of cotton, helping to artificially prop up domestic prices, which in turn made imports surge as textile mills sought cheaper overseas supplies.
Earlier this month, China began the second year of buying cotton from farmers for its reserves. "The government wants to support local prices, which may mean the import quota for next year will be tight as well," said Dong Shuangwei, an analyst with Capital Futures. Prices will be also supported by a government decision to stop selling the 2011 crop by the end of this month, Dong added.
"The local market is the top priority," said Wang Qianjin, a senior analyst with industry web site www.webtextiles.com. Instead of importing, the government would more likely sell its stocks to prevent the gap between global and local prices from widening, Wang added.
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