China imported 70,000 tonnes of cotton in August, the lowest monthly level since at least 2005 and down 65.8 percent from the same month a year earlier, trade website Cncotton.com said, citing customs data. Overseas purchases of the fibre have plunged this year after Beijing issued fewer import quotas to boost demand for the domestic crop.
The gap between international and domestic prices has also narrowed since Beijing overhauled a stockpiling policy last year that paid farmers prices well above the global market. The narrower spread has reduced the incentive for importers to import, with plentiful supplies available at home. "This is the new normal. We better learn to deal with it," said a cotton dealer who declined to be identified.
Monthly imports fell to 76,000 tonnes in November 2008 but have not dipped below that since the start of 2006, the earliest year for which Reuters has customs data. There is speculation, however, that unused quotas could be reallocated later in the year, supporting imports in the last few months of 2015. "By end of September, mills are supposed to return whatever processing quota has not been used, and it is hoped that may lead to a re-distribution of import quota in October," cotton merchant Reinhart said in its latest weekly report.
Overall the trade is bearish on China's short- to medium-term import picture, with the state still holding around 11 million tonnes in reserves, about half of the world's stocks, and struggling to offload it onto the market. Imports for the first 11 months of the 2014/15 crop year were down 44 percent at 1.67 million tonnes.
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