Beijing. China, the world’s largest cotton consumer and importer, has likely issued up to 1 million metric tons of additional import quotas to meet demand from the textile industry, trading executives said Thursday.
Textile mills, whose margins are getting thinner amid strong local cotton prices, have welcomed the move.
Of the 1 million tons, about 60% will be allocated to textile mills and the rest to the state stockpiler, a Qingdao-based cotton importer said.
“Textile mills are expected to get the quotas as early as next week,” the Qingdao trader said.
However, an executive of a Guangdong-based trading company said more than 700,000 tons will go to textile mills and the rest to state-owned companies, but didn’t elaborate.
The trader also said the government will likely release an official notice next week, adding that some textile companies already know the size of their allocations.
In a research note released Thursday, Tianqi Futures said one textile company confirmed it has received import quotas from the local economic planner.
Textile companies usually know the size of their quotas but not the overall amount, traders said.
Cotton imports will likely surge in the next few months and domestic prices will face downside pressure, analysts said.
Benchmark September cotton on the Zhengzhou Commodity Exchange closed 0.8% lower at CNY20,490/ton.
China issued 1.5 million tons of import quotas at the beginning of the year, including 894,000 tons under a 1% tariff.