CCI which is one of the companies which dominate the global cotton market has shared information regarding developments which will happen in cotton market next year. CCI Turkey Program Director Marsha Powell who has made evaluations regarding the subject has underlined that they face with the cotton market which is in the recovery process after economic crisis. Powell who has mentioned that the level of 2009/2010 still could not be reached despite of all these positive developments has expressed that cotton manufacturing has been under the world manufacturing for the last four years.
Powell who has emphasized that these developments happened in global area have directly affected the cotton stock has continued his speech as follows; “World cotton stocks has broken record in 2011/12 period by reaching to 15,2 million ton. It is expected that stocks will find 17,4 million ton in 2012/13 period as a continuance of this increase trend. However, the country which becomes prominent in the market in terms of stock will not change. The country which holds the highest stock in global area will be China next year. Since China government still holds more than 50% of world cotton stocks, manufacturers worldwide closely follow China’s cotton policies. China’s cotton stock has reached 6,6 million ton in 2011/12 season and it is supposed that it will be 9,3 million in 2013/14 season. I think that any change which China will make in its policies in next months may affect cotton supply in the world.”
60% of Global Cotton Stock is in China
Powell who has noted that changes also happen in supply and demand equilibrium in terms of cotton has emphasized that demands has followed a negative course since 2008-2009 crisis. Powell who has mentioned that increases happened particularly in prices are determinant in consumer demands has told that; “Decrease in years of 2009-2010 were not as big as expected, however change in prices has affected buyers. As a result of this, stock increase has brought high cost with it. As of today, I can say that a shift has happened towards increase trend”. Powell has continued his speech as follows; “Stocks between the years of 2004-2008 have remained in stable level. However, stocks have reached 17,4 million ton in 2012-2013 with increase in production. More than half of these stocks is now held by China. These stocks 85% of which is hold by the Government cause falling in prices. It is correct to say that this falling in global area in terms of price has occurred in this way. If China begins to use these stocks, the price will fall more and apply such a pressure to the market.”
Chinese Manufacturers are Pressed for Money
Powell who has noted that China does not apply tax in cotton import up to 894.000 ton according to WTO rules has explained that above of this number become evident according to the rules determined by the government. Powell who has said that “Manufacturers in China have to pay 40% tax if they import out of the government’s quotas” has expressed that enterprises in China are also in a bad condition due to expensive prices and quota applications inland. Powell who has noted that 81% increase in cotton prices in 2011 has caused 42% fall in import numbers has stated that yarn prices has increased at the rate of 55% in 2011 due to price difference in cotton. Powell who has noted that import numbers of yarn have fallen at a rate of 49% as a result of this has mentioned these; “When it is looked to the clothing sector in the same period, it has been announced that it has caused 20% import decrease as well as 25% price increase. When the effect on retail industry is considered, it is seen that the price increase in stores is in the level of 7% in the same period.”
Turkish Cotton Manufacturing Will Increase
Powell who has noted that cotton which is not manufactured in China is limited with import tariff quotas (TRQ) has concluded his speech as follows; “While this quota limits the import additionally made with licences given by the government, 40% premium is applied to the cotton imported out of TRQ and to the import made with licences taken from the government. Consequently, some Chinese manufacturers see that avoiding high cost Chinese raw cotton being one of the main factors which increase the price of cotton yarn and importing cotton yarn rather than manufacturing it will be cheaper. For some countries such as Turkey, this kind of conditions create the opportunity for selling cotton yarn to China to which import can be made without quota or tax. When it is viewed in consideration of these developments, although global economic crisis has caused reduction in consumer demands and a serious fall in world cotton consumption, cotton consumption of Turkey has reached the level of 1,3 million ton again. I think that this rate will increase more if developments in textile sector continue.”
