European And American Buyers Are Being Forced To Speed Up Decoupling From Xinjiang Cotton Products

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According to customs statistics, in August 2020, China imported 140000 tons of cotton, although it decreased by 6.7% month on month, but increased by 54.1% year on year. In the year of 2019 / 20 (September 2019 to August 2020), China's cotton imports totaled 1.59 million tons, a year-on-year decrease of 21.7%. However, China's cotton imports gradually recovered in July and August, which effectively made up for the lack of impetus and unsmooth demand of cotton flower import in China due to the new crown epidemic situation, the deterioration of Sino US relations and the transfer of orders from Europe and the United States.

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Some institutions and cotton enterprises believe that there are four main reasons for the sharp growth of cotton import in August

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First, the RMB rose sharply against the US dollar, and the import cost of foreign cotton decreased significantly;

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Second, the trump government has considered imposing a ban on Xinjiang cotton products (although it has been temporarily shelved, some European and American brand clothing enterprises and purchasers have started ahead of time). Domestic suppliers and processing enterprises have to reduce or even suspend the use of Xinjiang cotton, and increase the purchase of Brazilian cotton, American cotton and Indian cotton;

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Third, the first phase of Sino US trade agreement has not been broken, and both sides are vigorously promoting and implementing, so Chinese enterprises can not stop purchasing American cotton; fourth, in the second half of 2020, the domestic epidemic situation has been fundamentally controlled, the economy, consumption, production and life of European and American countries have returned to normal track, and the recovery of foreign trade orders is speeding up, and cotton textile enterprises are trying to fight a "turnaround battle".

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However, judging from the actual import classification, the US cotton import volume actually accounted for 72% of the total import volume in August, which expanded from the "half of the country" in June / July to more than 70%. It is not a big deal to say that after two or three months' inquiry and shipment are very active, and the port inventory is continuously declining, "sales champion" Brazilian cotton, where has the large amount of imported American cotton gone?

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At least according to the feedback from ports and cotton traders, bonded / customs clearance Brazilian cotton and Indian cotton are the "protagonists" of inquiry and purchase of downstream enterprises. Although the port inventory of American cotton is relatively large and the buyer can choose from it, the improvement of shipment is not prominent due to its high basis and low cost performance.

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According to the judgment of some domestic cotton textile and cotton traders, the proportion of US cotton import volume in the total import volume of China in September and October will remain at a high level, 60% - 70% will be normal, and Brazil cotton, Indian cotton, West Africa cotton and Central Asia cotton will carve up the remaining 30% - 40% of the import cotton market. On the one hand, China will ship a large number of American cotton in 2019 / 20 from June to August, and August to November will be the time of arrival and delivery; on the other hand, the additional 400000 tons of processing trade sliding tariff import quota in 2020 is expected to be issued around the middle of October. Considering the service life and the optional sources of port warehouse, American cotton is expected to become the largest beneficiary, while Australian cotton is too expensive and highly replaceable It's hard to do anything. Moreover, the US government's sanctions on Xinjiang made us cotton import "one position ahead of other cotton producing areas". Although the U.S. Treasury announced on September 25 that the sanctions would be postponed for two months to November 30, in fact, some European and American buyers and retailers are being forced to accelerate the "decoupling" from Xinjiang cotton products.