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China Sourcing Update: Prices of Natural Textile Materials (Apr 2018)

Prices of Natural Textile Materials

1. Cotton price indices drop further in April

The price indices [1] of cotton fell slightly in April. The CC Index 3128B, for example, edged down from 15,546 on 30 March to 15,451 on 26 April, the lowest level since November 2016, before rebounding a bit to 15,453 on 28 April.

The main reasons for the decline in domestic cotton prices in the month were an abundant supply of cotton and a sluggish demand for cotton from downstream manufacturers.

In the month, the tit-for-tat tariff threats between the US and China have created great uncertainty in China’s cotton market. On 4 April, China included cotton on the list of US goods that could be subject to additional tariffs of 25%. The next day, the US threatened to retaliate with extra tariffs on US$100 billion of Chinese goods, and it is widely believed that Chinese apparel will be hit with additional tariffs. As trade talks between the two countries continue, it is uncertain whether any of the proposed tariff hikes will actually be enforced. If these tariff threats do become a reality, however, the cotton market of China will be greatly affected: an increase in the tariff rate on US cotton will lead to a tightened supply of high-grade supplies, while a tariff hike on Chinese apparel will cause a fall in the demand for cotton.

Please click to read the full report.

[1] The indices, compiled by the China Cotton Association, track cotton prices quoted from over two hundred textile enterprises.

Content provided by Fung Business Intelligence
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