Dip in Chinese orders lessen India's cotton export

India's cotton export in 2012-13 is expected to fall to seven million bales (a bale is 170 kg) compared with 12.8 million bales last year, following a sharp fall in Chinese demand, a cotton exporter said Tuesday.

According to the Cotton Advisory Board (CAB), headed by the textile commissioner, China's total imports are projected to fall to 2.5 million tonnes this year, half of last year's. Around 65 per cent of India's cotton export goes to China.

"China's imports will be lower as their crop is good; they also have huge stocks," said A B Joshi, India's textile commissioner. India's cotton prices are higher compared to global ones.

"Although China is expected to reduce import of cotton from India, they may start importing cotton yarn," said Umang Kapasi, joint managing director of the Coimbatore-based Shri Vardhaman Cotton Corporation, which is also an indenting agent.

CAB has estimated this year's (the cotton year starts in October and ends in September) total cotton production at 33.4 million bales compared to 35.3 million last year. The 2012-13 production would be lower due to scanty rainfall in major growing areas of India's western state Gujarat.

However, output in India's southern state of Andhra Pradesh is expected at 7.2 million bales compared to 5.6 million last year, compensating for the loss in Gujarat.Consumption of cotton by mills and non-mill consumption is expected to be higher this year compared to last year (see table).

"Mill consumption is higher this year due to rise in productivity of smaller mills, which are in a financially better situation compared to last year. Also, the order inflow is much better this year," said D K Nair, secretary general of the Confederation of Indian Textile Industry.

Last year, many mills had financial issues, which led to their taking less of orders.

Internationally, too, mill consumption is put higher. According to the estimates by International Cotton Advisory Committee (ICAC), "outside of China, mill use is expected to increase by five per cent, to 14.9 million tonnes (mt). Taking into account reduced shipments to China, cotton production is forecast down by six per cent to 18.6 mt, while stocks in the rest of the world are expected to grow by 16 per cent to nine mt in 2012-13."

According to ICAC, with this projected fall in Chinese imports, the price outlook in the rest of the world is conducive to lower international prices in 2012-13.