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Insight | Time:May 31 2018 11:16AM
China cotton linter market may remain weak without bulls
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Cotton linter market was still depressed in May as the trading activity was subdued and prices remained weak. Demand was the biggest problem faced by cotton linter producers this year. Cotton linter pulp mills in Shandong and Henan were not running regularly and some Xinjiang-based plant had been closed this year, so the output was low and the demand for cotton linter was reducing sharply.

Given intense pressure of environmental protection and safety supervision, refined cotton plants also ran with low operating rates. Moreover, staple-grade cotton linter pulp mills increased the percentage of artificial linter in production and nitrocellulose as well as cellulose ether companies used other materials to replace refined cotton. Therefore, the demand for cotton linter kept decreasing.

The living space of cottonseed oil plants kept being squeezed on dreary cotton by-products as well as low profits. However, cottonseed prices were somehow pushed up by surging ZCE cotton futures since mid-May, but other cotton by-products were not boosted much.

As to cotton linter, the momentum is largely from downstream demand that is still weak as the operation of most companies is restrained by environmental issue. Therefore, cotton linter market may not improve much in the short run.
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