Cotton linter import of China was at a low ebb in 2018, but has been improving this year. The import volume of Aug and Sep keeps increasing, especially when new Chinese cotton linters arrive in Sep. The import of Sep is the second highest within the year, up 112% on yearly basis. Why did the abnormal phenomena appear? Has the demand recovered?



According to customs data, cotton linter import of China in Sep recovers to more than 10kt, totaling 10.5kt, up 6.6% m-o-m and up 112.4% y-o-y. It is the second highest within the year, just lower than 13.5kt in Mar, which is also the second highest volume since May, 2017.



China totally imports 51.8kt of cotton linter in the first half of 2019, which is close to the whole-year number of 2018 at 52.5kt. The import volume amounts to 74.5kt in the first three quarters of this year, up 70.8% y-o-y, which is likely to catch up with the whole-year quantity of 2017.



Import price keeps falling with increasing import volume. Coupled with changing origins of imported sources, some high-quality linters are hard to enter Chinese market, so China's cotton linter price keeps dreary by lingering around more than 10-year low. The average import price in Jun hits new lows at $286/mt since Feb, 2007. Although there is some improvement during Jul-Sep, the price is generally around historic low. It averages at $294/mt in Sep, down 22.3% y-o-y. Lower import price is one of the driving forces to push up import volume.



There are great changes of cotton linter origins this year, especially when high-quality US linters are rejected amid the influence of Sino-US trade friction. Low-priced linters from India and Turkey take up higher percentage, dragging down the general price trend. In the first three quarters of 2019, the import price averages at $334.6/mt, reducing by almost 30% versus the same period of 2018 at $477.8/mt.



Cottonseed supply of China tightens with prices rising gradually in later period of 2018/19 crop year. The price remained high amid short supply before mid-Sep and it rose to 2,700yuan/mt at the end of Aug and beginning of Sep. Cottonseed oil and delinting plants are cautious about processing due to cost pressure and influence of downstream demand. Many of them suspended operation and cotton linter output generally decreased, leading to increasing imports.

To sum up, cotton linter import volume of 2019 has been hiking on yearly basis due to limited output of Chinese linter, small quantity of last year, lower import price and changing origins this year. The supply of new linters has been increasing around National Day holiday, so the increment of imports may slow down after Oct. However, the import volume may be still higher than the comparable 2018 level, triggered by huge spread between Chinese and imported linters. The growth of import volume is expected to be over 50% this year.