Cotton linter and refined cotton get off to a good start in 2023

Cotton linter market is expected to be better after the Spring Festival with improving commodity market and resumption of work by both upstream and downstream plants. The price extends the firm appearance before the holiday and keeps rising. Refined cotton also gets off to a good start by following up significantly.

China's cotton and cotton linter market has ushered in a new journey since the 2022/23 crop year after diving from high level in the year of 2022. With the relaxing of China's pandemic control policy after the end of Nov in particular, the market sentiment has improved rapidly and cotton linter demand has been better, thus the price keeps firm and continues to go up. At present, Chinese cotton 3128 is about 15,500yuan/mt and cotton linter for industry-grade refined cotton is 4,200-4,300yuan/mt, respectively up 1,500yuan/mt and 1,000yuan/mt compared with the low level in Nov.

Refined cotton price tends to be firm around the Spring Festival with the strong driving force of cost resulting from strong upward momentum of cotton linter. Refined cotton producers in Hebei, Jiangsu and Xinjiang gradually resumed operation during Jan 27-29, coupled with strong willingness of raising offers. Now industry-grade refined cotton M1000 is mainly offered around 9,800yuan/mt, gaining ground by almost 1,000yuan/mt from the end of 2022.

In conclusion, the sharp rise in cotton linter price around the Spring Festival is mainly because that there is a request for rebound after steep decline, and market sentiment has improved with the shift of China's epidemic prevention and control policy since the end of 2022. Downstream plants have built up more stocks around the Spring Festival and commodity market also warms up, so cotton linter price keeps firm and climbs up with better expectation. Moreover, refined cotton price also follows up rapidly driven by cost and demand, which is expected to be stronger in the short run. However, it may take some time to digest the increase of almost 1,000yuan/mt in a short period.