China to implement state cotton reserves sales in late Jul, 2023

To meet cotton textile enterprises' demand, China Reserve Cotton Management Co., Ltd announced on Jul 18 that it would organize to sell some reserved cotton from late Jul, 2023. The the daily selling volumes will be arranged according to market situation.

The base selling price of reserved cotton is dynamically determined according to the market conditions, and it is generally linked to the Chinese domestic and international spot cotton prices. The calculation is showed below.

Formula:

Base selling price (cotton type 3128B)=average price of prior week's domestic cotton prices*50%+average price of prior week's international cotton price*50%.

1. Domestic cotton price=(China Cotton Index+CNcotton)/2;

2. International cotton price=Cotlook A Index (converted to USD per ton)*exchange rate*(1+1%import duty)*(1+9%VAT)

3. The exchange rate is the benchmark exchange rate of the foreign currency against the RMB announced by the People's Bank of China, based on the customs taxation method and the third Wednesday of the previous month (if it is on public holiday, the fourth Wednesday is postponed).