Can sharp increase of refined cotton import continue?

China’s refined cotton was mainly for export with small quantity in the past. However, with rising cotton linter price of China since 2021, refined cotton export has been growing steadily and import volume has been increasing fast. Some companies turn to import refined cotton instead of cotton linter, leading to notable changes in the import and export structure of refined cotton market in the past two years.

Refined cotton import of China has been rising with high cotton linter price in China and widening price spread between Chinese and imported refined cotton (the import tariff of refined cotton is zero). According to customs data, refined cotton import of China hit new highs of 1.831kt in Mar 2022, up 260.5% m-o-m and up 193.7% y-o-y.

China imports nearly 10kt of refined cotton in 2021, up 70% y-o-y and the import further hikes to 3.336kt in the first quarter of 2022, which has reached the half-year or even whole-year volume of the past years, up 220.8% y-o-y.

The percentage of imported refined cotton in the export is rising rapidly with increasing import volume, which has risen from 7% to 15% or above. In the first quarter of 2022, the export of refined cotton totals 21.312kt and the import takes up 15.7% of the export. In Mar, the percentage is as high as 29.4%.

China mainly imports refined cotton from Uzbekistan and US, and there is less import from Sweden and Japan. The import is mainly from US before 2020 and from Uzbekistan after 2021. In the first quarter of 2022, China imports 3.026kt of refined cotton from Uzbekistan, occupying 90.7% of total imports.

In conclusion, refined cotton import of China has been increasing rapidly since 2021 with high cotton linter price in China and widening spread between Chinese and imported refined cotton. The import volume further hikes in the first quarter of 2022 and some Hebei, Shandong and Shanghai-based companies turn to import refined cotton instead of cotton linter, but whether the growth can be ongoing needs further observation.