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Himfr Report: China's Cotton Prices Will Experience a Downward Trend

2010-07-28 21:56 1244

BEIJING, July 28 /PRNewswire-Asia/ -- Himfr.com, one of China's leading B2B search platforms with more than 30 B2B industry websites to its name, reports that China's cotton prices will experience a downward trend.

Currently, China's domestic macro control policies are affecting China's stock market, futures market and the real estate industry, while the Euro debt crisis still exists and the U.S. economy's recovery has been inadequate. For China's domestic cotton market, the domestic cotton market supply and demand is still tight, and there has been a slowdown in domestic textile exports. Overall supply is still supporting high cotton prices, but under RMB revaluation pressure the long-term trend of China's cotton price should be a downward trend.

Since the second quarter of 2010, in order to combat rapid price increases and inflation, China has launched a series of macro control policies. There has been an overall decline in commodity prices, while spot market cotton prices remain relatively strong. Currently, the textile materials PTA price is low but its main contract price has fallen to 7,000 yuan/ton, which also restricts a rise in cotton prices.

Currently, the domestic textile industry has seized on this advantage to concentrate on exports. The industry benefits from cheap labour costs and the delay in the appreciation of the RMB, but these two advantages will gradually dissipate. On the one hand, loose monetary policy has led to price inflation, and rising labor costs have made labour-intensive enterprises face increased pressure. The textile industry will significantly feel the pressure of increased labour costs. On the other hand, the RMB appreciation pressure is increasing, which would weaken the domestic the domestic textile export price advantage.

The RMB will appreciate by 5% while the cost of textiles will increase by 0.8%. For the current domestic textile and apparel industry, the average net profit should be only 3%-5%, and the high export dependent apparel industry will be damaged greatly. In addition, the RMB appreciation may stimulate China's cotton imports. The cotton market's tight supply situation will be alleviated, and the cotton textile industry will be more active.

About Himfr.com

Himfr.com is a promising e-commerce company and a leading vertical search engine company in China. Himfr.com offers a variety of high quality products such as violin bows (http://www.himfr.com/buy-violin_bow/ ), RV generators (http://www.himfr.com/buy-rv_generators/ ), onan generators (http://www.himfr.com/buy-onan_generators/ ) and more.

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Source: Himfr.com
Keywords: Retail
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