As China’s cotton harvest begins, Xinjiang ‘forced labour’ law and global recession fears hobble demand
- The spot price of cotton from Xinjiang has fallen by more than 20 per cent since Washington effectively banned imports from the region in June
- Supply side disruptions caused by extreme weather in countries like the US and recession fears are also weighing on the global cotton market
As the cotton harvest gets under way in Xinjiang, scenes of frenzied buying at mills that were a feature of last year are nowhere to be seen.
The spot price of cotton from the autonomous region has fallen by almost a quarter since Washington effectively banned imports of Xinjiang goods over alleged forced labour in June.
But the sluggish market is not just limited to China’s far western region, which is home to one fifth of global cotton output. The industry worldwide is facing pressure from a number of quarters.
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“Ultimately we need to look at the demand, if the demand is bad, the price will not go up,” said the owner of a cotton-ginning mill in southern Xinjiang, who spoke on condition of anonymity.
The price of cotton futures trading on the Intercontinental Exchange – an American company that operates financial exchanges and clearing houses – has fallen nearly 30 per cent since late August, though it has regained some of its losses in the past two days.
“[The drop in price] is mainly due to the worries about recession,” the mill owner said. “In addition, the retail inventory in the United States is quite high, so the number of new orders for cotton products would be relatively small.”