Macro economy was weak in June, financial strain of some banks tightened credit, which brought more pressure to textile companies. Raw material purchase was dominated by reserve cotton, spot market price declined in larger margins over the month.

1. CC Index in June

1.1further decrease for spot price

By the end of June, CC Index328 was 19,300 Yuan per ton, 36 Yuan down by 0.2% over the end of May. The monthly average price was 19,320 Yuan per ton, 30 Yuan down over the month, 0.2% down; while 925 Yuan higher than last June, 5% higher Y/Y.

1.2lower price in major inland areas

Monthly average prices for type 328 and 429 in Shandong were 19,334 Yuan per ton and 18,690 Yuan per ton, both was 0.1% down over the month. Type 328 and 429 in Hebei had monthly average price of 19,357 Yuan per ton and 18,862 Yuan per ton, 0.4% down and 0.5% down over the month.

1.3 mixed grade premium

Taking CC Index328 as the benchmark, premium of type 129 increased from 6.0% to 6.2% over the month. Type 229 increased from 3.8% to 3.9%. Premium of type 429 was 3.0%, and type 527 was -12.2%.

2. Major influential factors on domestic cotton price in June

2.1 2013 China International Cotton Conference.

Delegates attending the conference exchanged ideas deeply on current agriculture product trade and macro policy, cotton and textile situation, and discussed on future development of cotton industry China and the world. Government departments related believed consistent and stable policy on cotton shall be maintained, including policy on reserve cotton release and foreign cotton import, and also stated that reserve cotton release will be closed by the end of July.

2.2 changeable weather effected cotton growth.

During this month, weather influenced cotton growth in more than one ways; the high temperature and rain storm happened alternately and postponed normal growth of cotton.

2.3 reserve cotton release trade increased in volume

Reserve release would be closed by the end of July; therefore textiles increased their reserve purchase in worry of future resources. Import cotton was most welcomed and sold out once offered, the transaction rate of which kept above 80% after 20th July, much higher than domestic cotton.

2.4 off season of textiles with low yarn price

In June, domestic textile market was in off season, product mix was shifted to cotton and chemical blends from pure cotton yarn, domestic yarn price declined with more price competitive import yarn.

2.5 commercial cotton average price decreased mostly

In June, monthly average price of commercial cotton declined mostly, only forward contract MA1311 increased 8 Yuan, the largest decline was MA1307 by 592 Yuan.

2.6 international cotton price had mix performance

During the first half month, international cotton future and spot prices increased continually, while retreated by the end of the month. ICE nearby contracts in June had average price of 85.67 cent/lb, 1.47 cent up over the month; Cotlook A average monthly price was 93.08 cent/lb, 0.34 cent up over the week; China import cotton FC Index M had average monthly price of 95.99 cent/lb., 1.36 cent up over the month, which were 15,191 Yuan per ton under 1% tariff, and 15,893 Yuan per ton under sliding duties, 4,129 Yuan and 3,427 Yuan lower than CC Index separately, and 178 Yuan and 140 Yuan down over the month.