On April 30, the National Development and Reform Commission issued an announcement stating that the number of cotton import sliding tax quotas issued this time is 700,000 tons, all of which are non-state trade quotas, of which 400,000 tons are limited to imports through processing trade, and 300,000 tons are limited to processing trade imports. There are no restrictions on the trade method for tons, and enterprises that have obtained quotas can choose and determine the trade method by themselves when applying for quota certificates. At this point, the rumors of additional quota issuance since mid-March have finally come to fruition. Some large and medium-sized cotton textile companies and traders generally believe that the quantity is not in line with expectations.
According to the announcement, each entrusting agency shall submit the enterprise application materials to the National Development and Reform Commission before May 20, 2021, taking into account relevant procedures such as review, allocation, publicity, review, etc. After all, it is expected that the announcement of the additional issuance of 700,000 tons of sliding quasi-tariff import quotas and the submission of application materials by companies are relatively early, but the actual quotas cannot be issued too early (although additional issuances were announced on June 12 and April 12 respectively in 2018 and 2019) Import quotas are announced, but the actual quota issuance period is after September). However, the applicant company can “overdraw” the quasi-tariff quota in advance based on order needs, ICE disk prices and shipping schedules, and raw material inventory conditions, and sign far-month shipping schedule purchase contracts with foreign businessmen and domestic cotton import companies, which will help reduce costs and improve textile products. Clothing and other export competitiveness.
Judging from ICE’s disk performance, China’s announcement of an additional 700,000 tons of cotton import quotas with sliding quasi-tariffs boosted the main contract’s strong rebound, once approaching 90 cents/pound, but overall, The market is still consolidating at 85-90 cents/pound, and funds are not confident enough to drive unilateral market trends. So what impact will the issuance of an additional 700,000 tons of sliding tariff quotas have on ICE? Industry analysis is as follows:
First, the number of additional sliding tariff quotas issued in 2021 is far lower than market rumors, and the interest of bulls in entering the market and raising prices has obviously weakened, with the price at 90 cents/lb. Although the gate is close at hand, it still falls short of the success; secondly, only 300,000 tons of the 700,000-ton sliding quasi-tariff import quota are imported without restrictions on trade, and it is not easy for traders and investment companies to import; thirdly, considering that the main products of the United States in 2021 The weather in the cotton area is not good, the basis difference of U.S. cotton is significantly higher than that of Brazilian cotton, and the shipment period of U.S. cotton in 2021/22 is concentrated after December 2021. Therefore, the focus of Chinese textile enterprises’ quasi-tariff inquiry and procurement may be Brazilian cotton, Indian cotton, West African cotton rather than new year American cotton. </p