China Buzz

Lint prices were firmer around the country with average gains of 6 to 11 yuan/ton. Inland averages for the two primary grades, T328 and T229, are 11,519 and 11,891 yuan/ton while the same styles in Xinjiang are quoted at 11,833 and 12,167 yuan/ton. Mills remain vigilant about protecting cash flows while steadily buying hand to mouth needs. Most are feeling with the reserve procurement program winding down—this despite rumors of additional Xinjiang purchases—prices will gravitate lower. The industry seems less than excited over the government’s proposed plan to help it weather the current economic funk. ZCE futures added 5 to 130 yuan/ton as more than 8,000 contracts traded. CNCE contracts, however, felt the weight of the ending of the reserve buying and closed mixed, down 20 to up 23 yuan/ton. Volume for the day passed 7,000 tons. In today’s reserve procurement approximately 19,700 tons was scheduled to be purchased, including 9,600 tons of Xinjiang cotton and 10,100 tons of inland cotton.

According to China's Stats Bureau, cotton fabric output totaled 2.123 bil square meters in February, up 266 mil or 14.32% from a year ago and 440 mil or 26.14% higher from a month ago. Cumulative cotton fabric output for the first two months of 2009 totaled 3.806 bil square meters, down 6700 mil square meters or 1.73% year on year.

Foreign Direct Investment (FDI) flows dropped for the fifth consecutive month to 5.83 billion US dollars in February. This came on the heels of several prominent high tech US companies announcing plant closures in China. In 2008, China’s FDI increased almost 24 percent year on year to just under 93 billion US dollars.

Stock valuations in China have investors worried around the world worried that the "China Story" simply isn’t enough to prop up the global economy. Since the end of 2008, respective stock exchanges in both Shenzhen and Shanghai are up 21 percent for the current calendar year. The yuan is quoted at 6.8384 against the dollar this morning.