China Buzz

The moribund ZCE came to life today, passing the 12,000 daily volume mark for only the third time in three weeks. Prices closed on the plus side too, adding 20 to 70 yuan/ton. May increased 65 to finish at 11,975 yuan/ton. At the CNCE E-Forward Market, contracts closed higher as well, up 6 to 92 yuan/ton on volume of 6,000 plus tons. Lint prices were firm again today though, to be fair, only minimal gains of 6 to 8 yuan/ton were noted around the country with particular price strength in the usual suspects of Hebei, Henan and Shandong. Import quotes were up as well, marginally increasing .25 cents/pound for most styles. Mills were in a better mood today with most curious about the rumors of China’s textile VAT export rebate being increased from the current 17 percent. To add fuel to the fire, an official from the Commerce Department has stated the current rate has upside. Translated into this morning recap means it will likely be increased in the coming days or weeks. There still remains a shortage of high quality cotton.

The scheduled reserve procurement total was 19,600 tons with 9,600 designated from Xinjiang and the rest from the inland. As of yesterday, March 16th, total 2008/09 reserve procurement has reached 2,517,850 tons, 1,360,600 tons from Xinjiang and 1,157,250 tons from inland.
The well respected NCMMS continues its interviewing key cotton districts and their planting intentions for the 2009/2010 season. The latest to show a decrease is the very important Hengshui area of the Hebei province, where cotton acreage is expected to decrease around 2.3 percent this year. Most of the interviewed growers cited lower seed cotton prices as the main reason for the decline.

The yuan is virtually unchanged against the dollar this morning at 6.8372.