China Buzz

Derivative markets closed mixed today with ZCE trading down 10 to up 15 yuan/ton. Volume was just over 8,500 contracts. CNCE finished down 23 to up 40 yuan/ton on volume of 7,000 plus tons. In today's lint markets, gains of 13 to 14 yuan/ton were noted with inland averages. Similar grades in Xinjiang, however, were unchanged. Import quotes were lower with the US down by .75 cents/pound; Central Asian down 1.00 cents/pound; and India down 1.5 cents/pound. Offtake around the country was minimal, though with reduced supply, especially with higher grades, traders are still thinking prices will remain firm at least in the near term. Mills are on the opposite side of the trade and think prices will turn weaker. Most remain cautious about any large purchases and buying as needed remains the norm. In the current economic climate, cotton merchants are demanding cash payment, which, at the moment, is very difficult for textile mills. The scheduled reserve procurement today was for 20,000 tons, split evenly between Xinjiang and inland provinces.

The World Bank threw a wrench in China’s plan to maintain a yearly GDP of 8% by forecasting the world’s most populous country would only grow by 6.5% in 2009. However, the bank did go on to mention the country would still outgrow most other economies. If China does only hit 6.5%, it would be the slowest rate of growth since 1990.

China’s hot stock market continued its surge this year with the CSI adding 2.1 percent in today’s trading. China’s CSI has gained more than 24 percent this year. Still, it is down more than 63 percent from its peak in October of 2007.

The yuan is up against the dollar this morning and is currently quoted at 6.8285.