Reserved cotton on sale to curb price hike

(Xinhua)
Updated: 2009-05-22 23:38

BEIJING -- China sold 4,991 tonnes of cotton from state reserves via its national cotton exchange based in Beijing Friday.

The move is part of the country's plan to sell 1.5 million tonnes of cotton to meet demands of textile makers and to stabilize prices of the cotton market.

The plan has been approved by the Ministry of Finance and the National Development and Reform Commission (NDRC), said an official, surnamed Zhang, with the second commodity section of the economic and trade division under the NDRC Friday.

In comparison with statistics last November, cotton prices have gone up by 2,000 yuan (US$293) per tonne as of April, said Zhang, citing a shortage of cotton as the cause of the price hike.

"Some textile makers have also voiced complaints saying they have difficulty buying cotton for production, prompting the decision to sell cotton in reserve," said Zhang.

According to Sun Juan, assistant to the general manager of the China National Cotton Exchange, cotton being slated for sale under the plan included cotton harvested in three years -- 2003, 2004 and 2008.

Marketing was conducted via public bidding. The floor price for cotton harvested in 2003 and 2004 was the same, 12,500 yuan per tonne. It was 12,900 yuan per tonne for cotton from 2008.

Sun said they prepared 8,890 tonnes of cotton from reserves for Friday's trading, which attracted 161 textile makers. Only 17, however, bought cotton. The maximum price fetched was 13,260 yuan per tonne. The lowest price was 12,920 yuan per tonne.

China is one of the world's leading cotton producers. It harvested 7.8 million tonnes last year.

A total of 2.72 million tonnes of cotton was bought by the state for reserves from late August last year to March this year, according to the China National Cotton Reserve Corporation.