Editor’s note: Starting from the end of August, Xinjiang cotton has gradually entered the picking period, and in mid-to-late September, a new batch of cotton will enter the market. On June 21 this year, the so-called “Prevention of Forced Uyghur Labor Act” signed by US President Biden in December last year officially came into effect. This “evil law” presumes that all products produced in China’s Xinjiang region are so-called “forced labor” products. , prohibiting the import of any products related to Xinjiang. Foreign media commented at the time that the law would have a significant impact on Xinjiang’s key industry, the cotton industry, and could seriously damage China’s textile industry. In fact, since the beginning of last year, the United States has implemented an import ban on all Xinjiang cotton and its products. In the face of the malicious suppression by the United States, Chinese companies have been actively responding and achieving results. The U.S.’s Two Means “We have planted cotton in Xinjiang, and this year should be a bumper harvest,” Huang Hongyu, president of Henan Tongzhou Cotton Co., Ltd., said in an interview with a reporter from the Global Times. Xinjiang’s cotton output is expected to be higher this year than last year. Although there is a bit of drought, it has little impact. New cotton will enter the market from September 10th to 20th. Henan Tongzhou Cotton Industry integrates cotton purchase and processing, cotton textile and clothing production, cotton import and export trade and other businesses. Huang Hongyu said that the company also grows cotton in Xinjiang and has four local ginneries.
Visual China talked about the impact of the U.S. Xinjiang cotton ban. Huang Hongyu said that for cotton trading companies, the biggest risk is changes in market prices, and futures tools must be used to avoid risks. He predicts that the impact of the ban will continue for some time, and Chinese companies are looking for ways to expand markets outside the United States. “As far as I know, some Chinese companies have been fined for using Xinjiang cotton in products exported to the United States.” Zhu Gensheng, secretary-general of the Zhangjiagang Cotton Association, said in an interview with a reporter from the Global Times that the U.S. bill will be implemented in June, and major textile brands will start from the beginning of the year. Some preparations have been made from the beginning. The bill forces the traceability of textile products such as clothing imported into the United States, and companies need to provide contracts and purchase invoices for cotton used in yarns, fabrics, etc. In addition, the United States is also trying to prevent companies from “washing cotton” through third parties. Therefore, textile products imported from Southeast Asian countries such as Vietnam to the United States will also be required to provide the same certificates. There is currently a voice in the market saying that the United States is conducting genetic testing on cotton. Zhu Gensheng believes that there are only two institutions in the United States that can actually conduct cotton genetic testing, and there are only more than 20 staff members in the world. “The United States imports a large amount of textiles every year. It is impossible for them to conduct genetic testing on every order. Genetic testing is still at the level of random inspections when there are doubts.” Zhu Gensheng speculated that it is impossible for more than 99% of products exported to the United States to undergo genetic testing. . Data provided by the China Cotton Information Network to the Global Times shows that before the U.S. “bad law” takes effect, based on export data from customs statistics in 2021, it is expected that the final amount of Xinjiang cotton exported to the United States will be between 590,000 and 640,000 tons. between. According to data released by the National Bureau of Statistics of China, China’s cotton output in 2021 will be 5.731 million tons. A Chinese textile manufacturer with factories in Vietnam, who requested anonymity, told the Global Times that some downstream customers are required to provide product origin documents, in which case the manufacturer must go through a lengthy investigation. “The U.S. approach ultimately requires sufficient certification documents,” he said. It is difficult to distinguish the cotton entering Vietnam from different sources because they are mixed together when transported by sea. Two reasons behind the price difference: The Wall Street Journal recently reported that some U.S. sanctions and Xinjiang-related import bans “have produced results.” According to the report, “an interesting phenomenon” has emerged since the beginning of 2022: despite the rise in global cotton prices, the price of Chinese cotton futures is much lower than that of New York cotton futures, which is at least the first time since 2016. China’s cotton production accounts for about 1/4 of the world’s total, about 90% of which is produced in Xinjiang. For much of the past decade, Xinjiang cotton was one of the most expensive cotton varieties in the world. Companies and experts disagree with the US media’s statement. Many parties have confirmed that reduced consumption during the epidemic is the main reason for the decline in cotton prices in Xinjiang. “This price difference is quite outrageous,” Huang Hongyu said. In October last year, the average purchase cost of cotton in Xinjiang was more than 24,000 yuan per ton, but then the price dropped all the way, and is now about 16,000 yuan per ton. He said that for a long time, the price of Xinjiang cotton has been higher than the price of imported cotton such as US cotton. Taking last October as an example, the price per ton of Xinjiang cotton was 3,000-4,000 yuan higher than that of US cotton. Now, the price per ton of Xinjiang cotton is higher than that of US cotton. The price abroad is as low as 5,000 yuan to 6,000 yuan. Huang Hongyu believes that there are two main reasons for the price difference: one is that domestic cotton supply is abundant, but consumption is declining; second, foreign cotton supply is relatively scarce, but consumption is rising. He said that the decline in Xinjiang cotton prices was mainly affected by the decline in domestic consumption during the epidemic. At the same time, the impact of U.S. sanctions on Xinjiang cotton was increasingly apparent. “Textiles and clothing are not rigid consumption and are not very elastic. If the income is not good, people can temporarily not buy them.” new clothes”. But he also said that “as long as the domestic market develops, a large amount of Xinjiang cotton can be consumed.” Zhu Gensheng also believes that the price of Xinjiang cotton and imported cottonThe gap will gradually narrow in the future, and “the turning point has been reached.” In the international market, Xinjiang cotton cannot be absent. Zhu Gensheng told the Global Times reporter that in the past, companies would not take the initiative to distinguish whether Xinjiang cotton or imported cotton was used, but only distinguished based on quality what raw materials were used to better meet product requirements. After the implementation of the “Xinjiang cotton ban”, companies have made short-term adjustments and have now re-allocated their product structure. For example, imported cotton is used to produce products exported to Europe and the United States, while Xinjiang cotton products are used for domestic consumption or exported to Southeast Asia. China used to import yarn from Vietnam, India and even Thailand every year. Now Chinese companies are also exporting yarn, and the recent decline in the RMB exchange rate is also beneficial to exports. Zhang Wensheng, managing director of New Era Garment (Bangladesh) Co., Ltd., said that the impact of the US ban should be temporary, and adjusting market allocation can offset these impacts as soon as possible. In addition, Huang Hongyu said that Chinese companies are also exploring overseas markets outside the United States and looking for new sales channels in ASEAN or countries along the “Belt and Road”. Industry insiders and experts believe that in response to the possible continued U.S. ban, China’s over-concentration of cotton production in Xinjiang production areas can be appropriately adjusted, and production in traditional cotton production areas in the Yellow River Basin and Yangtze River Basin can be appropriately restored to diversify risks. “The Xinjiang cotton ban imposed by the United States will not have that big an impact on Chinese cotton in the end. In another two or three years, as companies adapt to the new path, the impact will be even smaller.” Zhu Gensheng said that Xinjiang cotton cannot be absent in the international market. Xinjiang’s cotton output is more than 5 million tons per year, and global cotton output is about 25 million tons. Xinjiang cotton accounts for about 1/5 of global cotton output. In addition, Xinjiang cotton is the world’s highest quality cotton, and the mid-to-high-end products made from it are popular at home and abroad. If Xinjiang cotton is excluded, international cotton prices will rise to unimaginable levels. If that extreme situation occurs, the United States is bound to taste the bitter consequences.
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