ICAC has revised downward world cotton consumption from initial projections

ICAC has revised downward world cotton consumption from initial projections

Growth in world cotton consumption has slowed and, for a fourth consecutive season, imports are set to decline in 2015/16, according to new forecasts.

The International Cotton Advisory Committee (ICAC) has revised downward world cotton consumption from initial projections to 24.4m tons, up less than 1% from 2014/15. In its October 2015 report, the International Monetary Fund lowered its forecast for world economic growth in 2015 to 3.1%. 

Despite optimism from the narrowing gap between polyester prices and cotton prices at the start of 2014/15 and falling domestic cotton prices, ICAC said cotton consumption in China remained unchanged from 2013/14 at 7.5m tons. As a result, mill use in China is now forecast at 7.3m tons in 2015/16.

With consumption slowing, ICAC forecasts a 3% decline in world cotton imports to 7.4m tons in 2015/16, marking the fourth consecutive season of import volume declines after a peak of 9.8m tons in 2011/12. China's imports are expected to shrink by 33% to 1.2m tons, while imports by Vietnam during the first two months of 2015/16 are up 63% from the same period last season and may reach 1.1m tons by the end of the season. 

India, the world's second largest consumer of cotton lint, may see mill use rise by 3% to reach 5.5m tons in 2015/16, ICAC said. However, Pakistan, which has in previous years benefited from the growing demand for cotton yarn in China, is expected to see mill use decrease by 10% to 2.2m tons. In addition to reduced demand from China, an ongoing energy crisis, high energy costs, and high taxes that greatly add to the cost of production have caused many mills to reduce operations, and in some cases to shut down entirely. 

Turkey's consumption is projected to increase by 5% to 1.4m tons, due in part to expanding private consumption in the EU. And, lower production costs and favourable government policies for the textile sectors in Bangladesh and Vietnam will encourage consumption growth in these countries. Mill use in Bangladesh is forecast to rise by 10% to just over 1m tons, and in Vietnam, by 20% to 1.1m tons.