BEIJING (Reuters) — China imported 264,500 tonnes of cotton in December, down 57 percent from the same month a year ago, while full-year imports dropped 41 percent to 2.4 million tonnes, a five-year low.
The annual number is the lowest since 2009 when imports for the year came to 1.5 million tonnes.
Demand for cotton in the world’s top consumer of the fibre is a major driver of global prices. A government stockpiling scheme from 2011-2013 pushed domestic prices well above the international market, causing imports to surpass 5 million tonnes in 2012.
But an overhaul of that policy pressured domestic prices, reducing the premium over New York futures and undercutting the incentive for imports. Beijing gave out fewer import quotas last year as well, further tempering demand.
“Since September some imports have also been replaced by domestic cotton,” said a trade source, who declined to be identified.
Chinese cotton prices plunged in September, tracking a drop in the international prices to five-year lows.
Demand has picked up recently, with U.S. sales figures showing strong buying from the world’s No. 2 economy last week, surprising the market.
Still, traders expect full-year imports for 2015 to drop further as the government keeps a tighter grip on import quotas.
Beijing will issue 894,000 tonnes of low tariff import quota for 2015, according to its WTO commitments, but it will not issue additional quotas unless the market falls short of supply, officials have said.
China’s cotton imports in 2015 will fall to around 1.5 million tonnes, according to the latest estimate by the U.S. Department of Agriculture.