By Kavita Desai
MUMBAI – Exports of around 250,000 cotton bales (1 bale = 170 kg) from India to China, for which deals were signed in January, have been put on hold as concerns over the spread of coronavirus have intensified.
These deals will be settled mutually if the situation is not brought under control soon, trade officials said.
In January, Indian exporters signed deals to export 700,000-800,000 bales (1 bale = 170 kg) of cotton, of which 400,000-500,000 or 60% were meant for China, and the rest for Bangladesh and Vietnam. The deals were struck at 76 cents per pound.
China accounts for around 30% of the world's cotton exports.
India's cotton exports may witness a temporary slowdown as the spread of coronavirus is likely to curtail demand for the fibre, said traders. This, however, may not affect the overall exports projected for the current season, they said.
"After this uncertainty in China, cotton exporters in India are anxious to sign up for new consignments with China," said Deven Shah, partner at the Mumbai-based Bhaidas Cotton LLP.
On Monday, trading resumed at financial markets in China, the second largest economy, after an extended holiday for the Lunar New Year.
Non-essential enterprises will remain closed until Sunday due to restricted movement.
"Exporters will continue to monitor developments related to the spread of coronavirus, if the virus keeps spreading and is not controlled in the next 10-15 days, it will create a problem," said Vinay Kotak, director of Kotak Commoditity Services.
This is unlikely to hit overall exports as strong orders from other countries and lower domestic prices have made sales economically viable, trade officials said.
Indian cotton is offered at 75-76 cents a pound, 6-7 cents lower than the crop from West Africa and the US, which is far superior in quality.
Atul Ganatra, president of Cotton Association of India, said the spread of coronavirus is not a major concern and the country's export target of 4.2 mln bales is easily achievable.
"Indian prices are currently competitive and finding new buyers won't be difficult. I expect cotton exports to touch 3.5 mln bales by end of March," said Ganatra.
So far in the season that started in October, India has signed export deals of 2.3 mln bales, of which 1.8-2.0 mln bales have been shipped, trade sources said.
"I believe India's overall exports might touch 5.0 mln bales mainly due to strong orders from other importing destinations like Bangladesh, Vietnam and Indonesia," said Ganatra.
The association has pegged India's cotton exports at 4.2 mln bales (1 bale = 170 kg) in the current 2019-20 (Oct-Sep) season.
The Cotton Advisory Board has estimated exports at around 5.0 mln bales. End
Edited by Charumathi Sankaran
