* China says to lower state sales floor price by 4.2 pct
from April 1
* To offer 200,000 T of imported cotton from reserves at
(Recasts with details from announcement)
BEIJING, March 28 China said it is cutting the
price of domestic cotton being sold from its state reserves and
will offer 200,000 tonnes of higher-quality, imported fibre for
bidding weekly, as the world's top cotton consumer steps up
moves to cut its massive stockpile.
The moves could pressure cotton imports and prices, hitting
top exporters India and the United States, which have already
seen shipments drop by 7 and 47 percent, respectively in the
first two months of this year.
From April 1, mills can bid as low as 17,250 yuan
($2,800)per tonne for standard-quality cotton in the daily state
auction, below the current floor price of 18,000 yuan per tonne
fixed in November, the China National Cotton Reserves
Corporation said in a statement on Friday (www.cncrc.com.cn).
Beijing is unwinding a stockpiling program aimed at
supporting farmers as it switches to a subsidy-based program.
The reserve is holding more than 10 million tonnes of cotton,
equal to about 60 percent of global stocks and sufficient for
more than a year of local consumption.
On Monday, New York cotton futures, which are used as
a global benchmark, sank more than 2 percent and were on track
for their sharpest daily rout in two months after the China
Cotton Association, which represents the interests of farmers,
unveiled the lowering of the floor price.
The reserves bureau did not say how much local cotton will
be offered in its daily sale, although it said mills were free
to bid for any volumes.
In a desperate bid to liquidate its stocks, Beijing has
since last year given incentives to mills to buy cotton from
state reserves with import quotas that gave preferential
Mills in the past, however, have shunned the government's
auction due to poor quality and much higher prices. The
government had sold only 36 percent, or 684,671 tonnes, of the
total offered in the auctions as of last week since the latest
round of auctions began in November.
Industry sources have estimated that stockpiles of imported
fibre, which are preferred by textile mills due to better
quality, stood at more than 1 million tonnes.
To prevent mills from rushing to only bid for the imported
material, the reserves corporation will require buyers to
purchase three tonnes of locally produced cotton stored in the
largest growing region of Xinjiang in exchange for each tonne of
overseas fibre from the stockpile, according to the statement.
The official announcement did not publish details on
government's plan to offer import quotas for access to cheap
Industry sources told Reuters that Beijing will give one
tonne of import quotas to mills which buy 4 tonnes of state
reserves from April.
($1 = 6.2130 Yuan)
(Reporting by Niu Shuping and Fayen Wong; Editing by Himani
Sarkar and Muralikumar Anantharaman)