June 7, 2018 / 9:03 AM / 14 days ago

UPDATE 1-China cotton imports to reach up to 3 mln tonnes by 2019/20 - trader

(Adds background, comments from associations)

By Hallie Gu and Dominique Patton

HARBIN, China, June 7 (Reuters) - China is set to return as a major cotton importer, taking 10 million to 15 million bales (2 million to 3 million tonnes) each year by 2019/20, said Tim Bourgois, head of the cotton platform at major trading house Louis Dreyfus Company.

Imports are expected to be around 5 million bales in 2017/18, he told an industry conference in Harbin on Thursday.

The forecast comes after China’s cotton industry association said earlier this week that Beijing would issue more import quota to boost overseas purchases.

Once the world’s top cotton importer, China has seen its imports shrink from more than 5 million tonnes in 2011/12 to around 1 million tonnes last year, due to its efforts to reduce state stockpiles of the fibre.

Now, after several years of auctions to low state stocks and with demand improving, buyers are expected to return to the market to supplement a production deficit at home.

Domestic cotton usage is expected to increase by 1.5 million bales to 41.5 million bales in 2018/19, said Bourgois.

The group has lobbied the government to increase import quota to meet demand from textile companies, Gao Fang, executive vice-president, China Cotton Association, told Reuters.

Production growth in China has been lean due to limited farmland and high labour costs. Details on the timing and volume of quota were not known, Fang said, adding that the quota was mainly to meet higher demand.

Market participants said this week the plan was also likely related to pressure from the United States for higher imports of American farm goods.

China has agreed to significantly increase its purchases of American goods and services, and cotton is one of the top agricultural exports of the United States.

The industry is also lobbying for more cotton supplies amid a hike in prices that could drive more manufacturers to use cheaper manmade fibres instead.

Production of viscose staple fibre will increase further in 2018, pulling down prices, Zhu Beina, president of the China Cotton Textile Association said.

The association expects the cotton textile sector to use 4 million tonnes of viscose fibre by 2019. (Reporting by Hallie Gu and Dominique Patton; Editing by Tom Hogue and Sherry Jacob-Phillips)

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