Australian cotton is being bought up by Chinese buyers in anticipation of an unofficial ban on exports being lifted after trade was resumed between the nations on some other commodities.

China imported 20,000 tons of Australian cotton in 2022 compared to 4,00,000 in 2019. If the ban is lifted Chinese buyers will be able to sell the product in lucrative domestic markets.Companies can use the product for re-export if the ban is not lifted.

Australian cotton is being shipped to a bonded warehouse in Qingdao and possibly one other location, by the Australian subsidiary of China National Cotton Group Corporation, one of the biggest state-owned Chinese cotton buyers.

Australian cotton had been moving into China for months and small shipments had already cleared customs.Once the biggest market for Australian cotton, the trade ground to a halt in late 2020 after China imposed a series of official and unofficial restrictions – called a shadow trade war – that also hit commodities like coal and timber, lobsters, wine and barley.But the diplomatic thaw following a meet between the two countries last November has already seen trade restrictions on coal partly lifted.

Chinese merchants are said to be entering May forward contracts for cotton. In the event that trade remained blocked, they would move supplies elsewhere. Australia has still got contacts with spinning mills in China which is eager to have access to high quality cotton again.