China’s import orders for cotton from Australia are slowing down though it continues to need premium grade fiber. With China importing less cotton, the challenge for Australia is to find alternative markets for its exports. At one time China used to consume about 70 per cent of Australia’s typical 3 meter-plus bale cotton crop.

The over-stocked global cotton industry is bracing for stiff competition from synthetic fabrics as 15 months of sliding oil prices have given polyester a selling advantage. Global prices are eroded by synthetics (derived from crude oil) and mountains of stockpiled cotton, mostly in China.

Chinese cotton reserves, currently about 64.5 million bales, are equivalent to almost two years of Chinese domestic consumption. More than 35 million bales are also stockpiled around the world, including at least 3,00,000 bales of Australian carryover from last year.

Prices paid by Chinese textile plants for purified terephtalic acid (PTA), the chemical synthesis of crude oil used to make polyester, fell 25 per cent in the past eight months.

Cotton and PTA outright prices generally contribute about 50 to 60 per cent to a manufactured garment’s final price. Spinning customers are using more man-made fibers in blended yarns.